Persida Lake v Imperial Vintage Jewellery Pty Ltd
[2024] FWC 1185
•8 MAY 2024
| [2024] FWC 1185 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Persida Lake
v
Imperial Vintage Jewellery Pty Ltd
(U2024/837)
| COMMISSIONER SIMPSON | BRISBANE, 8 MAY 2024 |
Application for unfair dismissal remedy – Jurisdiction Objection that that the Applicant is a Small Business – Other Entity not an Associated Entity – Respondent a small business – Application dismissed.
On 25 January 2024, Ms Persida Lake (Ms Lake / the Applicant) applied to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (the FW Act) for an unfair dismissal remedy, alleging she was unfairly dismissed from her employment with Imperial Vintage Jewellery Pty Ltd (the Respondent).
The Respondent raised a jurisdictional objection on its Form F3 Employer Response that the Applicant did not meet the minimum employment period as the employer was a small business with less than 15 staff at the time of termination.
On 28 March 2024, a Directions Hearing took place. That same day I issued directions for the filing of material relating to the jurisdictional objection. A hearing was conducted on 16 April 2024 where Ms Lake represented herself and the Respondent was represented by its Director, Ms Sarina Cheney.
Relevant legislation
The FW Act provides the following:
“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.
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.”
“23 Meaning of small business employer
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, employee is a regular casual employee of the employer.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”
An ‘associated entity’ has the meaning given by s.50AAA of the Corporations Act 2001 (Corporations Act). The Corporations Act provides:
“50AAA Meaning of associated entity
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6), (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.
50AA Meaning of control
(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(2) In determining whether the first entity has this capacity:
(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).
(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies
(4) If the first entity:
(a) has the capacity to influence decisions about the second entity's financial and operating policies; and
(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members;
the first entity is taken not to control the second entity.”
Jurisdictional objection
The Applicant commenced employment with the Respondent on 22 May 2023, and it was agreed by the parties that she was dismissed on 10 January 2024, completing a period of employment of approximately 7.5 months. Therefore, Ms Lake will be protected from unfair dismissal only if, at the time of the dismissal, the Respondent was not a small business employer.
The question for determination is therefore whether, at the time of Ms Lake’s dismissal, the Respondent was a small business employer in accordance with the meaning provided by s.23 of the FW Act.
The Respondent submitted that at the time of Ms Lake’s dismissal, it employed 10 employees. The Respondent provided a company extract, along with a payroll summary for the period of 12 December 2023 to 12 January 2024 which listed 10 employees.
Ms Lake had previously suggested that there may be associated entities of the Respondent which, when taken into account, would mean that the Respondent was not a small business for the purposes of s.23 of the FW Act at the time of her dismissal. The Respondent identified a second entity, Master Metals Exchange Pty Ltd (Master Metals), who trades as the Imperial Group, however submitted that Master Metals was not an associated entity within the meaning of s.50AAA of the Corporations Act. The Commission also obtained an ASIC company extract for Master Metals.
The Respondent provided a witness statement of Mr Michael Simpson, Director of Master Metals. Mr Simpson stated that at no time has Master Metals held any shares in the Respondent, and neither Master Metals nor its shareholders exert any controlling power over the operations of the Respondent. Finally, Mr Simpson stated that the management and decision-making processes of the Respondent “are solely under the purview” of Ms Sarina Cheney, the Director of the Respondent.
The letter advising Ms Lake that she was dismissed on account of her position being redundant was co-signed by Ms Cheney on behalf of the Respondent, and Ms Shelley Holdsworth, the Human Resources Manager for Imperial Group. It was noted that there was also correspondence in relation to a work cover issue sent to Ms Holdsworth by Workcover Queensland in relation to the Applicant. Ms Cheney advised that Ms Holdsworth provides human resources services and payroll services to the Respondent and is paid an hourly rate on a commercial basis for those services.
The material the Respondent put before the Commission indicates that Master Metals does not own shares in the Respondent, and Master Metals shareholders do not own a controlling interest in the Respondent or vice versa.
The Respondent submitted it operates in a separate industry. In terms of the operations, resources, and affairs of the Respondent, it says it rents property from Master Metals at a commercial rate under that arrangement.
