O'Dwyer and Secretary, Department of Employment

[2024] AATA 1825

O'Dwyer and Secretary, Department of Employment [2024] AATA 1825 (18 June 2024)

Division:GENERAL DIVISION

File Number(s):      2020/3284

Re:O'Dwyer

APPLICANT

AndSecretary, Department of Employment

RESPONDENT

DECISION

Tribunal:Deputy President B W Rayment OAM KC

Date:18 June 2024

Place:Sydney

The decision under review is set aside and remitted to the Secretary with a finding that the applicant is not an ‘excluded employee’ within the meaning of subsection 556(2) of the Corporations Act 2001 (Cth)

..........................[SGD]..............................................

Deputy President B W Rayment OAM KC

CATCHWORDS

FAIR ENTITLEMENTS GUARANTEE – whether applicant entitled to a FEG advance – whether applicant an excluded employee – whether company is the true employer of the applicant – whether applicant a relative of an employee/director – Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd applied – decision under review set aside and remitted

LEGISLATION

Corporations Act 2001 (Cth)

Fair Entitlements Guarantee Act 2012 (Cth)

CASES

Construction Forestry Maritime Mining and Energy Ltd v Personnel Contracting Pty Ltd Pty Ltd [2022] HCA 1

EFEX Group Pty Ltd v Bennett [2024] FCAFC 35

Re Plutus Payroll Australia Pty Ltd (in liq) [2019] NSWSC 1171

Revill v John Holland Group Pty Ltd [2022] FCAFC 179

REASONS FOR DECISION

Deputy President B W Rayment OAM KC

18 June 2024

1. This review was heard before the Tribunal for a second time following the matter being remitted by Goodman J on a s.44 appeal heard by his Honour following an earlier decision of the Tribunal differently constituted. The reasons of Goodman J are reported as Secretary, Attorney General’s Department v O’Dwyer [2022] FCA 1183.

2. Evidence was called before me afresh, and on this occasion the Tribunal heard evidence from three of the O’Dwyer brothers: William O’Dwyer who was the managing director of the company thought on the first review to be the employer of the applicant, Raylan Property Services Pty Ltd (RPS), and other companies in the group; Mr Brian O’Dwyer who was appointed as a director of RPS and who, in the relevant period indicated by s.556 of the Corporations Act, 2001, was held in the Tribunal not to be an employee of RPS at that time; and the applicant, who was not a director of any company in the group.  The evidence called before the Tribunal as presently constituted suggested that in fact the applicant may have been employed by another company in the group, Raylan Property Care Pty Limited (RPC), of which Mr Brian O’Dwyer was never a director in the relevant period. Throughout, the respondent accepted that, although Mr William O’Dwyer was a director of all companies in the group, he was not an employee of any of them. As will appear, there was in fact a fourth O’Dwyer brother Mr Allen O’Dwyer, to whom the applicant reported in his work for RPC.  Mr Allen O’Dwyer was also not a director of RPC or any other company in the group. His work title was that he was the manager of RPC.

3. Section 11 of the Fair Entitlements Guarantee Act (the FEG Act) under which the applicant claimed against the respondent, which administers that Act, incorporates by reference s.556 of the Corporations Act and provides in substance that a person who is held to be an excluded employee under s.556 cannot claim under the FEG Act. That is the ultimate question on this review, and it raises two questions: was a director of RPS, Mr Brian O’Dwyer both a director and an employee of that company during the relevant period of 12 months, and was RPS the company which employed the applicant. If RPC was the true employer, then even though RPS was his employer of record, to use terms which are appropriate to authorities concerning s.556 of the Corporations Act, then the applicant is not an excluded employee. The respondent is liable under the FEG Act whether RPS or RPC was the applicant’s employer.

4. The applicant is a self-represented layman without legal training. The respondent was represented by Mr Parkin of Counsel.

5. It is clear on the authorities that the Tribunal is to act on the evidence before it, not on the evidence before the decision-maker, and I proceed on that basis. It is the reviewable decision which is under review, not the reasons given by the respondent for its decision. Despite the applicant having nominated, on his application form, RPS as his employer for the relevant period, it was, in my opinion, open to the decision-maker whose decision is under review to conclude that the applicant was not employed by RPS. So, if the decision-maker was satisfied of that fact, it would have concluded that the applicant was not an excluded employee, and would not have rejected his claim on that basis.

6. I next deal with each of the two questions to which I have referred. Only the first question was decided by the earlier Tribunal.

   WAS MR BRIAN O’DWYER AN EMPLOYEE OF RPS AT THE RELEVANT TIME, BEARING IN MIND THAT HE WAS APPOINTED AS A DIRECTOR AT THAT TIME? 

