Peter Taverna v 3 Keys Global T/A 3 Keys Food Group

[2018] FWC 3244

[2018] FWC 3244

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Peter Taverna
v
3 Keys Global T/A 3 Keys Food Group
(U2017/12671)

COMMISSIONER MCKINNON MELBOURNE, 5 JUNE 2018

Application for an unfair dismissal remedy – jurisdictional objections – transmission of business – Small Business Fair Dismissal Code.

Introduction

[1] Peter Taverna was employed by 3 Keys Food Group (3 Keys) as a Business Development Manager from 7 September 2016 1 until 13 November 2017.

[2] On 28 November 2017, Mr Taverna applied to the Commission for a remedy for unfair dismissal under section 394 of the Fair Work Act 2009 (the Act).Mr Taverna says he was terminated following repeated requests to be paid commission under his contract of employment.

[3] On 4 April 2018, 3 Keys responded to the unfair dismissal application. It says Mr Taverna was terminated for misconduct and was not entitled to the commission claimed. It objects to the application because it says Mr Taverna had not completed the minimum employment period and the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

[4] The matter was conciliated on 31 January 2018 but not settled. A hearing was held on 19 April 2018 in Melbourne. Mr Taverna was represented by Alana Costa (apparently not in the capacity of paid agent) and 3 Keys was represented by its Directors, Yoram Cohen and Alon Yadin, by telephone. Mr Taverna, Mr Cohen and Mr Yadin each gave evidence in the proceeding.

Preliminary matters

[5] The application was filed within the 21 day timeframe required by the Act.

[6] Section 382 of the Act sets out when a person is protected from unfair dismissal. Under section 382, a person is protected from unfair dismissal if, at the relevant time:

•  they have completed at least the minimum employment period; and

•  they are either covered by a modern award, employed under an enterprise agreement that applies to them or earn an annual income of less than the “high income threshold”.

[7] It is common ground that Mr Taverna’s annual income was less than the high income threshold.

[8] It does not appear to be in dispute that 3 Keys employed approximately 5 employees at the time Mr Taverna was dismissed (including employees of associated entities, discussed further below). 2 It was a small business employer.

[9] 3 Keys says Mr Taverna did not complete the minimum employment period. As it was a small business employer at the relevant time, the minimum employment period for present purposes is one year. 3 Keys says Mr Taverna commenced employment with 3 Keys Global Pty Ltd (3 Keys Global) on 1 July 2017 and was dismissed on 13 November 2017. Prior to 1 July 2017, it says he was employed by Donna Italia (Australia) Pty Ltd (Donna Italia).

[10] Mr Taverna says as far as he knew, he was employed by Donna Italia from September 2016 until his dismissal on 13 November 2017.

[11] It is first necessary to decide who Mr Taverna’s employer was.

[12] If Mr Taverna was employed by Donna Italia from September 2016 until his dismissal in November 2017, it is uncontroversial that his employment was for more than one year and he had completed the minimum employment period required to be protected from unfair dismissal.

[13] If, as 3 Keys submits, Mr Taverna ceased employment with Donna Italia on 30 June 2017 by reason of redundancy and became employed by 3 Keys Global on 1 July 2017, it is also necessary to decide whether there was a transfer of his employment from Donna Italia to 3 Keys Global.

Did Mr Taverna complete the minimum employment period?

Identity of the employer

[14] In August 2016, Mr Taverna was offered employment in the role of Business Development Manager for Donna Italia, a fine food chain in Melbourne. He recalls commencing work on or about 11 or 12 September 2016. Documents he says constituted his contract of employment are dated and signed 7 September 2016 on Donna Italia letterhead. 3

[15] Mr Taverna says as far as he knew, he was employed by Donna Italia until his dismissal on 13 November 2017.

