Ms Taisia Kaye v Mr Marco Fahd (First Respondent)
[2013] FWC 1059
•2 MAY 2013
[2013] FWC 1059 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s 394 - Application for unfair dismissal remedy
Ms Taisia Kaye
v
Mr Marco Fahd (First Respondent);
Mr Alex Fahd (Second Respondent);
More Ceramic Tiles Pty Ltd ABN 90 108 605 385 (Third Respondent); and
Versatile Ceramics ABN 44 249 024 176 (Fourth Respondent)
(U2012/10539)
DEPUTY PRESIDENT SAMS | SYDNEY, 2 MAY 2013 |
Application for unfair dismissal remedy - 19 years of part time employment - identity of employer - whether applicant contracted to related entity - transfer of business provisions - dismissal by SMS message - whether ‘dismissal harsh, unreasonable or unjust - dismissal unfair - further submissions as to remedy.
BACKGROUND
[1] One of the principal objectives of the unfair dismissal provisions of the Fair Work Act 2009 (the ‘Act’), requires the Fair Work Commission (FWC or the ‘Commission’) to establish procedures for dealing with unfair dismissal applications which are quick flexible and informal, and which address the needs of employers and employees (s 381(1)(b). Fortunately, the applicant in this matter, Ms Taisia Michelle Kaye, who was terminated over ten months ago, after being employed/engaged by the same ceramic tile company for 19 years, is by this decision, much closer to a concluded outcome from her unfair dismissal application. This is so, because identifying the true employer of the applicant and whether she was engaged as a consultant or independent contractor, are both ‘live’ preliminary issues which will be determined by this decision.
[2] In her application for an unfair dismissal remedy, made pursuant to s 394 of the Act, the applicant identifies Versatile Ceramics as her employer. Versatile Ceramics is a business name which was, for the majority of the applicant’s employment, registered in New South Wales with Mr Alex Fahd as its proprietor. Mr Alex Fahd’s son, Marco Fahd, purchased the business name from his father in May 2012 according to an Agreement (the ‘Agreement’) between them executed 7 May 2012. However, it is not as simple as that, as I will address later. Throughout this decision, I may refer to the relevant respondent interchangeably with the person or company name. Unless expressly referable to Mr Alex Fahd, all other references to ‘Mr Fahd’ will be to Mr Marco Fahd, his son.
[3] It was Mr Alex Fahd who purportedly dismissed the applicant by way of an SMS message in the following bald, unexplained terms:
‘I am no longer contracting to MCT as of today, therefore your services are not required with immediate effect. Regards Alex.’
[4] Perhaps unsurprisingly, the applicant claims that:
a) there was no valid reason for her dismissal;
b) the circumstances surrounding her dismissal constituted a gross denial of procedural fairness; and
c) her 19 years of unblemished and loyal service were not recognised by the employer.
In addition, she made claims that she had not been paid her pro rata long service leave, annual leave, payment in lieu of notice or five weeks of unpaid wages.
[5] On the face of the s 394 application, it is difficult to imagine a more grossly unfair dismissal of an employee, assuming she was such a person for the purposes of the Act. Even so, since the filing of this application, the applicant has been involved in a protracted battle to establish the true identity of her employer and therefore the respondent to the proceedings.
[6] None of the four respondents involved in these and earlier proceedings before Roe C, will acknowledge that he or it is the true employer of the applicant. The former owner of Versatile Ceramics and the author of the SMS message, Mr Alex Fahd, has refused to attend and/or participate in these proceedings in any way and without explanation. Indeed, apparently no one, including his son, knows where he is, or how he might be contacted, despite numerous attempts to do so by the applicant’s legal representatives. It is as if he has disappeared in a puff of smoke.
[7] As I observed at the outset, regrettably, this matter has had a long, convoluted and somewhat tortuous history. I have not been assisted by the parties sending, and sometimes repeatedly resending, submissions and documents (even weeks after I had reserved my decision) said to be relevant to the issues to be determined by the Commission in its unfair dismissal jurisdiction.
[8] It would be unproductive, and probably confusing, to outline the history of this matter in minute detail; suffice to note that it was first listed for hearing on 14 August 2012 before Roe C in respect to establishing the identity of the true employer. The next day, the Commissioner, in Kaye v Versatile Ceramics [2012] FWA 6953 decided:
‘[7] At the hearing Mr Crabb suggested that the Respondent is a Partnership of Mr Marco Fahd and Mr Alex Fahd trading as Versatile Ceramics (ABN 44 249 024 176). I agree that the evidence provided of the ASIC report suggests that this is the case. I therefore have decided that, subject to consideration of further submission, I will issue a further Order that the Application be amended to provide that the Respondent be named as Mr Marco Fahd and Mr Alex Fahd trading as Versatile Ceramics (ABN 44 249 024 176). I will provide Mr Marco Fahd and Mr Alex Fahd with 14 days in which to provide any submission as to why I should not make such an Order.’
[9] Mr Marco Fahd, through Mr John Kiprovski, General Manager of More Ceramic Tiles, continued to insist that the first and the third respondent have no involvement in the matter and following the receipt of further submissions, Roe C on 18 September 2012 in Kaye v Versatile Ceramics [2012] FWA 7990 concluded and ordered that:
‘[11] The position will not be clear until after the hearing of the evidence in this matter. Mr Marco Fahd and More Ceramics Tiles Pty Ltd deny any liability in this matter and continue to maintain that they are not the employer. However, I am satisfied that there is an arguable case with some strength that they are. Therefore, I will Order that they be added as respondents and the liability of each respondent will need to be determined at the final hearing of the substantive application for unfair dismissal after the testing of the evidence.
[12] I have therefore decided to issue further Orders changing the identity of the Respondent in this matter in the following terms.
I order that:
1. The Application be amended to provide that Mr Marco Fahd, Mr Alex Fahd and More Ceramic Tiles Pty Ltd be added as Respondents to the application.
2. The liability of each respondent will be determined at the final hearing of the substantive application for unfair dismissal.’
[10] The Commissioner issued a further decision on 28 November 2012 (Kaye v Fahd and others [2012] FWA 10073), in which he said:
‘[2] To be consistent with my Order the Respondents are Mr Marco Fahd, Mr Alex Fahd, More Ceramic Tiles Pty Ltd, and Versatile Ceramics. This is what will appear on future listings.
[3] Mr Marco Fahd continues to argue that he and or More Ceramic Tiles were not the employer of the Applicant however for the reasons outlined in the decision of 18 September 2012 I have decided that they together with Mr Alex Fahd and Versatile Ceramics are Respondent employers and that the liability of each respondent will be determined at the final hearing of the substantive application for unfair dismissal which will now be in February 2013.
[4] I accept that Versatile Ceramics may be simply a trading name and not a legal entity capable of employing the Applicant. At the mention hearing the parties agreed and I accepted that Versatile Ceramics could therefore be deleted as a Respondent. However, upon reflection having made a decision and an Order in this matter it is not appropriate to amend my Order at this stage. I have decided that the issue of the liability of the Respondents will be determined at the hearing. The correction sought by Mr Marco Fahd and the Applicant can be made at that time. However, the removal from future listings of the non-existent entity More Ceramic Tiles T/A Versatile Ceramics should reduce any confusion.’
[11] It is to be observed there has been no appeal of any of the Commissioner’s decisions or orders. As a result, the matter was reallocated to me for further hearing. Directions were issued and it was subsequently listed for hearing on 7 February 2013. Documents continued to be filed with the Commission up to 24 April 2013.
THE EVIDENCE
For the applicant
[12] The applicant provided two written statements and gave oral evidence in the proceedings. The applicant commenced what she termed ‘permanent employment’ with what she believed was a company called Versatile Ceramics on 9 October 1993. She did not remember receiving a written employment contract around that time, or at any time since. She said that she worked as a retail assistant part-time on weekends. Immediately prior to her dismissal, she was working 7 hours on Saturdays and 5 hours on Sunday. She also worked another unrelated full time job from Monday to Friday.
[13] The applicant understood that Versatile Ceramics was part of a group of related companies, trading in wall and floor tiles, and other related products. These companies included More Ceramic Tiles (MCT), Versatile Concepts, Absolute Tiling, Versatile Features and Versatile Tiling (collectively, the ‘Companies’ or the ‘Group’). She based her understanding on observations gained during her many years of service with the Group. She provided the Commission with a number of documents which referred to the Companies as operating or functioning together. In addition, the Companies shared the same addresses and/or premises. She understood that these companies were owned, or founded by Mr Alex Fahd in order to benefit his sons, Mr Marco Fahd and Mr Alexis Fahd.
[14] The applicant deposed that the staff of the various Companies worked interchangeably for the different entities. She had worked at various Versatile Ceramics stores throughout Sydney from the time she was employed up until 2010. In early 2010, she was transferred to work at the Versatile Ceramics showrooms in Bankstown. The applicant denied that she worked as a ‘consultant’ and noted that the work she performed was always subject to the relevant retail industry award. She had always believed that she was an employee. She never entered into any ‘consultant contract’ with Alex Fahd, Versatile Ceramics or anyone else.
[15] On 4 February 2012, the applicant was informed by the manager of the Versatile Ceramics store in Bankstown, Mr Elias Fares, that the store was to be temporarily shut down for renovations for three to four months. She was told that she should use the MCT invoice book for all sales and that she should speak to Terry (who she took to mean Mr Terry Raad, a manager of Versatile Ceramics) in relation to a temporary transfer to another store. She spoke to Mr Raad shortly thereafter, who said words to the effect of ‘You’re to go to work at the Prospect Store, 31 Stoddart Road.’ The applicant knew that the ‘Prospect Store’ was a MCT store. She understood from Mr Raad that she would now be working for MCT until the Versatile Ceramics store in Bankstown reopened. She believed that her employment entitlements would continue to accrue while working for MCT as she understood that MCT was a related company (to Versatile Ceramics).