In terms of a qualifying investment, Ms Cheney said she owned an earlier business Canary Lane Pty Ltd, and she decided to collaborate with Michael Cotton and Michael Simpson. Michael Simpson is a current director of Master Metals and both Michael Cotton and Michael Simpson are current shareholders in Master Metals.
Ms Cheney and Mr Michael Simpson are the directors of the Respondent, and Mr Simpson is the Secretary.
Of the 1000 ordinary shares in the Respondent, Ms Cheney’s company Canary Lane Pty Ltd owns 500 shares, Mr Cotton owns 142, Mr Simpson owns 74, S W Waterman Pty Ltd owns 142 and Brent Dougherty owns 142.
Mr Simpson, Mr Cotton and Scott Waterman are the Directors of Master Metals, and Mr Simpson is its Secretary. Of the 600 ordinary shares in Master Metals, David Cotton owns 285, Michael Simpson owns 30 and Brent Dougherty owns 285.
Ms Cheney said she has no interest in Master Metals, and she is the decision maker for the Respondent, controls the business and makes all day-to-day decisions. Ms Cheney said she does take advice from other shareholders, but she makes the decisions. She said her business partners have no control over the Respondent. Ms Cheney said it is a business-to-business arrangement to benefit from the branding of Imperial. Ms Cheney also said she has a loan arrangement with Master Metals although it is also an arm’s length arrangement.
In a subsequent email to chambers, Ms Cheney said that the Hamilton location of its business is retail and administration, and the Fortitude Valley location is full manufacturing jewellery workshop and administration. Ms Cheney said that while Hamilton is noted as the principal place of trading, the Respondent does this as the location focuses more on retail customers, provides free parking for clients and is a more secure location. Ms Cheney said the Fortitude Valley location is the business’s head office in terms of the heart of the operations, as it is where she is based and where most of the business operations and marketing is conducted from. It is also where all manufacturing, repairs and remakes occur, which are critical works the business needs to operate. It was also home to the original business for many years prior to any partners joining the business.
Ms Cheney said most sales are performed online, and both Hamiton and Fortitude Valley locations equally share the work that is required to prepare the stock for online sales. Ms Cheney said four of the employees are located in Hamilton, and four employees are located at Fortitude Valley, and one employee is at Toowoomba. Ms Cheney said Hamiton is a shared workspace where Imperial Jewellery pays rent to Master Metals at commercial prices, and the Fortitude Valley location is rented independently from Master Metals and Imperial Jewellery pays commercially priced rent. Ms Cheney said her business has been well established in this location for approximately 20 years.
Ms Cheney said Canary Lane owns most of the intellectual property, and Master Metals does not have the expertise or skills that Canary Lane possesses, such gemologists, jewellers, full production workshop, valuers, industry network. She said these are crucial pieces of the business that are key in understanding why this is her business that she operates. Ms Cheney confirmed that the Respondent does have loans from both Master Metals and Canary Lane.
Ms Lake did not add any specific submissions other than to say that she recalled Mr Dougherty dealt with some cash transactions with customers.
Conclusion
On the basis of the material before me I am not satisfied that Master Metals controls the Respondent or has the capacity to determine the outcome of decisions about the Respondent’s financial and operating policies. It appears to be reasonably clear Master Metals does not have any significant practical influence over the Respondent, and there is not any practice or pattern of behaviour affecting the Respondent’s financial or operating policies that indicate Master Metals controls the Respondent. On that basis I am satisfied that the Respondent and Master Metals are not associated entities and the Respondent is a small business.
As I am satisfied the Respondent is a small business, the Applicant has not served the relevant minimum employment period of one year under s.383 of the FW Act. Therefore, the Commission has no jurisdiction to deal with Ms Lake’s application and it is dismissed. An order to that effect will be issued separately and concurrently with this decision.
COMMISSIONER
Appearances:
Ms Persida Lake on her own behalf.
Ms Sarina Cheney for the Respondent.
Hearing details:
2024.
By Microsoft Teams.
16 April.
Final written submissions:
26 April 2024.
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