[16] In September/October 2017 Mr Taverna says he was in Sydney for a trade show when he realised the employees of 3 Keys all had “3 Keys cards” except him. He asked Mr Cohen “why are they 3 Keys and I’m Donna Italia?” According to Mr Taverna, Mr Cohen replied “we’ll talk about it another time.” Mr Taverna says “I was still paid by Donna Italia. I never really received payslips. I just got the pay through my account because they are in Brisbane and I’m in Melbourne.” 4 His email was always [email protected].

[17] Mr Taverna gave evidence that his bank statements said “DI”  5 (which I understood to be a reference to Donna Italia) and that he only became aware that he was ‘employed by 3 Keys’ when he read its Form F3 response to this application.

[18] It is well established that an employee cannot be transferred from one employer to another without their express or implied consent. 6 There is no evidence that Mr Taverna consented to a change in his employer from Donna Italia to 3 Keys Global. Mr Taverna’s evidence is to the contrary – that is, he had no knowledge of any such change. While a contract of employment purporting to show Mr Taverna’s employment by 3 Keys Global was provided to the Commission after the hearing without leave, it was not produced prior to that time and was not available at the hearing with the result that there was no opportunity for it to be tested. It appears to contradict the direct evidence of Mr Taverna that he was not aware of any change to his employer. I also note the evidence of 3 Keys in the hearing to the effect that Mr Taverna’s contract of employment had been deleted from its records by Mr Taverna. I have not given the (late filed) contract of employment any weight.

[19] 3 Keys also relied on an email sent by Mr Taverna on 18 November 2017, referring to “everything 3 keys global has put me through”. The email has the appearance of being drafted by a person assisting Mr Taverna rather than Mr Taverna himself. That might help explain the references to 3 Keys Global, but in any event Mr Taverna’s clear evidence is that he thought he was employed by Donna Italia. An email sent to 3 Keys after his dismissal in an effort to resolve outstanding matters does not overcome the weight of evidence in that regard.

[20] On the material before me, I find that Mr Taverna was employed by Donna Italia from September 2016 until the termination of his employment on 13 November 2017.

Transfer of employment

[21] If I am wrong about Donna Italia being Mr Taverna’s employer, it is necessary to decide whether his service with Donna Italia counts as service with what 3 Keys asserts was his subsequent employer, 3 Keys Global.

[22] Section 22(7) of the Act provides that there is a transfer of employment from one employer to another if the employment occurs within a 3 month period between two associated entities. Under section 22(5) of the Act, if there is a transfer of employment, service with the old employer generally counts as continuous service with the new employer (excluding any interim break in service, which is not presently relevant).

[23] 3 Keys asserts that Mr Taverna was made redundant by Donna Italia (the old employer) on 30 June 2017 and employed by 3 Keys Global (the new employer) from 1 July 2017 (that is, within 3 months).

[24] The Directors of 3 Keys Global are Yoram Cohen and Alon Yadin. The Directors of Donna Italia are also Yoram Cohen and Alon Yadin. Mr Cohen gave evidence that he and Mr Yadin made the decisions about the operations of 3 Keys together and that no person had the ‘casting vote’. ASIC Company Extracts show Mr Cohen and Mr Yadin as holding equal shares in 3 Keys and equal ordinary shares in Donna Italia. Together they hold the majority of shares in Donna Italia.

[25] The Motor Vehicle Policy is on Donna Italia letterhead and signed by Mr Taverna. The “Individual Sales Action Plan May – June 2017” for Mr Taverna displays a “3 Keys Food Group” logo and identifies Mr Yadin as “Sales Manager”. A purported redundancy letter for Mr Taverna dated 12 June 2016 is on Donna Italia letterhead and signed by Mr Yadin as “Sales Manager, Donna Italia Australia Pty Ltd”. A Summary Report of Sales made by Mr Taverna, “Jenny” and “Peter” displays the “3 Keys Food Group” logo. A New Customer Form for Donna Italia displays both the Donna Italia and 3 Keys Global logos.

[26] Mr Cohen has two different signature blocks and email addresses - one with a “3 Keys Food Group” logo and “3 Keys Global” email address and another with a Donna Italia logo and email address. 7 Mr Yadin’s email signature block has the 3 Keys Food Group logo and a 3 Keys Global email address.