[16] The applicant commenced working at the MCT shop in Prospect on 11 February 2012, where she was directed by the Manager of MCT, Ms Amal Tannous. Ms Tannous was already known to the applicant as they had worked together at Versatile Ceramics in Bankstown until 2008, when Ms Tannous went to work for MCT. During her work at MCT, the applicant claimed that she was under the supervision, control and direction of MCT management and had no contact from anyone at Versatile Ceramics. On the day that she arrived at the showroom, she was provided with work by MCT and accepted and performed work as directed in her role as a retail assistant. MCT determined her hours and she only worked at this particular store. She performed the same duties as a retail assistant at MCT that she had performed when she worked at Versatile Ceramics.
[17] While working for MCT, she found out that MCT had opened a store in or about March/April 2012 in the showroom she had previously worked for Versatile Ceramics in Bankstown. She undertook searches for business addresses and annexed these to her second statement, although these seemed to refer to the Versatile Ceramics store in Bankstown and the MCT store in Prospect. She also provided an email from Mr Ishmael Molina, Financial Controller, welcoming the ‘Showroom located at Bankstown’ and referring to its integration on the wider computer systems. The email also provided contact details for the showroom as being [email protected] and ended with an exhortation of ‘All for One and One for All’.
[18] The applicant had earlier organised her annual leave to be taken from 11 March 2012 to 7 April 2012. However, now that she was working at MCT, she was required to raise the timing of her annual leave with MCT Management. Prior to going on leave, she spoke to Ms Michelle Gruszka, the assistant to Mr Molina at MCT. She had wanted to return to work on 8 April 2012, which was a public holiday (Easter Sunday). Although the store would not be open, she would receive payment for a public holiday. Ms Gruszka replied in words to the effect of: ‘I think we will start you on the 14th.’
[19] The applicant returned from annual leave on 14 April 2012. She did not receive any pay for the Easter period, which she would have, if she had returned on 8 April. She continued to work every subsequent weekend at MCT in Prospect until 5 June 2012. From the time that she began working at MCT until she had taken leave, she continued to receive pay advices and her pay from Versatile Ceramics. She provided copies of pay advices received between 11 February 2012 and 11 March 2012. After 27 April 2012, she received pay advices and pay from MCT Pty Ltd (ABN 90 108 605 385). The applicant annexed to her statement a copy of a pay advice received from MCT. A Group Certificate showing that she had been paid $515.00 by MCT for the year ending 30 June 2012 was also annexed to her second statement.
[20] The applicant claimed that she did not receive any payments or pay advices for a number of weekends that she had worked at MCT, Prospect. As a result, she made a complaint to the Fair Work Ombudsman (FWO) in relation to an underpayment claim. At or around this time, Mr Molina, who purported to act on behalf of Versatile Ceramics, sent her several emails. The applicant annexed a selection of these emails to her second statement. She believed Mr Molina was employed by Versatile Concepts, but in fact performed work for most of the Group’s Companies.
[21] On 7 June 2012, the applicant received a text message from a phone with the number of 0412 472 184. The text message was from Mr Alex Fahd (see para [3]) and she clearly understood the message to mean that she had been dismissed.
[22] In oral testimony, the applicant deposed that she believed that Mr Alex Fahd could terminate her employment with MCT because, ‘being the father’, he always had authority and control over the Companies which were established for his sons. The Group of Companies were considered as a Group or referred to as a ‘network’. She believed that Versatile Ceramics was definitely part of the Group.
[23] The applicant clarified her evidence that she had never worked as a ‘consultant’. She regarded the term ‘consultant’ as referring to a position ‘other than straightforward, grade one, level one retail sales assistant’. The applicant tendered a document marked ‘Certificate of Achievement’ for the first quarter of 1998 which referred to her as the highest selling assistant or retail assistant when she worked at Castle Hill. There were two signatures on this document, being the signature of Mark Pentecost, who was Payroll Manager and Marketing Manager. The second signature was that of Mr Alex Fahd.
[24] Mr A Crabb, the applicant’s solicitor, tendered two faxes from Mr Alex Fahd dated 7 February 2006 and 10 February 2006. These discussed, in fairly robust terms, the applicant’s refusal to choose between the options provided to all ‘Versatile staff’ of accepting a change in roster or a reduction in their hours. The applicant said that the issue was resolved by Alex Fahd agreeing to her days and hours of work remaining as they were.
[25] Mr Crabb tendered another document, being a copy of a cheque dated 22 October 2010 to be paid to the applicant in the amount of $807.19, accompanied by a Compliments Slip from Versatile Ceramics upon which was handwritten, ‘Pay adjustments: 6.8.09 - 15.2.10’. The compliments slip gave the address of ‘Head Office’ as being at 2/23 Rowood Road Prospect NSW 2148. The applicant said that this amount had been forwarded to her following a formal complaint resolution with the FWO.
[26] Mr Crabb also tendered two documents which the applicant obtained during the course of employment. The first was a Memo marked to: ‘All staff at Versatile Ceramics, More Ceramic Tiles, Versatile Concepts, Absolute Tiling & Versatile Tiling’ and referred to a Staff General Meeting and was signed ‘From Management: Versatile, More & Absolute’. The second memo was a Phone Directory headed ‘Versatile Ceramics - Australia’s Largest Range of European Tiles’. It listed various people, who the applicant presumed were Management/Administration and their contact details. It listed a number of showrooms and their addresses, telephone numbers and fax numbers, including the ‘Prospect Showroom’, the ‘Bankstown Showroom’, the ‘North Parramatta Showroom’, the ‘Norwest Showroom’ and the ‘Smithfield Warehouse’. It listed Alex Fahd as Director of Verstaile Ceramics and listed his son, Mr Marco Fahd, as Director of MCT, Versatile Concepts and Absolute Tiling Solutions.
[27] Mr Crabb also tendered four ASIC company searches for Absolute Tiling Pty Ltd, Versatile Concepts Pty Ltd, Versatile Features Pty Ltd and Versatile Tiling NSW Pty Ltd. Mr Crabb also supplied searches on the national business names current and historical extract, an ASIC search in relation to the business name Versatile Ceramics, a search on a holder name of Alex Fahd conducted on 4 February 2013 with the business name of Versatile Ceramics and a search conducted on 4 February 2013 in relation to the holder name Marco Fahd, with the business name of Versatile Ceramics.
[28] In cross examination, conducted by Mr Marco Fahd, the applicant acknowledged that she did not understand the whole company structure or network at the time that she was employed in 1993. She believed Versatile Ceramics was her employer, but understood that Alex Fahd had registered a number of companies from 2005 of which he had control, including MCT.
[29] The applicant agreed that the Company Phone Directory (see para [26]) referred to ‘Alex Fahd, Director of Versatile Ceramics’ and ‘Marco Fahd - MCT DCATS WAC - Director’. At the time she became aware of this document, in or around 2011, there were a number of companies and communications which seemed to suggest that Mr Alex Fahd was authorised to deal on behalf of those Companies. In response to a question as to whether she understood the purpose of the other registered entities, she responded that all she knew was they were all part of a Group.
[30] The applicant claimed that when Mr Fares indicated to her in February 2012 that the Bankstown showroom would be temporarily closed, she was ‘told, instructed to go, or offered employment’ with MCT. She had accepted this offer. This situation was similar to the time of her employment in 1993 in that there were no negotiations and nothing put in writing. She noted:
‘Nothing from the group of employers in dealing with Absolute, More Ceramic Tiles or Versatile Ceramics is ever put in writing in terms of employment or otherwise.’
[31] The applicant acknowledged that the Department of Social Services form filled out in 1993 referred to her employer as Versatile Ceramics. She did not know at the time whether Versatile Ceramics was the only registered entity. She accepted that MCT was registered in 2005, but did not know the identity or purpose of the registered entity at that time.
For the first and third respondent
Mr Marco Fahd
[32] Mr Fahd provided a document entitled: ‘Response by First Respondent Marco Fahd of Applicant to Witness Statement of Taisia Michelle Kaye, as received for abovementioned matter.’ It took the form of a line by line response to the applicant’s first written statement. While the document was unsigned and not in appropriate legal form, I admitted it as Mr Marco Fahd’s and MCT’s evidence.
[33] Mr Fahd ‘noted’ the applicant’s claim that she had been employed by Versatile Ceramics and that she had never received a written contract of employment. However, he then provided lengthy details of a discrepancy of the applicant’s date of birth on two forms held by the Companies. The first of these was a Department of Social Security Employment Declaration Form (the ‘DSS form’) and a ‘BT Online Employer View Member Page’.
[34] Mr Fahd stated that the idea that Versatile Ceramics was part of a Group of Companies was absolute conjecture on the applicant’s part. He noted that she listed Versatile Ceramics as the business she commenced employment with on a number of forms. Mr Fahd did not deny that the Companies identified by the applicant were set up by Alex Fahd in order to help his sons set up businesses, but took issue with its relevance. He did not deny that these Companies had shared addresses, shared use of premises and that staff were used interchangeably between Companies. This was in order to allow the children of Alex Fahd to:
‘utilise proven and existing resources as Alex Fahd had at his disposable [sic] took place, that otherwise would/could prove at considerable expense for the any of the offspring [sic] as any person will experience in any start-up business. The father of course doing all he can to secure better likelihoods for their respective business expense.’
However, Mr Fahd stressed that there was no business relationship between Alex Fahd and his two sons in relation to this matter.