7. A number of irregular or curious facts affect that matter.  First, he did not receive a wage. No PAYG deductions were made from his receipts. Nor did he receive superannuation or long service leave or even perhaps annual leave.  To that extent the arrangements were to his disadvantage, as a reasonable person in his position would have understood. Instead, his emoluments arose from a conversation between him and Mr William O’Dwyer. He was given, I understand for the first time, a shareholding in RPS, and the weekly payments to him were characterised as advances against dividends to be declared on his shares. Also, he continued after the conversation between him and William to sell as a commissioned agent of RPS and he paid tax as an independent contractor for commission he received. Once, he was only a commissioned agent for RPS and there was then no suggestion that he was employed by RPS, and he declared his commissions from sales as income in the ordinary sense. As to dividends, correspondence suggests to me that the dividends ultimately declared by the company were, in some way, fully franked, so his rate of tax was the company rate. The net amount, that is, after the fully franked “advance” of dividend, was what he was paid weekly or fortnightly, and he paid income tax only on any commissions received. I gather that his tax accountant was an in-house accountant of RPS.  He has not, as I gathered, complained about the absence of superannuation or long service leave. If he were an employee, he would have had those rights.

8. On the other hand, he reported to his brother William and acted on his instructions in the things he did for RPS. He acted as a senior executive of RPS.  He was designated and notified to ASIC as a director of RPS and signed bank documents in that capacity, but in fact he never attended a meeting of directors.

9. There is no onus in this kind of review and the circumstances I have described do not satisfy me on the balance of probabilities that he was an employee of RPS.  He had no written or formal contract, and I have heard the oral evidence of William (who gave evidence on summons from prison) and Mr Brian O’Dwyer himself. In reaching that state of non-satisfaction, I take into account what was said by the High Court in Construction Forestry Maritime Mining and Energy Ltd v Personnel Contracting Pty Ltd Pty Ltd [2022] HCA 1; (2022) 96 ALJR 144.

10. One thing seems to be clear about how reasonable men in the positions of William and Brian O’Dwyer would act.  The aim of the unusual arrangements made seems to have been not to make Brian an employee.  That operated to the disadvantage of Brian O’Dwyer. On the other hand, he became for the first time a shareholder in RPS. 

11. In making an evaluative decision about their relationship in all those circumstances, I conclude, on the balance of probabilities, that Mr Brian O’Dwyer did not become an employee of RPS but rather simply became a shareholder, and was to be paid, and was paid, amounts which he and the company treated as advances against dividends.

12. In some respects, the conclusion at which I have arrived is similar to the decision of the full Court to which Mr Parkin referred the Tribunal in EFEX Group Pty Ltd v Bennett [2024] FCAFC 35.

    WAS THE APPLICANT AN EMPLOYEE OF RPS?

13. The history of his employment is that he had, originally, a formal service agreement with RPS in 2010.  At that time, he intended to work for RPS as a property manager under the service agreement, which is at T5 on page 306 and following of the T documents.  However, according to his evidence, within approximately one month of him having begun working at RPS under the service agreement, his intentions changed, stating at Tr 100-101, that he (at first) wanted to train as a property manager but “I couldn’t get my head around the computer or anything like that, so (I went) straight to the maintenance department”. The applicant subsequently ceased to work for RPS and in effect started to work for Raylan Property Care (RPC). There had been a change in the Raylan Property Services Group when a new company, Raylan Property Care Pty Ltd, was established in which only William O’Dwyer was a director. The applicant decided, as I understand it, to work for RPC doing maintenance work. Persons working for the group as maintenance and construction workers were collected beneath the umbrella or RPC, all being persons with construction or maintenance experience.  The applicant was one of those persons and so was Mr Allen O’Dwyer.  So, the applicant became a de facto worker for Raylan Property Care Pty Ltd, but continued to receive a salary from RPS throughout.  Within RPC, he reported not to any executives of RPS, but to his brother Allen, who was called the manager of RPC; he was not controlled by RPS but by PRC. When he gave evidence, he said that he had recently checked his records and found that his pay slips had the name of RPS on them.  Obviously, he did not have any objection to that because, even if he noticed it at the time, he knew it was part of the group which employed him. RPC functioned, in effect, as a collection point for construction and maintenance personnel.