[27] On 20 December 2017, a “Christmas Gift” of $500 was paid to Mr Taverna by another company owned by Mr Cohen, “Blu Australia Pty Ltd”.

[28] A payslip provided at the direction of the Commission after the hearing purports to show payment of $3100.84 by 3 Keys Global to Mr Taverna on 17 November 2017 (for the period 4 to 17 November 2017). Mr Taverna disputes the reliability of the document and relies on bank statements showing no deposit of any amount to his bank account in November 2017. Mr Taverna says his final pay from 3 Keys was paid on 22 December 2017. This is consistent with his bank statement for that day and an email from Mr Cohen to Mr Taverna on 22 December 2017 with a breakdown of his final pay in the amount of $2215.18 (net). I prefer the evidence of Mr Taverna in this regard. I have not given the payslip any weight.

[29] Together, the evidence paints a picture of Donna Italia and 3 Keys Global as two entities in a group of small businesses operated by Mr Cohen and Mr Yadin, each trading under the banner of 3 Keys. I find that Mr Cohen and Mr Yadin control 3 Keys Global and Donna Italia. They do so together in circumstances where the operations, resources and affairs of those entities are material to both Mr Cohen and Mr Yadin as directors and shareholders in each case. I am satisfied that Mr Cohen and Mr Yadin have the capacity to determine the outcome of decisions about the financial and operating policies of 3 Keys Global and Donna Italia. 8 They are ‘associated entities’ for the purposes of the Act.

[30] If 3 Keys Global was Mr Taverna’s employer on and from 1 July 2017, it was in circumstances where there was a transfer of his employment from Donna Italia to 3 Keys Global on that date. It follows that service with Donna Italia would count as service with 3 Keys Global.

[31] Whether his employer at the time of dismissal was Donna Italia or 3 Keys Global, I find that Mr Taverna completed the minimum employment period and is a person protected from unfair dismissal for the purposes of section 382.

Is the application properly made?

[32] There is a separate question of whether the application made against “3 Keys Global trading as 3 Keys Food Group” was properly made because it did not identify Donna Italia as the legal employing entity. I consider that the application was properly made against 3 Keys Food Group, of which Donna Italia was a part. While it wrongly identified the legal entity as 3 Keys Global, it correctly identified the employer as 3 Keys Food Group. If I am wrong about Donna Italia being the employer, the application identifies the legal identity of the employer as “3 Keys Global” and the issue does not arise.

Was Mr Taverna dismissed?

[33] Section 385 of the Act provides that a person has been unfairly dismissed if the Commission is satisfied they have been dismissed; the dismissal was harsh, unjust or unreasonable; and if relevant, the dismissal was not consistent with the Small Business Fair Dismissal Code or not a case of genuine redundancy.

[34] Except in relation to whether there was a transfer of Mr Taverna’s employment from Donna Italia to 3 Keys Global, no issue of redundancy arose in this matter and I am satisfied that the dismissal was not a case of genuine redundancy.

[35] There is no dispute that Mr Taverna was dismissed on 13 November 2017.

[36] As noted earlier, 3 Keys Global and Donna Italia are ‘associated entities’ for the purposes of the Act. 9 The letter of termination refers to Mr Taverna’s “employment with 3 Keys Global”, although I prefer the view that Mr Taverna was employed by Donna Italia. The letter was issued by Mr Yadin who is also a Director of Donna Italia and a person with a material controlling interest in the entities that form the 3 Keys Food Group. For all practical purposes, the two entities were operated as one business and Mr Yadin had actual and apparent authority to act on behalf of Donna Italia, including to dismiss employees. He exercised that authority by giving effect to the termination of Mr Taverna’s employment.

[37] I am satisfied that Mr Taverna was dismissed by his employer.

Was the dismissal consistent with the Small Business Fair Dismissal Code?