[35] Mr Fahd said that prior to the Versatile Ceramics store in Bankstown being closed for renovations, his father called him to ask if he would take on the applicant ‘on a consultancy basis’ either at the MCT Showroom in Prospect or the MCT Showroom in Smithfield. Should he agree to this proposal, Versatile Ceramics would provide invoices for her ‘consultancy’ services. Mr Marco Fahd agreed to this, but on a provisional basis only.
[36] Mr Fahd agreed that he did not speak to the applicant about this arrangement as his father made it clear that either he or his long term managers (Terry Raad or Elias Fares) would make the necessary arrangements with the applicant. Mr Fahd tendered a copy of an invoice from Versatile Ceramics to MCT which provides for a ‘Consultancy fee’ to be paid. Mr Fahd agreed that the applicant was under the control of the MCT Showroom Manager, Ms Tannous. He maintained that she was contracted for two weeks to carry out the tasks and duties that were assigned to her by that Manager. Mr Fahd did not deny that the applicant had liaised with Ms Gruszka in relation to the timing of her annual leave, but questioned the relevance of this in that he insisted that neither he, nor MCT, was the employer of the applicant.
[37] Mr Fahd acknowledged that MCT paid two weeks of weekend pay to the applicant. However, this came about because the applicant had been complaining to the Warehouse Manager at MCT in Prospect (Mr Tony Mannah) that she had not been paid. The Warehouse Manager communicated with the MCT payroll office and asked ‘of the office that they paid as paid previously existing arrangements fix her money owed without any delay.’ In order to ‘calm the situation’, the Payroll Officer paid the applicant for two weeks without any reference to him. It was an error.
[38] Mr Fahd repeatedly reasserted that a number of the applicant’s claims were ‘not relevant’ in that he was not her employer and claimed that once he had determined that MCT no longer required the applicant’s consultancy services, his father was advised. He said:
‘[A]fter a period of time MCT determined they no longer required the consultancy services, like any other similar services offered, the actual provider (Alex Fahd) was advised and whatever action he undertook to inform his person being Michelle Kaye was of his doing only ... [A]t no stage did Marco Fahd, nor any of his MCT employees ever talk to or advise Ms Kaye with regards to the consultancy tenure coming to an end.’
It was Mr Alex Fahd who sent the text message to the applicant saying that she was no longer required.
[39] Mr Fahd acknowledged that MCT (of which he is sole Director and Shareholder) now owns the business name Versatile Ceramics. However, he was not responsible for his father’s perceived or unknown dealings. The application to change the Proprietors of a Business Name for Versatile Ceramics was lodged with NSW Fair Trading on 26 April 2012. He was advised of the acceptance of the application on 7 May 2012.
[40] Mr Fahd disputed that the applicant received pay advices and pay from MCT. He regarded the fact that she had not received pay or pay advices for work performed on the premises of MCT Prospect as not properly relevant to him as she was employed by Versatile Ceramics.
[41] In cross examination, Mr Fahd affirmed that the idea that Versatile Ceramics was one of a Group of Companies was an opinion of the applicant only. It had no credible basis. However, he agreed that there was a Versatile Group of Companies saying, ‘Not as a registered entity, but yes, it’s referred to as such.’ The Group includes Versatile Concepts, MCT, Absolute Tiling Solutions and Versatile Stone. Mr Fahd explained that Versatile Ceramics was founded by his father and mother and had operated from 1977. He had ‘opened’ his own entity, MCT, to ‘serve different purposes to Versatile Ceramics due to a point of difference between my father and I.’ His father had wanted to stay in retail, but he had wanted to work more in wholesale/retail, supply and installation. He opened MCT, Versatile Concepts and Absolute Tiling Solutions, although MCT was a name created for a six month period in 2002. He had purchased all the shares and activated what had previously been a shelf company until 2005.
[42] Mr Fahd agreed that his brother, Alexi Fahd, was the Director of Versatile Tiling and Features. He believed the Versatile name meant something because their father had started it in 1977. He noted that his sister runs Versatile Design. He had bought Versatile Concepts. They were all different entities. Mr Fahd agreed that he had observed Versatile Ceramics, MCT, Versatile Concepts, Absolute Tiling and Versatile Tiling referred to together, including at Staff General Meetings which he had conducted himself. These discussions were said to be of ‘ethics, moving forward; nothing to do strategically, nothing to do as far as different business models.’ The holding of General Meetings involving staff from the different Companies, was something which he had come up with six or seven months earlier. However ‘Versatile Group’ was not a registered entity and he was not sure if he was allowed to use the name. He had been trying to register it at the time of the hearing.
[43] Mr Fahd acknowledged that he had referred to himself as Managing Director of the Versatile Group of Companies, including Versatile Concepts, MCT and Absolute Tiling Solutions (the latter of which he was a 50% shareholder). There was no relationship to Versatile Ceramics. Because he was director of four different entities, calling them the Versatile Group seemed a straightforward way of presenting himself on his LinkedIn account. He did not agree that ‘Versatile group and group of companies’, included Versatile Ceramics. They had separate ABNs, separate bank accounts, separate directors, separate policies and procedures which each employee signs upon accepting employment with that company. He conceded that the Memo of the Staff General Meeting and the Phone Directory (see para [26]) included employees of Versatile Ceramics.
[44] Mr Fahd conceded that prior to his ‘opening’ of MCT he had performed a number of duties for Versatile Ceramics, including working in the warehouse, in sales and importing: ‘Whatever the business required I’d be involved in’. He had still performed some duties for Versatile Ceramics at the time of starting his own business and he was still a signatory of the main account. He was not sure as to whether he had remained a signatory to the main account in 2012. However, as he never took himself off, he may well have been. He did not agree that he had the power to enter into contracts, but would sign a cheque if advised to do so by his father. He did this because his father travelled a lot due to the importing nature of his business. However, over the last nine years, he was never involved in the running of his father’s business.
[45] As to his relationship or involvement with the management of Versatile Ceramics, Mr Fahd said:
‘My experience came from Versatile Ceramics as far as management was concerned. I was the son of the director. So I don’t know what you’re referring to in the management ... I think I was automatically a manager. I was the son of the director of Versatile Ceramics, yes. ... [At the time I took over or started MCT] I was never officially - it was a family business, still existed. I was never officially appointed a manager, nor was I officially ever taken off as a manager. It was a family business, run that way. ... My involvement, yes, to a point, stopped of course. But if my father ever needed assistance I would get involved, definitely.’
[46] In response to a question from me as to how his father had dismissed the applicant if he no longer had a company known as Versatile Ceramics, Mr Fahd responded that he did not know, as he was not involved enough in his father’s affairs. He did not know who his father employed or how many staff he had. He had offered to purchase the business name from him for $30,000 because he wanted to use it in the pursuit of growing an ‘architectural division’ to his business. He also claimed he was not informed that the applicant had been dismissed. He received word that the applicant was no longer available and that there was a claim from Fair Work Australia (FWA) against him. He said:
‘I’ve got no answer to that. I would not know. I was not involved in his [Alex Fahd’s] affairs to know. At that time, I didn’t know who he employed, how many staff he had. All we know is that we offered to make the purchase of the business name off him because I wanted to retail the name and launch it as an architectural division. So I purchased that off him because I knew he was in desperate need of funds and I offered him $30,000 as per a contract agreement dated 20th of the ninth. As far as he relocated offices, worked on his own separately from me. I said to him I didn’t want to know about his business and he stayed out of mine because we clashed heads and that’s how it ended up becoming. So Ms Kaye, for example, advises and states that for six weeks she wasn’t getting paid when I was paying my father at the time. I was never to know. If I was the employer I didn’t dismiss her so why wasn’t it confirmed with me that she was dismissed? All of a sudden I got word there was no longer Ms Kaye available and there was a Fair Work Australia claim against him. I did not dismiss her. If I was the employer - at More Ceramic Tiles I’m the owner. I’m very involved in it. If it was indicated that I was her employer and she was transferred to that, then why wasn’t I asked, “Am I really dismissed?”’
[47] The first and third respondents tendered a bundle of documents relating to the purchase and transfer of the business name of ‘Versatile Ceramics’. This included an invoice by Versatile Ceramics to MCT for the ‘Transfer of business name (Versatile Ceramics) to Mr Marco Fahd - MCT’ in the amount of $30,000.00 inclusive GST. A copy of a bank statement in the name of ‘MORE CERAMIC TIL’ [sic] was also included that showed a payment of $30,000.00 transfer to ‘VC NSW’. A NSW Fair Trading ‘Application to Change Proprietors of a Business Name’ form (the ‘application form’) signed and dated by Mr Marco Fahd on 26 April 2012 was also included with a Certificate of Registration of Business Name which showed that the name Versatile Ceramics was registered as being owned by Mr Marco Fahd, with registration being valid from 31 October 2009 until 31 October 2012.
[48] Also included with the bundle was a document on MCT letterhead and marked to Mr Alex Fahd. The document was headed ‘Contract Agreement More Ceramic Tiles Pty Ltd’, signed by both Mr Marco Fahd and his father and dated 7 May 2012. It was expressed as follows:
‘This Agreement is to certify that on 7th May 2012 a binding Legal Loan contract was entered into between MCT Pty Ltd with Mr. Alex Fahd for the amount of Thirty Thousand Australian dollars ($30,000.00).
The details as recorded below will ensure both parties are bound by the following terms.:
I Mr. Alex Fahd of [address supplied] have received full payment from MCT Pty Ltd for tax Invoice # 00100314 to the value of Thirty Thousand dollars inclusive of GST for the purchase of business name Versatile Ceramics.