14. The Full Court of the Federal Court decided a case which refers to relevant authority, Revill v John Holland Group Pty Ltd [2022] FCAFC 179 (Bromwich, Banks-Smith and Feutrill JJ). Feutrill J delivered reasons with which the other justices agreed. At [141]-[155] Feutrill J said:

15. Feutrill J delivered reasons with which the other justices agreed. At [141]-[155] Feutrill J said:

    141 Branded Media Holdings was a decision of Black J on an application by the liquidators of Branded Media Holdings and deed administrators of Brand New Media Pty Ltd seeking directions under s 90-15 of the Insolvency Practice Schedule (Corporations), or alternatively s 479(3) of the Corporations Act 2001 (Cth) or in the Court's inherent jurisdiction. The directions raised the question of the identity of the employer of specified employees within the Branded Media group. The liquidators, alternatively liquidators and deed administrators, sought orders to the effect that they were justified in determining that the specified employees were employed by Branded Media Holdings or that they were employed by BNM. The liquidators' primary position was that Branded Media Holdings was the employer, although it was recognised that there was a case for alternative characterisation of BNM as the employer. Black J made a direction that the liquidators and deed administrators were justified in determining that the employer of the specified employees was BNM.

    142 The decision of Black J proceeded on 56 assumptions set out at [5] of his Honour's reasons for decision. The application also proceeded on affidavit evidence described in [7]-[17] of his Honour's reasons for decision. Black J referred to and had regard to other decisions in which the question of whether a company was the employer of particular employees was considered for the purposes of s 556 of the Corporations Act. Two of the main decisions considered were Gothard (recs and mgrs of AFG Pty Ltd (in liq) v Davey [2010] FCA 1163; (2010) 80 ACSR 56 and Re Plutus Payroll Australia Pty Ltd (in liq) [2019] NSWSC 1171; (2019) 139 ACSR 536.

    143 Black J then considered the assumptions and evidence before him and determined that BNM rather than Branded Media Holdings was a true employer of the specified employees. In reaching that conclusion Black J said (at [31]):

    As I have noted in addressing the parties’ submissions, a structure by which Holdings was the employing entity, where it had no assets or revenue from which it could meet employees’ entitlements, and did not charge for its services, would have had no intelligible business purposes, or at least no proper purpose. The documentation of the relationship is consistent with Holdings being an “employer of record” and is less significant in identifying the true employer than the fact BNM incurred the costs of paying employees for entities across the group and on-charged other subsidiaries in respect of those costs. The question of direction or control is, at best, neutral where the issue arises in respect of a corporate group; and those said to have exercised that control were either employed by BNM (in the case of Mr Smith) or otherwise and involvements with both Holdings and BNM in different capacities. For these reasons, and adopting substantially the same reasons as was adopted in Gothard, it seems to me that BNM rather than Holdings was the trued employer of the Specified Employees.

    144. In Gothard v Davey, Edmonds J said (at [52]):

    Unsurprisingly, the outcome in cases which have been concerned with identifying an employer of a person or group of persons from two or more possibilities, whether from within the same group of companies or otherwise, has turned on their own facts and, in consequence, the case law in this area is of limited assistance. Nevertheless, it is possible to discern certain general principles that the courts have applied in the identification process. The courts have adopted the position that in undertaking this exercise, they are entitled to take a wide view of the putative relationship, beyond the terms of the contractual documentation, to examine how the parties conducted themselves in practice and whether, where there is contractual documentation, the reality of the situation accords with the terms of that documentation or whether it points to another entity being the employer.

    145. After setting out various cases discussing the general principles Edmonds J then said (at [60]):

    Aspects of the practical realities of the relationship which have been considered relevant in the cases referred to above, include a consideration of the entity which:

    (a) had practical and legal control and direction of the employees;

    (b) made decisions about hiring;

    (c) made decisions about disciplinary issues;

    (d) made decisions about the level of remuneration;

    (e) actually paid remuneration;

    (f) communicated with employees about leave;

    (g) made decisions about termination of employment.

    146. Black J also considered the general principles in Re Plutus where he said (at [21]):

    In Australian Insurance Employees Union v WP Insurance Services Pty Ltd (1982) 42 ALR 598 at 606, the fact that a person’s salary was paid by a particular company and the tax group certificates issued to her showed that company as her employee did not establish that that company was her employer. In Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd [1998] FCA 1465, a first company was held to be the employer, notwithstanding that a second company’s name was shown on payslips and group certificates, where the first company made the employee’s services available to the second company on condition that it pay their wages and attend to relevant tax deductions. In Re C&T Grinter Transport Services Pty Ltd (in liq) [2004] FCA 1148 at [20], Finn J pointed to several considerations that were relevant to identifying which of two or more possible entities was the employing company and noted, inter alia, that the totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment of that matter and that documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship. His Honour also emphasised that, in determining the identity of a disputed employer, the Court is entitled to consider “the reality of purported contractual arrangements”; that conversations and conduct at the time of the alleged engagement of the employee is of considerable significance; and the employees’ beliefs as to the identity of their employer is admissible and is entitled to weight.