[38] The Code applies to small business employers with less than 15 employees. 10 A person is not unfairly dismissed if the dismissal is consistent with the Code and immediately before dismissal or at the time notice of the dismissal is given, whichever is earlier, the employer is a small business employer.11 I have already found that 3 Keys was a small business employer at the relevant time.

[39] 3 Keys says it complied with the Code in relation to the dismissal. Mr Taverna says it did not. That question also needs to be resolved.

[40] The Code provides as follows:

Commencement

The Small Business Fair Dismissal Code comes into operation on 1 July 2009.

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[41] In Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services 12, a Full Bench of this Commission considered the proper application of the ‘Summary Dismissal’ section of the Code and concluded that it applies to dismissals without notice on the ground of serious misconduct as defined in regulation 1.07 of the Fair Work Regulations 2009.

[42] In this matter, the Code is to be applied as it relates to ‘summary dismissal’ because the dismissal was without warning and took immediate effect, notwithstanding that one week’s wages in lieu of notice was paid six weeks later.

[43] Under the Code, it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Examples include theft, fraud, violence and serious safety breaches although these categories are not exhaustive. It is sufficient for the purposes of the Code, although not essential, if an allegation of theft, fraud or violence has been reported to the police and there were reasonable grounds for making the report. There was no suggestion that any such report had been made in this case.

[44] My role in this regard is to determine whether the employer genuinely held a belief that the employee had committed an act of serious misconduct and whether that belief was, objectively speaking, based on reasonable grounds. 13 It is not necessary to determine whether the serious misconduct did in fact occur or that the employer was correct in the belief that it held.14

[45] Mr Cohen and Mr Yadin believed Mr Taverna’s conduct was sufficiently serious to justify immediate dismissal. The evidence shows that Mr Taverna was suspected of theft, related to “suspicious transactions” on his credit card. 15 A list of 70 transactions on 42 separate days over the period from 23 September 2016 to 31 October 2017 was in evidence. The transactions are generally for amounts of $10 - $20, or a total of $1397.43, less one $150 deposit on 19 January 2017.

[46] An email to Mr Taverna from Mr Yadin on 6 November 2017 provided him with the list of transactions with the covering comments: “Please find attached a new list of different transections (sic) we do not know if legit or not…. Please update the attached list with recites (sic) and explanations of all transactions.” Mr Taverna was given 7 days to respond. Mr Taverna did not respond until after his dismissal.

[47] Once he did respond, he explained that nine transactions were work related. Otherwise, he offered a general explanation as follows:

“23/09/16 – 24/01/2017 – murray informed me of this back then and I asked him, could take money out of my pay say 200 per fortnight, nothing eventuated, I then spoke to you about it Alon in my car when we went to falls creek trade show together if you remember, it was the time you slept at my place the day before we left so you could avoid paying accommodation, now naturally I don’t expect you to acknowledge this but you said very clearly to me, don’t worry about paying this back, its ok just be careful where you leave the car and r ard (sic), if your adding this, I will be more than happy to provide many petrol receipts that I have in my filing cabinet which shows how many times I have paid for fuel and not be reimbursed.”

[48] That explanation appears consistent with a break in the use of the credit card after 24 January 2017. It is not in dispute that a relative of Mr Taverna had used 3 Keys’ credit card for online gambling. That led to a discussion between the parties and ultimately, the money was not repaid. Mr Taverna says that was agreed in his discussion with Mr Cohen. An email from Mr Yadin to Mr Taverna on 6 November 2017 says “We didn’t put pressure on you with the amount owing from last time your stepson used the card but we need to get the Money back.”

[49] The explanation does not address the transactions on Mr Taverna’s credit card from 2 September 2017 to 31 October 2017, including 16 further unexplained transactions that do not appear to be work related.

[50] The Motor Vehicle policy signed by Mr Taverna expressly states that “Fuel charge cards are to be used for the purchase of fuel and oil etc. No miscellaneous purchases are permitted on these cards.” In the hearing, Mr Taverna agreed that the reference to “Fuel Charge card” was the company credit card. He said he used the credit card for personal use.