That as agreed MCT Pty Ltd has purchased the Business Name only and as part of this agreement, that it will be agreed that MCT Pty Ltd has not purchased any outstanding debt(s) as related to Mr. Alex Fahd as the former Proprietor of Versatile Ceramics, that any such debt(s) and/or any such payments as due are his, and his only (Mr. Alex Fahd). That as he has promised that his debts as nay outstanding will not be bourn [sic] by MCT Pty Ltd, that as/if agreed:
- This agreement binds both parties listed
- That Mar [sic] Alex Fahd is fully responsible for all his own payments and/or debts
- That MCT Pty Ltd (Marco Fahd as Director) will not encumber any of Mr. Alex Fahd debts and/or due payments’
[49] In response to a question from me, Mr Fahd said that he was not sure where his father was, but he thought that he might be staying with his sister. He had not had much in the way of communication with his father over the last nine months. He had bought the business name from him in May 2012, which was just prior to their ‘falling out’. He no longer had any function, role or ownership of his father’s companies. His father had been proprietor of the name from 31 October 1999 until the point that he purchased it from him and he became the sole registered owner on 7 May 2012. Mr Fahd was at pains to say that he had only purchased the business name. He had spent $30,000 because the name meant something to him. He agreed that the Certificate of Registration of Business Name showed the Prospect address, but also addresses in Bankstown, Bella Vista and Lansvale. However, he denied that this suggested that he and his father were co-proprietors of the business name and noted that these addresses were not fully accurate - the Lansvale premises had been sold in 2008. Mr Fahd said that if his father had not come off the business register, then this was contrary to his intentions and their Agreement.
[50] Mr Fahd was aware that his father was currently the defendant in other legal proceedings. While he knew that the registration of the business name ‘Versatile Ceramics’ had expired, he had not re-registered the business name because he thought that the contract entered into with his father (see para [47]) would protect him from any legal troubles incurred by his father, but he now found that this was not the case. Accordingly, he did not intend to renew the name. He agreed that the ‘Contract Agreement’ sought to ensure that he was not liable for any outstanding debts which his father may have incurred overseas, through his importing business. His father’s business dealings had contributed to the deterioration of their relationship. Mr Fahd said that Mr John Kiprovski had prepared the Agreement. He had not sought legal advice because it was not in his nature to do so in an arrangement between him and his father at that time. However, if he were to enter into further agreements with this father, he might well do so.
[51] Mr Fahd believed that the applicant was an independent contractor because he agreed to ‘contract’ her services while his father was renovating the premises at Bankstown. His father had told him that he had nowhere else to put her. At the time, it was convenient because one of his employees was on annual leave. He paid his father and his father was to pay the applicant. If he had known that this would complicate matters, he never would have agreed to it. He noted that his store based retail business represented only ten percent of his business.
[52] Mr Fahd said that in most instances, employees would work for only one Company in the Group. However, ‘Business is business’ and employees would often ‘consult’ to different companies. He gave an example of a payroll officer at his father’s company who was on leave. He would provide a person to do payroll and invoice his father for those services. Truck drivers would also ‘consult’ between companies. Mr Fahd admitted that Mr Kiprovski, who was an employee of MCT, would also represent Mr Fahd’s other companies, although if it was to do with Absolute Tiling Solutions, the work would be billed, because he was only a 50% shareholder in that entity. He explained:
‘If I’m 100% owner of, as an example, MCT and Versatile Concepts, I’m 100% owner. They serve completely two different purposes. If I required one staff from the other then I wouldn’t bill myself, no. But if I was giving it to Versatile Ceramics, Absolute Tiling Solutions, that would come as a consultancy fee, yes. 99 % of the time you don’t ask a retail assistant to work in the office and vice versa; an office person to work as a truck driver.’
[53] Mr Fahd was shown a document which he agreed was a printout from the website of Absolute Tiling. Under the heading of ‘Our Experts’, a number of person’s details were shown. Mr Fahd agreed that Ms Michelle Gruszka, was his Personal Assistant, but an employee of Absolute Tiling. Mr John Kopanovski was a subcontractor working with his own ABN. Mr Fahd agreed that a contacts page with the contact address of 2-3/23 Rowood Rd, Prospect NSW 2148 reflected the correct contact address for Absolute Tiling. Mr Fahd said that this was an office and warehouse address which was leased from his mother (with whom he was still on good terms).
[54] Mr Fahd agreed that the signatures on the Certificate of Achievement presented to the applicant in 1998 and the two faxes sent to the applicant (see paras [24]-[25]) were the signatures of his father and that they differed from the signature purporting to be that of Alex Fahd on the application to change the proprietor of the business name (see para [47]). However, he said that both signatures were those of his father - the latter was the one that he used to sign cheques. He disagreed with the proposition that his father had not signed this document. He could not recall if he was present when his father signed the Agreement (see para [48]).
[55] As earlier mentioned, there was no evidence or submissions put for or on behalf of the second or fourth respondent, notwithstanding Mr Marco Fahd’s proprietorship of the NSW registered business name of Versatile Ceramics.
SUBMISSIONS
[56] Much of the documented material filed by or on behalf of the first and third respondents was repetitive or replicated the oral evidence of Mr Fahd. The gravamen of their submissions was that the first and third respondent had never employed the applicant and that she was only ever engaged by MCT on a consultancy basis for a short period. That consultancy arrangement was terminated by Mr Alex Fahd and neither Mr Marco Fahd nor MCT had any knowledge or involvement in the termination of the alleged consultancy arrangement.
[57] In asserting that for 19 years, the applicant worked for the second and fourth respondents, Mr Fahd tendered the following documents:
a) The applicant’s Employment Declaration Form and Superannuation details which disclosed Versatile Ceramics as her employer;
b) Her application for employment as a Sales Assistant, dated 5 October 1993 (Curiously, there is no headnote or reference in the body of the application to which entity the applicant is applying to work for); and
c) Copies of tax invoices from MCT to Versatile Ceramics from 2 May 2012 to 30 May 2012 for consultancy services allegedly provided by the applicant.
[58] Mr Fahd made the point on numerous occasions that the Agreement he made with his father, Alex Fahd, in April/May 2012 was for MCT and himself to purchase the business name Versatile Ceramics from his father for $30,000. He tendered the agreement, proof of the money exchange and the application to change the name of the proprietor of Versatile Ceramics from Mr Alex Fahd to himself. Mr Fahd emphasised that the Agreement was expressed as releasing MCT from any debts or liabilities of his father.
[59] Mr Fahd said that it was his father who terminated the applicant’s services. By virtue of the Agreement of 7 May 2012, he had not terminated the applicant and was not responsible for any of his father’s unknown or perceived debts. He acknowledged that the applicant was contracted to MCT shortly before her termination, but those consultancy fees were paid directly to Versatile Ceramics.
[60] In further submissions, Mr Fahd insisted that he and the third respondent had not obtained any beneficial use from the purchase of the name Versatile Ceramics. He claimed that it had in effect been shelved and ‘since being purchased has not traded’. He accepted the registered address of Versatile Ceramics is the same as that of the third respondent, but Versatile Ceramics has not traded and was merely acquired ‘for sentimental purposes’.
[61] Mr Fahd claimed that at all material times, the applicant was employed by his father under the trading name Versatile Ceramics. He agreed that over 19 years the applicant worked weekends at the various Versatile Ceramics showrooms throughout Sydney. Mr Fahd submitted that although MCT had provided her last two pay advices and a Group Certificate, this was a mistake by the payroll officer of MCT and at no time had he authorised or directed any person to do so. It had arisen because the applicant was demanding payment and the Payroll Clerk did not understand what was being asked and to calm the situation, incorrectly paid the applicant. The mistake was later rectified.
[62] Mr Fahd added that it was his father who had directed the applicant to attend at the premises of MCT. She was not terminated as the first and third respondent had never made any offer to employ her. He cited MCT’s strict ‘best practice’ policy in respect to job offers and the signing of a ‘Contract Employment Agreement.’ The applicant had never undergone that process and, accordingly, was never his employee.
[63] Mr Fahd was the only person authorised to appoint or terminate staff and he had never done so and had never negotiated any matter whatsoever with the applicant. He had never dismissed her. No one at MCT had ever discussed dismissal with the applicant. He noted it was his father who sent the SMS message and it described her work as contracting.
For the applicant
[64] Mr Crabb, Solicitor, properly addressed the legislative provisions relevant to this matter (to which I will refer later). He submitted that the applicant was a person protected from unfair dismissal and had been employed at the time of her dismissal by MCT. Alternatively, the Commission has jurisdiction to order the reinstatement of the applicant to a position at MCT, even if MCT is found not to be an associated entity of the employer, rather than the employer itself.
[65] Mr Crabb submitted that there was the positive existence of a contract between the applicant and MCT. A contract can be implied by fact or law. Mr Crabb added that the applicant’s period of employment with Versatile Ceramics counted as service with MCT and therefore she had satisfied the minimum employment period under the Act.
[66] In further submissions, Mr Crabb highlighted the history of the applicant’s employment and detailed the confusing business ownership arrangements of the respondents. He submitted that the applicant was plainly unfairly dismissed. There was no reason for her dismissal and no notice or warning of the dismissal.
[67] Mr Crabb answered the first and third jurisdictional objections by submitting:
a) A contract concerning the performance of the applicant’s work for the third respondent as a retail assistant is accepted by the first and third respondents;
b) The contract is one of service, not for service;
c) No labour hire arrangement was in existence concerning the applicant’s work for the third respondent;
d) The applicant’s employment was terminated at the initiative of the employer, being the third respondent;
e) For the purposes of the Act:
i. The applicant is a transferring employee;
ii. There is a transfer of business;
iii. The third respondent is the new employer;
iv. The third respondent owns, or has the beneficial use of some of the assets that the second respondent owned, or had the beneficial use of, prior to the transfer of business; and
v. The work performed by the applicant for the third respondent was the same, or substantially the same, as the work performed for the second respondent.
f) Accordingly, the applicant is a person protected from unfair dismissal under the Act.