    147. These cases are authority for the proposition, at least insofar as s 556 of the Corporations Act is concerned, that the employer of record may not be the employer for the purposes of s 556 and the Court will look to the 'practical realities' to determine which of two or more possible entities is the employer of an employee. In so doing the Court will have regard to the factors referred to by Edmonds J in Gothard v Davey at [60].

    148. Burswood Catering concerned an appeal against the Western Australian Industrial Relations Commission in Court Session by which the Commission in Court Session agreed to issue an award to cover the employees of Burswood Catering and Entertainment. The award terms were substantially similar to the terms of an agreement between the relevant union and Burswood Resort (Management) Ltd registered in the Western Australian Industrial Relations Commission (2001 agreement). The evidence demonstrated that before incorporation of BCE staff employed at Burswood Casino who worked in the food and beverage and bar operations were employed by BRML. BRML and the relevant union were involved in a number of industrial disputes which ultimately led to the 2001 agreement. That agreement provided the employees of BRML with wages and conditions that were in excess of those normally applicable to workers in the same industry governed by other applicable awards. BCE was incorporated less than a month after the 2001 agreement was made.

    149. The Commission in Court Session made findings, in effect, that BCE was not a catering contractor distinct from the Burswood group of companies. The decision to have BCE employ staff to do work previously performed by employees of BRML within the resort merely reduced the terms and conditions of employment payable for that work. Burswood Limited was effectively contracting to itself. These matters caused an inequity. The inequity resulted in an avoidance of the 2001 agreement and BCE's employees receiving entitlements less than those applicable under the 2001 agreement albeit equivalent to those under the award otherwise applicable. The Commission in Court Session made a new award for BCE’s employees on terms equivalent to the 2001 agreement. BCE appealed to the Full Court of the Supreme Court of Western Australia.

    150. One of the grounds for the Commission in Court Session reaching the conclusion that a new award should be made was that the corporate veil should be lifted and that BCE should be treated as an agent of BRML as principal. The Commission in Court Session had considered the principles relating to lift a corporate veil. These are set out in Burswood Catering at [34]-[44] in which Scott J (Parker and Hasluck JJ agreeing) said that the Commission in Court Session was not in error in looking behind the corporate veil and determining that BCE was an agent of BRML. The principles were that courts and tribunals are reluctant to lift the corporate veil but will do so in three circumstances:

    (a) when a particular law requires it to be done;

    (b) when it can be established that the company is an agent of its controllers;

    (c) when the court (or tribunal) is satisfied that the company has been created as a mere façade or shame to conceal the true facts.

    As to agency, a number of factors may be relevant such as: are profits treated as profits of the controller (putative principal); are the persons conducting the business appointed by the controller; is the controller the ‘head and brain’ of the business; does the controller govern the business venture, decide what should be done and what capital should be used; were profits made by skill and direction of the controller; and is the controller in effectual and constant control. Scott J then said (at [39]-[40]):

    39 ... In its conclusions ... the Commission in Court Session said:

    [68] Having considered all of the evidence it [sic it is] our view that the corporate veil should be lifted. If the question set out by Atkinson J (in Smith, Stone and Knight) are asked, it is apparent from the uncontradicted evidence set out above that each question must be answered in the affirmative. BCE plainly has not [sic] resources of its own. In relation to the internal labour hire arrangements, the structure of that arrangement cannot be described as a contract to effect a transfer of “business” of BRML in the sense of a [sic] obligation contracted to carry out a commercial enterprise as a going concern.

    In my view, it cannot be said that, taking all of the maters into account, the Commission in Court Session was in error in looking behind the corporate veil and determining that BCE was an agent of BRM. Indeed, in my view, that conclusion was inevitable.

    151. One of the authorities to which reference was made in Branded Media Holdings was Fair Work Ombudsman v Ramsey Food Processing Pty Ltd [2011] FCA 1176; (2011) 198 FCR 174. Ramsey Food Processing concerned the identification of the ‘true’ employer of certain employees within a group of companies. In that group, a labour hire company (Tempus) and Ramsey made an agreement for the hire of certain employees. As a consequence of that arrangement, Tempus was the employer of record, but the services were provided to Ramsey under its instruction and direction. Buchanan J made findings (summarised at [2] – [3]) to the effect that the interposition of Tempus was a sham and that the ‘true’ employer was Ramsey. Buchanan J discussed the applicable principles that generally apply when determining the identity of the ‘employer’ (at [44] – [74]) and the application of those principles within a company group where there may be ‘shell’ companies that are, in effect, the employer of employees as agent for another company in the group which is the ‘true’ employer (at [75] – [92]). It is evident from his Honour’s description of the legal principles and his analysis of the facts of that case that Buchanan J directed his attention and inquiry to the ‘substance and reality’ of the arrangements within the corporate group.