[51] 3 Keys asked Mr Taverna directly for a response to what it was concerned were transactions that were not “legit”.  16 He did not respond. In the absence of any response, it made the decision to dismiss him.

[52] It was only after 3 Keys had acted on its concerns that Mr Taverna sought to explain his actions. In my view, the explanation might have addressed concerns about the earlier period to 24 January 2017, but it would not have allayed concerns about Mr Taverna’s recent resumption of unauthorised spending on the credit card. These concerns were reasonable in the circumstances. Mr Taverna had a history of inappropriate credit card use, had admitted to such and had never repaid any of the money he had taken. 3 Keys and Mr Taverna had previously discussed the issue. It was reasonable for 3 Keys to consider that Mr Taverna’s unexplained spending was unauthorised such that it constituted theft and that Mr Taverna knew what he was doing was wrong.

[53] I am satisfied that Mr Cohen and Mr Yadin had a reasonable belief at the time of dismissal that Mr Taverna was engaged in theft by using the company credit card for personal expenses without authorisation and in breach of the Motor Vehicle policy.

Other matters

[54] Mr Taverna says he has been underpaid by 3 Keys. The claim relates to two weeks’ notice of termination and 88 hours unused annual leave, although it appears that one week’s notice of termination was paid. Issues such as underpayment of National Employment Standards entitlements and failure provide payslips are serious matters that indicate contraventions of the Act within the jurisdiction of the Fair Work Ombudsman. In light of my finding about the period of Mr Taverna’s employment, the payment of accrued entitlements should be revisited by 3 Keys as should its approach to record keeping and payslips generally.

Conclusion

[55] Mr Taverna is a person protected from unfair dismissal. However, Donna Italia was a small business employer at the time of dismissal and Mr Taverna’s dismissal was consistent with the Code.

[56] The application is dismissed.

COMMISSIONER

Appearances:

A Costa for the Applicant

Y Cohen and A Yadin for the Respondent

Hearing details:

2018.

Melbourne:

April 20.

Printed by authority of the Commonwealth Government Printer

<PR607794>

 1   Exhibit 2, Motor Vehicle Policy

 2   Form F3 filed on 4 April 2018; Respondent’s Outline of argument: objections filed on 5 April 2018

 3   Exhibit 2, Motor Vehicle Policy; Exhibit 4, Position Description

 4   Audio recording of Hearing on 20 April 2018

 5   Audio recording of Hearing on 20 April 2018

 6   Roberg v FGP Company Pty Ltd & Steelworks Australia Pty Ltd[2013] FWC 4947 (20 August 2013); Fair Work Ombudsman v Eastern Colour Pty Ltd [2011] FCA 803 (19 July 2011); McCluskey v Karagiozis [2002] FCA 1137 (12 September 2002); Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014

 7   Exhibit 7, Email from Yoram Cohen to Murray Brown, Alon Yadin and cc. Mr Taverna, 28 September 2017 5.45am.

 8   Corporations Act 2001 (Cth), s50AAA(7); s50AA(1)

 9   Corporations Act 2001 (Cth), s50AAA(7); s50AA(1)

 10   Fair Work Act 2009 (Cth), s.23

 11   Fair Work Act 2009 (Cth), s.385; s.388

 12   Ryman v Thrash Pty Ltd t/as Wisharts Automotive Services[2015] FWCFB 5264

 13   [2015] FWCFB 5264; Grandbridge Limited v Wiburd[2017] FWCFB 6732, Steri-Flow Filtration Systems (Aust) Pty Ltd v Erskine[2013] FWCFB 1943 and Pinawin v Domingo [2012] FWAFB 1359

 14   Hart v Forex 1 Pty Ltd ATF Trading Rental Trust[2018] FWC 942

 15   Email from A Yadin to P Taverna, 6 November 2017 at 5.50pm

 16   Email from A Yadin to P Taverna, 6 November 2017 at 5.50pm