[68] Mr Crabb noted that the first and third respondents’ own submissions accept that a contract concerning the performance of the applicant’s work for MCT existed (at least for a short period of time). The contract was for one of service, not for services. Mr Crabb detailed the relevant authorities which have considered basic contract principles. A contract can be written or oral; implied by conduct or implied by law. The exercise is a question of fact based on the objective circumstances of the case. See: Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; [1986] HCA 1 (‘Stevens v Brodribb’) and Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139 (‘Global Plant Ltd’).
[69] Mr Crabb also cited Sappideen et al, Macken’s Law of Employment (Thomson Reuters, 7th ed, 2011) at 96, which sets out the elements of a contract as follows:
1. there must be an intention between the parties to create a legal relationship, the terms of which are enforceable;
2. there must be an offer by one party and its acceptance by the other;
3. the contract must be supported by valuable consideration;
4. the parties must be legally capable of making a contract;
5. the parties must genuinely consent to the terms of the contract; and
6. the contract must not be entered into for any purpose which is illegal.
[70] Mr Crabb also cited a number of authorities on the elements of a contract. See: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 and Damevski v Giudice [2003] FCAFC 252 (‘Damevski v Giudice’).
[71] Mr Crabb rejected the submission that there was no formal offer of employment by MCT or that if there had been, it would have been a signed Contract Employment Agreement. He said there was no evidence of the third respondent’s hiring practices and procedures and, in any event, a contract may still exist as a matter of law, without a written contract. This was not uncommon and a contract can be inferred by the conduct of the parties. It is clear the applicant attended the premises of the third respondent and was performing retail duties as directed by MCT Management. The third respondent employs other retail assistants and the applicant continued working every weekend for MCT, during which she took annual leave. The applicant was paid by MCT for the same work she had performed for the second respondent and it was legally obliged to do so.
[72] Mr Crabb cited further authorities on the intention to enter into a contractual relationship being inferred by the conduct of the parties, as viewed by a reasonable bystander. He submitted that a contract can be inferred by the conduct of the applicant and the first and third respondents and that the denial of such a relationship was not definitive; See: Damevski v Giudice.
[73] Mr Crabb dealt with the principles governing whether the applicant was an employee or a consultant/contractor; See: Stevens v Brodribb and Hollis v Vabu Pty Ltd (2001) CLR 21; [2001] HCA 44 (‘Hollis v Vabu’). He noted that the control factor, while still significant, is no longer the most significant factor in determining whether the person is an employee or a contractor. Here, the third respondent had complete control over the applicant’s work, where and how it was performed and the hours she worked. There was no labour hire arrangement and the applicant performed work pursuant to a contract of service.
[74] There was no evidence the applicant held herself out as a contractor for services to the ‘world at large’ or that she would not be recognised by outsiders as being separate to the business of the third respondent. The evidence was clear that there was a transfer of employment from the second respondent to the third respondent.
[75] Mr Crabb noted that there was no reason, let alone evidence, as to why reinstatement of the applicant would be inappropriate. Mr Crabb said that if the Commission found the applicant was not employed by the third respondent, it is an associated entity for the purposes of s 391 of the Act and reinstatement can be effected to Versatile Ceramics operating as a partnership of Mr Fahd and his father.
[76] In any event, Mr Fahd is the sole shareholder of both the third respondent and a proprietor of the fourth respondent. The onus was on the objectors to establish that there was no transfer of business. They operated out of the same premises and just because Mr Fahd chooses not to utilise the trading name, does not mean it is not a valuable asset. Its value was demonstrated by the fact Mr Fahd paid $30,000 for it.
[77] Mr Crabb further submitted that the applicant’s employment was terminated at the initiative of the third respondent when it decided it no longer required her services. It was of no consequence who sent the SMS text message, because given the history and structure of the Companies, the applicant was entitled to believe Mr Alex Fahd had the authority to terminate her employment.
[78] In summary, Mr Crabb submitted:
a) The applicant was protected from unfair dismissal for the purposes of the Act;
b) The applicant was unfairly dismissed;
c) There is no reason or evidence suggesting why reinstatement should be considered inappropriate;
d) The applicant should be reinstated to her position with the third respondent;
e) The Commission should order the continuity of the applicant’s employment;
f) There is no reason or evidence suggesting that had the applicant not been dismissed she would not have continued to work 7 hours on every Saturday and 5 hours work on every Sunday and paid in accordance with the relevant industrial award (the General Retail Industry Award 2010 [MA000004];
g) The Commission should order that the third respondent pay to the applicant remuneration lost, or likely ot have been lost, by her because of the dismissal. This amount can be calculated in accordance with the General Retail Industry Award 2010.
CONSIDERATION
Preliminary matters
[79] Before dealing with the two main jurisdictional objections, I note that s 396 of the Act relevantly requires the Commission to determine four preliminary threshold matters, one of which is directly referable to the questions of establishing the applicant’s true employer and whether the applicant was a person protected from unfair dismissal:
‘396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.’
[80] There is no dispute that:
i. the unfair dismissal application was made within the prescribed time of 14 days (now 21 days) (subsection (a) of s 396);
ii. the application of the Small Business Fair Dismissal Code was not argued in this case and is not relevant (subsection (c) of s 396);
iii. the applicant’s dismissal was not a case of genuine redundancy.
[81] Accordingly, it follows that subsection (b) of s 396 is the only jurisdictional issue in contest to the extent the Commission must determine whether the applicant was a person protected from unfair dismissal. The definition of this expression is found at s 382 as follows:
‘382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.’
[82] It is obvious that to fit within the definition of a person protected from unfair dismissal, the applicant must be both an employee and have completed the minimum employment period with her employer. s 384 is relevant in this context. I will come back to this section shortly.
Was the applicant a consultant/contractor or an employee?
[83] While the central objection in this matter concerns the identity of the true employer, an appropriate and logical starting point is to establish whether the applicant was an employee or a consultant/contractor. In my assessment, the answer to this question is more readily apparent than the question of the identity of the true employer and if the Commission finds that the applicant was not an employee, a finding on the other objection would be rendered nugatory.
Applicable tests
[84] In answering the first question, which will also answer the wider question of whether the applicant was a person protected from unfair dismissal within the meaning of s 396 of the Act, the applicant must be an employee for the purposes of s 13. That definition is as follows:
‘13 Meaning of national system employee
A national system employee is an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement.’
[85] There was no submission put that the first and third respondents are not national system employers as defined in s 14. What is disputed is that neither of them employed the applicant. To resolve this dispute, one must travel to the conventional, well known authorities which deal with the issue of whether a person is an employee or independent contractor.
[86] In Jiang Shen Cai t/a French Accent v Do Rozario [2011] FWAFB 8307, the Full Bench of FWA said at para [18]-[20]:
‘[18] We endorse the proposition in sub-paragraph (1) of the Abdalla summary, based on the High Court authorities, that:
“... the ultimate question will always be whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own. This question is answered by considering the terms of the contract and the totality of the relationship.” (the ultimate question)
[19] Sub-paragraph (5) of the summary in Abdalla should be read as nothing more than a restatement of the ultimate question, designed to bring the focus of consideration back to the ultimate question.
[20] A consideration of the nature of the work performed, the terms of the contract, and the so-called indicia must always be directed to the ultimate question. The leading case in this area is the decision of the High Court in Hollis v Vabu Pty Ltd.The most significant case since Hollis v Vabu is the decision of the Full Court of the Federal Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation (Roy Morgan). That case concerned an appeal against a decision of the Administrative Appeals Tribunal that interviewers engaged by Roy Morgan were “employees” either within the ordinary meaning of that word in s.12(1) of the Superannuation Guarantee Charge Act 1992 (SGC Act) or because they worked under a contract that was wholly or principally for their labour as specified in s.12(3) of that Act. The Full Court endorsed a passage from the leading judgment in the decision of the Victorian Court of Appeal in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue, which in turn had endorsed a passage from the judgment of Mummery J in Hall (Inspector of Taxes) v Lorimer which makes it clear that a consideration of the indicia:
“...is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”’
[87] The Full Bench then summarised in a lengthy passage the general law approach to distinguishing between employees and independent contractors. It said at para [20]:
‘[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:
(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important . However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
● Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.
Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”
● Whether the worker performs work for others (or has a genuine and practical entitlement to do so).
The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.
● Whether the worker has a separate place of work and or advertises his or her services to the world at large.
● Whether the worker provides and maintains significant tools or equipment.
Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.
● Whether the work can be delegated or subcontracted.
If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor 37. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.
● Whether the putative employer has the right to suspend or dismiss the person engaged.
● Whether the putative employer presents the worker to the world at large as an emanation of the business.
Typically, this will arise because the worker is required to wear the livery of the putative employer.
● Whether income tax is deducted from remuneration paid to the worker.
● Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.
Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.
● Whether the worker is provided with paid holidays or sick leave.
● Whether the work involves a profession, trade or distinct calling on the part of the person engaged.
Such persons tend to be engaged as independent contractors rather than as employees.
● Whether the worker creates goodwill or saleable assets in the course of his or her work.
● Whether the worker spends a significant portion of his remuneration on business expenses.
It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.
(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.
(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.’