    152. As Bromberg J observes, the approach taken in Ramsey Food Processing and other authorities such as Branded Media Holdings referred to above, may need to be revisited in light of the recent High Court authorities to which his Honour has made reference. For example, in WorkPac Pty Ltd v Rossato [2021] HCA 23; (2021) 271 CLR 456 (at [37], [66], [67]), the High Court expressly rejected approaching an assessment of the character of an employment relationship as casual or otherwise by reference to the ‘conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship’ (at [37]) which was described in WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 (at [180]-[181]) as the ‘settled approach’ to the question of whether a person was an employee as distinct from an independent contractor. Otherwise, as Bromberg J observes, in each of Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 398 ALR 404, ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 398 ALR 603 and Rossato, the High Court placed emphasis on the primacy of written contracts, the validity of which is not in dispute, as the source for identifying the terms of the ‘employment’ contract and the nature of the ‘employment’ relationship between the parties to that contract.

    153. Nonetheless, for the purposes of s 31A of the FCA Act and assessing if there are reasonable prospects of successfully prosecuting a claim, I do not regard the recent High Court authorities as precluding a party from advancing a claim, based upon the facts of that party’s particular case, to the effect that the ‘true’ employer within a corporate group is not the company identified in the group’s corporate records as the nominal employer. Nor do I regard the recent authorities as precluding a claim, in accordance with established legal principles, that the ‘corporate veil’ of the group should be disregarded because the relevant corporate group arrangement is a sham or that the nominal group employer is employer, as agent, for another company within the group, as principal.

    154. Each of the authorities upon which Mr Revill relies are examples of decisions that apply facts, as found, to established legal principles of broader application than purely employment relationships. These decisions illustrate that before a court (or other tribunal) is justified in reaching the conclusion that an employer of record is not the true employer there must be facts demonstrating that another entity is the true employer and that the employer of record is agent of the true employer or other circumstances exist that would make it inequitable not to treat the other entity as the true employer.

    155. It is necessary for Mr Revill to demonstrate that the primary judge was, or may have been, in error for failing to conclude that Mr Revill has reasonable prospects of demonstrating that in reality JH Group was his employer or that JH Group was his employer and JHPL was JH Group’s mere agent for that purpose. Mr Revill must be able to point to material facts, and evidence of material facts, capable of giving rise to a reasonable argument of that practical reality or agency. (emphasis added)

1. Those cases include authorities about s.556 of the Corporations Act, which happen to discuss a matter relevant to the case of a person who works for some member of a group (called the true employer in those cases) but has a contract of employment with another member pursuant to which he or she seems to work for the other group member, called the employer of record. In the vernacular (but not in legal terms) such a thing might be described as a secondment. The cases are concerned with the identity of an employer for the purposes of s.556 and a good example is the decision of Black J in Re Plutus discussed by Feutrill J at [146] and [147] in Revill. I do not take the High Court to have considered in Personnel Contracting any matter concerning the identity of an employer within a group, or any of the law about s.556 of the Corporations Act. The circumstance that the employer of record in Plutus was the holding company and that in the internal accounts, the subsidiary (there called the true employer) reimbursed its holding company for the wages is different from the present case, but does not seem to affect the principle.

2. The service agreement between the applicant and PRS may in effect have been bypassed or disregarded because within the group, the identity of the wage-paying employer, did not matter.

3. There is at least a cogent case to be made that the applicant was in truth employed by RPC, and doing the best I can with the facts proved in evidence, and not without some hesitation, I find on the balance of probabilities that the circumstances resemble Re Plutus such that RPC was the true employer of the applicant. That entails that under s.556 of the Corporations Act, the applicant was not an excluded employee.

4. The applicant succeeds in any event since the first question is resolved in his favour.

5. In the result the reviewable decision will be set aside, and it is decided that the applicant is not an excluded employee.

   
   
   

I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM KC

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Associate

Dated: 18 June 2024

Date(s) of hearing:	1 & 2 May 2024
Applicant:	In person
Counsel for the Respondent:	Mr C Parkin
Solicitors for the Respondent:	Ms J Vetter, HWL Ebsworth Lawyers