[88] In my opinion, the following matters are relevant to establishing whether the applicant was an employee or a consultant/contractor:
a) The applicant commenced permanent part time employment with Versatile Ceramics on 9 October 1993 as a retail assistant under the prevailing retail award. Moreover, when applying for the job in 1993, it was for the position of sales assistant;
b) Mr Fahd’s own evidence included the applicant’s Employment Declaration Form and superannuation fund details;
c) Even Mr Fahd agreed that she was ‘working weekends at the various Versatile Ceramics showrooms that at their peak were located in many suburbs of Sydney’;
d) The applicant regularly worked seven hours on a Saturday and five hours on a Sunday. There was no evidence of any written contract of employment or letter of offer;
e) In early 2010, the applicant was transferred to work at the Versatile Ceramics showroom in Bankstown;
f) On 11 February 2012, the applicant was advised that the Bankstown store would be closed for a few months for renovation and that she was to work for MCT at Prospect during the renovations. She commenced work at MCT Prospect on 11 February 2012;
g) At MCT Prospect, the applicant was directed in the performance of her usual duties of a retail assistant by the Manager of MCT Prospect, Ms Tannous. At all times, she was under the supervision, control and direction of MCT Management. These were the same duties as she had performed at Versatile Ceramics;
h) The applicant’s request for annual leave in March 2012 was made and approved by MCT management and she returned for work at MCT Prospect from annual leave on 14 April 2012 at MCT’s direction;
i) Up until 27 April 2012, the applicant’s pay advices were from Versatile Ceramics. After that date, her pay advices came from MCT and a group certificate for the period 12/4/2012 to 30/6/2012 was signed and authorised by Marco Fahd on behalf of MCT. I do not accept the submission that this was a mistake by the Payroll Clerk. It seems to me that such an excuse was an afterthought to explain away the true state of the evidence. Moreover, the person who could give the best evidence in this matter was the Payroll Clerk himself. The first and third respondents chose not to call him to give evidence.
j) Mr Ishmael Molina, a Financial Controller, whose email address was [email protected], appeared to perform work for most of the Group’s associated entities. He was identified in a number of email exchanges as referring to the applicant as an employee and making comments about her Award and National Employment Standards (NES) entitlements. One exchange refers to sick leave claims of the applicant. I note that Mr Molina was also not called to give evidence in the case;
k) There was a dispute in 2006 with Versatile Ceramics staff, including the applicant, in respect to a reduction in the hours of work; and
l) The applicant was awarded a Certificate of Achievement Award in 1998 for a 22% increase in showroom sales for the first quarter - hardly something a Company would give to a consultant;
[89] At no time in the past 19 years, until shortly before these proceedings, was there any evidence that the applicant was a consultant/contractor - not a conversation, document, letter or file note. I consider the evidence overwhelmingly points in the opposite direction. I believe the various Tax Invoices which attempted to demonstrate the applicant was a consultant, were a convenient, last minute scramble to justify an otherwise untenable position.
[90] Lest there be any doubt, applying the Stevens v Brodribb principles to the facts and circumstances of this case, results in the same inevitable conclusion:
a) For 19 years, Management representatives of Versatile Ceramics, or its associated entities, exercised control over the applicant’s work, where, when and how it was performed;
b) The applicant did not perform work for anyone else and had no practical or intentional opportunity to do so;
c) The applicant always worked at one or other of Versatile Ceramics showrooms or its associated entities. She did not advertise her services to the ‘world at large’;
d) The applicant does not maintain any tools or equipment;
e) At no time could the applicant delegate or subcontract her work;
f) The employer had the right to dismiss the applicant and did so;
g) At all times, the applicant presented herself as an employee of the Versatile Ceramics Group of Companies;
h) Income tax was deducted from the applicant’s wages. She had no ABN and had never set out to establish herself as a business or company;
i) The applicant was paid a wage according to the hours she worked as opposed to by reference to the completion of a task or specific project;
j) The applicant was paid holidays, sick leave and enjoyed all of the conditions and entitlements under the prevailing retail award;
k) The work performed by the applicant did not involve a profession, trade or distinct calling;
l) The applicant created no goodwill or saleable assets from her work; and
m) The applicant did not spend anything on business expenses.
[91] Importantly in addition, there was no written contract between the applicant and Versatile Ceramics, the applicant and Mr Marco Fahd or the applicant and MCT. Indeed, the applicant had no idea her working arrangement was that of a consultant/contractor, having always believed and accepted she was a retail assistant. There was no consent to the terms of such an arrangement. See: Sappideen et al, Macken’s Law of Employment (Thomson Reuters, 7th ed, 2011) at 96. Further, there was no evidence that Mr Alex Fahd had ever operated a consultancy or labour hire business, let alone one which contracted out the applicant’s services. Mr Fahd claimed other persons were engaged on a consultancy basis, such as payroll and truck drivers. However, no evidence was produced of any such arrangements.
[92] In my view, this is not a case in which a balancing of the various factors which might point one way or the other is required. As stated in Stevens v Brodribb, the picture painted here is overwhelmingly one of an employee.
[93] Two of Mr Fahd’s particular submissions require comment at this point. Firstly, MCT purportedly had a rigorous ‘best practice’ policy in respect to processing new employees and their signing of a comprehensive ‘Contract Employment Agreement’. The chain of reasoning was developed that, because the applicant had not completed the process, or signed such an agreement, she was therefore not an employee of MCT. Even putting aside that there was no direct evidence of such a process or contracts, this was an absurd, counter-intuitive proposition. Moreover, it begs the question as to why it would be necessary for someone with 19 years experience in the same job with the same duties, to be required to undergo such a process?
[94] Secondly, Mr Fahd sought to take some issue with the applicant’s date of birth. He asserted that this allegation impacted on the applicant’s credit. I do not accept this submission and, in any event, it was completely irrelevant to the issues for determination by the Commission in this case. As to the subject of credit, I found the applicant to be a thoughtful, sincere witness whose evidence I found to be truthful, clear and entirely believable.
[95] Regrettably, one further comment is necessary about the first and third respondents’ approach to the applicant’s status. Mr Fahd seems to think that if he labels a person a consultant (even without telling them) or creates a false document to that affect, then as a matter of law, they are. With respect, Mr Fahd and/or his advisors are either incredibly stupid, incredibly naive or incredibly manipulative. At the risk of offence, I prefer to give Mr Fahd the benefit of the doubt. However, his simplistic approach lacks any credibility and is entirely consistent with his dismissive submissions concerning his legal obligations to the applicant.
[96] As a matter of fact and law, there is not a shadow of a doubt that at all relevant times, the applicant was a National System Employee, as defined. The first jurisdictional objection of the first and third respondent is dismissed.
The true employer of the applicant
[97] The second question which needs to be answered in this case is which entity was the applicant’s true employer. The answer to this question will also determine the merits of whether the applicant was unfairly dismissed.
[98] As I mentioned earlier, I do not apprehend that Mr Fahd or MCT deny that they are National System Employers within the meaning of ss 14 - 15 of the Act. Rather, they emphatically deny that they were the employer of the applicant and therefore no orders for reinstatement or otherwise, can be made against them. This is the gravamen of this case and, regrettably, where the complications begin. To get to the end result, it will be necessary to outline a brief history of events, attempt to disentangle a series of inter-company and family business arrangements and place the facts of this case within the particular context of the relevant legislative provisions dealing with the transferring of business. The question of the minimum employment period will naturally fall out of these considerations. I shall deal with these matters as follows:
Relevant statutory provisions
[99] s 383 of the Act provides a meaning of minimum employment period as follows:
‘383 Meaning of minimum employment period
The minimum employment period is:
(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:
(i) the time when the person is given notice of the dismissal;
(ii) immediately before the dismissal; or
(b) if the employer is a small business employer—one year ending at that time.’
[100] Period of employment is defined at s 384 as follows:
‘384 Period of employment
(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.
(2) However:
(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; and
(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and
(b) if:
(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and
(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and
(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;
the period of service with the old employer does not count towards the employee’s period of employment with the new employer.
[101] s 22 governs the meaning of ‘service’ and ‘continuous service’ including where there is a transfer of employment:
‘22 Meanings of service and continuous service
General meaning
(1) A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).
(2) The following periods do not count as service:
(a) any period of unauthorised absence;
(b) any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or
(ii) a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c) any other period of a kind prescribed by the regulations.
(3) An excluded period does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service.
(3A) Regulations made for the purposes of paragraph (2)(c) may prescribe different kinds of periods for the purposes of different provisions of this Act (other than provisions to which subsection (4) applies). If they do so, subsection (3) applies accordingly.
Meaning for Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2
(4) For the purposes of Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2:
(a) a period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include:
(i) any period of unauthorised absence; or
(ii) any other period of a kind prescribed by the regulations; and
(b) a period referred to in subparagraph (a)(i) or (ii) does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service; and
(c) subsections (1), (2) and (3) do not apply.
(4A) Regulations made for the purposes of subparagraph (4)(a)(ii) may prescribe different kinds of periods for the purposes of different provisions to which subsection (4) applies. If they do so, paragraph (4)(b) applies accordingly.
When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and
It should be noted that the trustee concluded that this transaction requires further investigation.
[112] The various entities referred to in this decision seem to operate as a Group of Companies. From documents tendered in evidence, it appears ‘Versatile Ceramics’ is the generalised name of the Group. These documents are:
a) A telephone directory under the bolded heading ‘Versatile Ceramics - Australia’s Largest Range of European Tiles’ lists contacts for MCT employees, Versatile Ceramics’ director (Alex Fahd) and others whose email addresses end in @versatileceramics.com.au, Marco Fahd as a director of MCT, Versatile Concepts, Absolute Tiling Solutions, WAC and other employees of Versatile Concepts. It details the Head Offices as 23 Rowood Rd, Prospect, where the Prospect Showroom is located and the mailing address as PO Box 947, Seven Hills, NSW 1730. Other showrooms being at Bankstown, North Parramatta, Norwest (Bella Vista) and the Smithfield Warehouse.
b) There are memos of Staff General Meetings to: ‘All staff at Versatile Ceramics, More Ceramic Tiles, Versatile Concepts, Absolute Tiling and Versatile Tiling’. The applicant was given these memos.
c) A direction concerning the 2011 Closing Christmas Break was issued which said:’Jan 9th 2012 Monday - All back to work (Wholesale, Absolute, MCT, Ceramic and Office Staff).’
d) A further memo on MCT letterhead directed to all staff at Absolute Tiling Solutions, More Ceramic Tiles, Versatile Ceramics and Versatile Concepts, advised of a ‘must attend’ General Meeting on 3 November 2010.
e) There was evidence of the interchange of employees between the various entities.
[113] To suggest that the various entities did not act, in fact and reality, as a Group of Companies is nonsense and is soundly rejected. I believe the applicant’s transfer to Prestons while the Bankstown showroom was being renovated was a usual and unremarkable transfer of staff between the Group of Companies.
The father and son arrangement
[114] In my judgement, there can be no doubt that the document, signed and executed on 7 May 2012, in which Marco Fahd purchased the name ‘Versatile Ceramics’ from his father for $30,000, was an ‘arrangement’ for the purposes of s 311 of the Act. Indeed, it purports to release one party’s debts from the other party and creates a plain, binding ‘arrangement’ between them. Where there is a payment of $30,000 for a business name, such an ‘arrangement’ clearly demonstrates that the name has a value. Therefore the name is an asset of the former employer transferred to the new employer. Whether, as Mr Fahd contended, it has some sentimental value only, is irrelevant.
[115] It must be remembered that the applicant’s services were not terminated for another month after the execution of the arrangement. It follows that as an employee of Versatile Ceramics, the applicant’s employment and years of service were also transferred to MCT on 7 May 2012, within the meaning of s 311 of the Act.
[116] As liability for the applicant’s accrued entitlements were transferred to MCT in May 2012, and as she was not dismissed or otherwise had her services terminated at that point by Versatile Ceramics, the applicants’ period of employment for the purposes of s 384 of the Act was over 19 years. The applicant plainly meets the minimum employment periods, as defined, which confirm that she was a person protected from unfair dismissal.
[117] Even putting aside the value of the business name, I am deeply troubled by the false evidence of Mr Marco Fahd that Versatile Ceramics had no other assets which he purchased at the time. After the conclusion of the hearing, I received a report dated 22 March 2013 from Accountants - HLB Mann Judd, appointed trustee of the bankrupt estate of Alex George Fahd on 2 November 2012. The report notes as follows:
‘[A]ll inventory and business name were sold to More Ceramic Tiles Pty Limted, a company of which, Marco Fahd, the bankrupt’s son is the sole director and shareholder in May 2012 for a consideration of $508,500 (including GST).’
[118] Given the seriousness of this disclosure and the requirement on the Commission to afford procedural fairness; See: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Construction, Forestry, Mining and Energy Union v Abigroup Contractors Pty Ltd [2013] FWCFB 453 citing R v Commonwealth Conciliation and Arbitrataion Commission; Ex parte Angliss Group (1969) 122 CLR 546, I invited Mr Marco Fahd to respond. He did so as follow:
‘The transaction that transpired between Alex Fahd \ Marco Fahd was a commercial transaction purely, a transaction to purchase the stock and that Mr Kaye advises she continued to sell “Versatile Ceramic” stock has no relevance , for the record this stock was sold via the wholesale sector, how Ms Kaye has the ability to identify this stock and distinguish the difference is far beyond me.
In relation to Alex Fahd not continuing to trade has no relevance to this case nor the fact that we were made aware that he was not trading, as stated through this case I purchased the business name and made a offer on stock as at the time he had offers of others, this stock was sellable stock and market value was paid. This decision was a commercial decision on behalf of MCT.’
[119] Later, I received a further document from the applicant, being a copy of the Personal Details filed by Mr Alex Fahd, or otherwise on his behalf, in accordance with the requirements of the Bankruptcy Act 1966 (Cth). At Part E - Business Details, the following questions and answers were recorded:
What is the nature of this business? | Import + Sales of Tiles | |
Partner’s name (if any) | 1. Ibtisam Fahd | 2. |
Partner’s Address | [address supplied] | |
41D | Is there a written partnership agreement? | No | Yes | |
41E | When did the business start operating? | Date: 1979 | ||
41F | Has the business ceased operating? | No | Yes | Date ceased 07/05/2012 |
41G | Have you sold any business assets or have you sold the business as a going concern in the last two years? | No | Yes please give details | |
Business Name/Asset Description | Date Sold | Name of Purchaser | Amount Received |
Total Stock | April/May 2012 | More Ceramic Tiles | $478,500 (INC GST) |
Business Name | 07/05/2012 | More Ceramic Tiles | $30,000 (INC GST) |
The document was declared to be signed by Mr Alex Fahd on 19 December 2012. Again, as a matter of natural justice, I invited Mr Fahd to respond.
[120] Rather than responding directly to this new information, Mr Kiprovski, presumably on Mr Fahd’s instructions, filed four documents, three were documents of twenty pages each, which were largely repetitive of each other, the other was a copy of submissions which had earlier been filed in accordance with the directions of the Commission. All of these simply repeated all of the first and third respondents’ earlier claims and submissions. They were of no further assistance to the Commission.
[121] At no time during the proceedings, or in any earlier communications with the Commission, did Mr Fahd or anyone else on his behalf, notably Mr Kiprovski, mention, let alone explain the purchase of stock and other assets for $508,500 (valued at $6.9 million in or about October 2011) from his father at the same time he purchased the business name. I consider Mr Fahd deliberately and wilfully withheld this information from the Commission in order to mislead me and have the Commission draw erroneous conclusions based on omitted facts. At PN 673 - 675, in answers to questions from me, the following exchange occurred:
‘Do you know if it has any assets?---No, no. We just purchased the business. I didn’t do a search or anything. We just purchased the business name, We weren’t buying a going concern because I was using it for a completely different purpose. He does retail with that name. I was launching it to architectural clients, so specifiers rather than mums and dads walking into a showroom.
So you paid $30,000 for a name only, which had no assets?---It meant something to me, your Honour. It was 1977, you know.’
[122] I regard this as an extremely serious matter. It calls into question the credibility of Mr Fahd and his advisor Mr Kiprovski to such an extent that I seriously doubt I can give any credibility to his evidence or submissions. In any event, applying the principles of the Full Bench in Lucas v Hillie, Mr Marco Fahd owned and had the beneficial use of most of the tangible assets of Versatile Ceramics in accordance with an ‘arrangement’ between the owner of Versatile Ceramics and himself as the sole director and shareholder of MCT. It follows that there was a ‘transfer of business’ on or about May 2012 for the relevant purposes of s 311(3) of the Act.
[123] It may also be that the applicant, as an employee of Versatile Ceramics, at the time of her dismissal, was an employee of both entities. Eitherway, Mr Marco Fahd is the sole owner and shareholder of both businesses. He was the true employer of the applicant. Both the first and third respondents are jointly and severally liable for any orders which may be made in this matter. The second jurisdictional objection of the first and third respondents is dismissed.
[124] Even if I be wrong about this finding, I am also well satisfied (as was the trustee of the bankrupt Mr Alex Fahd) that MCT is, and was, an associated entity of Versatile Ceramics for the purposes of s 50AAA of the Corporations Act 2001 (Cth). The Dictionary to the Fair Work Act ascribes the definition to the same meaning below. That definition in the Corporations Act is as follows:
‘50AAA Associated entities
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.’
[125] At the foot of page 4, the Trustees report, one finds this reference:
‘The current known ‘Associated Entities’ and ‘Related Entities’ of the bankrupt as defined in the [Corporations] Act are as follows:
- Stateland Developments Pty Limited;
- Versatile Home Centre Pty Limited;
- More Ceramic Tiles Pty Limited;
- Styleland Developments Pty Limited as Trustee of the Fahd Family Trust;
- Fahd Superannuation Fund;
- Memfahd Pty Limited AFT Fahd Holding Family Trust.’
[126] There was other corroborative evidence that not only was MCT an associated entity of the old employer, but it was part of a Group of Companies which, from time to time:
- shared directors and shareholders;
- shared premises and business addresses;
- seamlessly exchanged staff between the various entities;
- staff of various associated entities were required to attend broader Group Company meetings;
- shared managers, advisors and consultants.
On either construction, I do not see how MCT can escape the clear meaning of s 311. It is impossible to deny that there had been a transfer of business in May 2012.
[127] It is incontrovertible that all of the entities had been the creation of Mr Alex Fahd as a means of providing his offspring with their own niche part of the business of trading in wall and floor tiles and related products.
[128] Even if Mr Alex Fahd had purportedly dismissed the applicant via SMS message at the relevant time, he may have had no legal authority to do so. The mischaracterisation of the applicant’s employment relationship by Mr Alex Fahd or anyone else does not alter the true legal position. At the relevant time, he seems to neither have owned or managed an enterprise trading as Versatile Ceramics. Nevertheless, there is a glaring inconsistency in Mr Fahd’s evidence as to whether he was aware of, or had any knowledge of the applicant’s termination. In his written statement, he claimed that once he had determined that MCT no longer required the applicant’s consultancy services, his father was advised. In answer to a question from me following cross-examination, Mr Fahd claimed that it had not been confirmed with him that the applicant had been dismissed. Rather:
‘All of a sudden I got word there was no longer Ms Kaye available and there was a Fair Work Australia claim against me. I did not dismiss her.’
[129] I do not consider this to be an inadvertent slip or lapse of memory. I am satisfied that Mr Fahd had full knowledge of, and had made the decision to terminate the applicant’s services. To the extent that he claims otherwise, he demonstrates a lack of credibility.
[130] After 19 years of service, presumably without blemish, the applicant was terminated without notice and without the payment of any accrued entitlements. This should be matter of some interest for the Fair Work Ombudsman (FWO). Having assumed the business of Versatile Ceramics and its assets in May 2012 through a transfer of business, Mr Marco Fahd became responsible as a matter of law, for the accrued entitlements of the applicant.
[131] Mr Fahd believed he could simply create an arrangement with his father which would release him from his father’s debts and liabilities. It is not quite as simple as that. Fortunately for the applicant, the labour laws of Australia will not allow her to be left in a never-never world where no one is responsible for the appallingly unfair treatment she experienced by her dismissal. Again, Mr Fahd (or one of his advisors) seems to think he can do whatever he likes to quarantine himself from his legal obligations under the Act. To the extent that Mr Marco Fahd could distance himself completely from the transfer of business provisions of the Act by the purported releases in his arrangement with his father, he is very much mistaken. Further, I note that the trustee of the bankrupt Mr Alex Fahd went so far as to describe this transaction as one which required further investigation. Accordingly, I find that Mr Marco Fahd and MCT are legally bound as the respondents to these proceedings.
Was the applicant’s dismissal unfair?
[132] At para [5] of this decision, I assumed, from the information in the application that if the applicant was an employee, it was difficult to imagine a more grossly unfair dismissal. In my view, the severity and magnitude of the unfairness in this case is so manifest that it must fall within a category of one of the worst unfair dismissals on record.
[133] While none of the respondents addressed the question of whether the dismissal was unfair (because the applicant’s justifiable claims were brushed aside on the grounds she was a consultant), I do not believe I would be doing any of the respondents an injustice by not seeking their views on the question as to whether the applicant’s dismissal was unfair. This is so because there could be little or nothing to say which could defend the manifestly indefensible.
[134] Nevertheless, there is a statutory obligation on the Commission to consider whether the applicant’s dismissal was ‘harsh, unreasonable or unjust’ within the meaning of the criteria outlined in s 387 of the Act as follows:
‘387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.’
[135] The well known passage from Byrne & Frew v Australian Airlines Ltd [1995] HCA 24 (‘Byrne’) is relevant to the consideration of whether a dismissal is ‘harsh, unjust or unreasonable.’ Their Honours McHugh and Gummow JJ said at para [128]:
‘It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted’.
[136] The meaning of ‘valid reason’ in s 387(a) is drawn from the judgment of North Jin Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 (‘Selvachandran’). This meaning has been applied by members of the Commission and its predecessors for many years and is as folows:
‘In its context in s 170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly.’
Procedural fairness
[137] Subsections (b) - (e) of s 387 of the Act might be broadly characterised as issues relevant to whether a dismissed employee was afforded procedural fairness. It is trite to observe that, even if there was a valid reason for an employee’s dismissal (which is not the case here), the dismissal may still be held to be unfair, if the employee was not afforded procedural fairness. This has been a long held industrial principle adopted and applied by this Commission, its predecessors, other Courts, industrial tribunals and the High Court. In the High Court case of Byrne, supra above, their Honours McHugh and Gummow JJ said at para [130]:
‘130. That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable (168). But the question under cl 11(a) is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking to the first issue before there is seen to be any need to enter upon the second.’
[138] In Wadey v YMCA Canberra 1996 IRCA 568 (‘Wadey’), Moore J made it clear that an employer cannot merely pay ‘lip service’ to giving an employee an opportunity to respond to allegations concerning the employee’s conduct. His Honour said:
‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’
[139] I shall now deal with each of the matters in s 387 in turn.
a) Not only was there no valid reason for the applicant’s dismissal, there was no reason at all, save for the spurious one; that ‘your services are not required’. In these circumstances, the epithet described in Selvachandran, supra above as the reason being capricious and fanciful has a particular resonance in this case. There can not be a skerrick of doubt that there was no valid reason for the applicant’s dismissal.
b) As there was no reason given, it is axiomatic that she was never notified of any reason.
c) Similarly, she could not respond to something of which she had no knowledge.
d) Obviously, there was no opportunity for the applicant to have a support person present for non-existent meetings.
e) There was no evidence of any unsatisfactory performance or conduct issues relevant to the applicant. Indeed, the evidence is that she was a loyal, hardworking employee, who had even won awards for her sales performance.
f) and g) The respondents do not operate a small business and have long experience in the industry. The respondent is part of a wider Group of Companies with specific advisors and consultants. It beggars belief that it would treat any employee in the manner it did, let alone one of 19 years standing.
h) The applicant was dismissed without any notice, for no reason and with no warning. Moreover, the means of communicating her dismissal, by a brief SMS message was brutal, gutless and outrageous.
[140] In this last respect, I respectfully agree with the comments of Cambridge C in Sokolovic v Modestie Fashion Australia Pty Ltd (ABN: 67144920838) [2011] FWA 3063, where the Commissioner said at paras [56]-[61]:
‘Notification of reason for dismissal
[56] In this instance the notification of the reasons for dismissal was made by text message. I believe that this is an inappropriate means for notification of dismissal or reason(s) for dismissal. The employer suggested that text messaging was the most commonly used form of communication between the applicant and Ms Sarkis. There is of course no comparison that can be made between day to day communication about a variety of work and non-work-related matters, and advice of termination of employment.
[57] Mr Barwick said that it was “pretty appalling for an employee to be terminated by SMS”. In the absence of any compelling reason why dismissal would need to be communicated by any means other than direct face-to-face conversation, I am inclined to concur with the sentiments of Mr Barwick.
Opportunity to respond to any reason related to capacity or conduct
[58] The implementation of dismissal by way of text message clearly deprived the applicant of any opportunity to respond, offer explanation or defence about any of the issues that may have contributed to the decision to dismiss.
[59] It is difficult to accept that it could be reasonable or just for any employee to be dismissed without a fundamental process involving an opportunity to put a case, face-to-face, to the decision maker. The requirement for such a process is primarily derived from the notions of natural justice. The absence of such a process can also infer a lack of courage to face the employee.
[60] If the decision maker is not prepared to deliver the message themselves, face-to-face, he or she risks creating the appearance that they do not have the courage of their convictions. The basis for the decision is immediately opened to challenge upon the inference that the decision maker did not have, in all good conscience, sufficient confidence in the decision to act with any conviction. Consequently if dismissal is implemented by any means other than face-to-face communication both the legal and ethical basis for the decision to dismiss is likely to face strong and successful challenge.
[61] It must be recognised that there are some circumstances where a decision to dismiss might be justifiably implemented without the need to provide the employee with a face-to-face opportunity to be heard. Such circumstances would usually be confined to instances where an employee committed gross and wilful misconduct that was admitted or undeniably existent and no possible explanation or mitigation could alter the decision. Other circumstances could be contemplated where face-to-face contact may involve some genuine prospect of aggression or violence. These would be limited, unusual situations and clearly not apposite in this case.’
[141] As will be apparent from the above, under each of the criterion in s 387 of the Act, the Commission has made adverse findings against the respondent. I cannot recall a case where all of the factors in s 387 have so tellingly weighed against an employer. Accordingly, the Commission has no hesitation in finding that the applicant’s dismissal on 7 June 2012 was ‘harsh, unreasonable and unjust’, both substantively and procedurally, within the meaning of s 387 of the Act.
FINDINGS
[142] In summary, I make the following findings:
1. The applicant was a national system employee and a person protected from unfair dismissal. She was not a consultant or contractor.
2. The applicant was dismissed as an employee on 7 June 2012, after 19 years of unblemished service.
3. There was an ‘arrangement’ to transfer the business name and assets from Mr Alex Fahd to Mr Marco Fahd and MCT in May 2012. At that time, Mr Marco Fahd was the sole director and shareholder of MCT. He then became the registered proprietor of the business name Versatile Ceramics. MCT became the owner of the inventory and assets of Mr Alex Fahd. This was an ‘arrangement’ as contemplated by s 311 of the Act in respect to transfer of business.
4. The joint respondents in these proceedings are Mr Marco Fahd and More Ceramic Tiles Pty Ltd through the abovementioned arrangements with Mr Alex Fahd.
5. The applicant’s dismissal was harsh, unjust and unreasonable, both substantively and procedurally within the meaning of s 387 of the Act.
6. The applicant is entitled to a remedy for her unfair dismissal, pursuant to s 392 of the Act.
REMEDY
[143] The applicant seeks reinstatement to her weekend part time hours, Of course, reinstatement is the primary remedy under Ch 3 - Part 3-2 of the Act. See: Holcim (Australia) Pty Ltd v Serafini [2011] FWAFB 7794 and specifically, s s381(1)(c). This decision has dealt primarily with jurisdictional objections and these matters have now been determined. Understandably, the first and third respondents have made no submissions as to remedy. As a matter of natural justice, they should be afforded an opportunity to put such submissions as they see fit on the question of remedy. I shall issue directions to provide for this opportunity contemporaneously with this decision. Despite these directions, I do not discount the possibility that further negotiations between the parties might resolve this application. Such an outcome is to be encouraged.
DEPUTY PRESIDENT
Appearances:
A Crabb, Solicitor for the Applicant
M Fahd, First respondent in person and for the third respondent.
No appearance for the second and fourth respondent
Hearing details:
2013:
Sydney.
7 February
Final written submissions:
Applicant - 21 February, 14 March 2013
Respondent - 7 March 2013
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