Rachael Reid v Mega Cafe Pty Ltd T/A Megamart Cafe

[2018] FWC 6225

[2018] FWC 6225

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Rachael Reid
v
Mega Cafe Pty Ltd T/A Megamart Cafe
(U2018/5472)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 5 OCTOBER 2018

Application for an unfair dismissal remedy – minimum employment period – small business employer – associated entities.

[1] On 25 May 2018, Ms Rachael Reid made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy in respect of her dismissal by Mega Cafe Pty Ltd T/A Megamart Cafe (Megamart Cafe).

[2] Ms Reid submitted that she commenced employment with Megamart Cafe on 15 August 2017 and was dismissed from her employment on 15 May 2018 at the initiative of the employer. The dismissal took effect immediately. Ms Reid submits her dismissal was unfair.

[3] Megamart Cafe submitted that Ms Reid had commenced employment with them on 22 August 2017 and objected to Ms Reid’s application on the basis that her employment did not meet the minimum employment period required under the Act.

Procedural Background

[4] This matter was conciliated on 16 July 2018 and was unable to be resolved. Consequently, the matter was referred to me for the jurisdictional objection to be determined.

[5] A hearing was held before me by telephone on Friday 24 August 2018. I granted permission for Ms Reid to be represented by Amanda Millar of Australian Dismissal Services taking into account the complexity of the matter.

[6] Ms Reid appeared and gave evidence on her own behalf. Ms Karlie Thexton, Operations and Marketing Manager, and Mr Kevin Harrison, Accountant, appeared and gave evidence for Megamart Cafe.

Statutory Framework

[7] Section 396 of the Act requires that the following matters be decided before the merits of the application may be considered:

“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 (the Code);

(d) whether the dismissal was a case of genuine redundancy.”

[8] Section 382 of the Act provides that a person is protected from unfair dismissal only if they have completed the required minimum employment period.

“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.

[9] If a person has not completed the relevant minimum employment period they are unable to make an unfair dismissal remedy application.

[10] Section 383 of the Act, which is set out below, provides different minimum employment periods depending upon whether or not the employer is a small business employer.

“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.”

[11] Section 384 of the Act provides 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

…”

[12] Section 23 of the Act provides as follows:

“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, he or she has been employed by the employer on a regular and systematic basis.

(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.”

[13] Section 12 of the Act defines an associated entity by reference to s.50AAA of the Corporations Act. Sections 50AAA and 50AA (which deals with control) of the Corporations Act provide as follows:

“s.50 AA 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.

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.”

The cases presented

[14] Megamart Cafe contended that at the time of Ms Reid’s dismissal they had four employees. 1 They provided Payroll Activity Summaries2 for the period in which Ms Reid was employed along with information regarding the formal structure of the business3 and financial statements for the year ending 30 June 20184.

[15] Ms Reid disputed that Megamart Cafe was a small business employer at the time of her dismissal. She submitted that the Respondent had not disclosed the employees employed by its associated entities and as such the minimum employment period relevant to her claim is six months, which was undisputedly met. 5

[16] Her submission was that the Respondent is one of several companies under the ultimate control of Mr Raymond Weinzierl, including the Cardinia Park Hotel which she submitted employs in excess of thirty employees. 6 Ms Reid’s evidence was that she had worked at the Cardinia Park Hotel since March 2016 and, in late July 2017, was approached by the Hotel Manager who asked if she would be interested in a job at the Megamart Cafe in addition to her casual work at the Hotel.

[17] Her evidence was that during her work at the Hotel it was made known to her that Mr Weinzierl, his brother Mr Ron Weinzierl and a Mr Frank Deegan were the owners of the establishment. 7 She submitted that when Megamart Cafe was short staffed, staff would be brought over from Mr Weinzierl’s other businesses, such as the Hotel and Gumbuya World.8

[18] Further, Ms Reid gave evidence that the Megamart Cafe is the onsite café at the Car Megamart, which is also owned by Mr Weinzierl. She submitted that both the café staff and the car traders wear the same uniforms, are treated as part of the same operation and take direction from the same Operations Manager Ms Thexton. 9 In support of her position, Ms Reid filed a number of documents obtained from ASIC searches10 and some newspaper reports regarding the businesses owned by Mr Weinzierl11.

[19] Ms Thexton’s oral evidence was that the Respondent did not have any associated entities. She submitted that she did not have any access to the Cardinia Park Hotel or Gumbuya World businesses or payroll systems however advised that she did have contacts in those businesses whom she could reach out to if the Megamart Cafe was short staffed. In the event that staff from these other businesses worked at Megamart Cafe, her evidence was that they would be employed by the Megamart Cafe for those shifts and paid out of her payroll.

[20] In relation to the car traders at the Car Megamart, Ms Thexton’s evidence was that all of the traders were tenants with signed lease agreements who operated out of Car Megamart’s premises. She advised that she did not pay the traders and that they were not required to wear the uniforms Ms Reid referred to, however elected to for branding and advertising purposes. Ms Thexton’s evidence was that she was the only employee of Car Megamart.

[21] Ms Thexton gave evidence that whilst Mr Weinzierl was a shareholder of both the Cardinia Park Hotel and the Megamart Cafe there was no financial connection between the two businesses. She submitted that whilst she did report to Mr Weinzierl it was her understanding that he did not control the Cardinia Park Hotel.

[22] She submitted that the documentation provided by the Respondent demonstrated that they employed no more than 7 employees at any one time during the Applicant’s employment.

[23] Mr Harrison gave evidence that regarding the ownership structure of the Cardinia Park Hotel, Megamart Cafe and Car Mega Properties Pty Ltd. His evidence was that Mr Weinzierl was listed on ASIC as the sole Director of Car Mega Properties Pty Ltd, however he was simply an office bearer. He submitted that Mr Weinzierl had a 35% share in the Cardinia Park Hotel and a 29.45% share in Car Mega Properties Pty Ltd. As Mr Weinzierl only owns a minority share in each of those businesses, Mr Harrison’s evidence was that he had no capacity to exercise control over the entities.

Conclusion

[24] Mr Weinzierl’s relationship with Megamart Cafe, Gumbuya World, Cardinia Park Hotel and Car Mega Properties Pty Ltd as a shareholder through the various trusts and his role of Director must be considered having regard to the test of ‘control’ in s.50AA of the Corporations Act2001.

[25] In her submission that Gumbuya World was an associated entity of Megamart Cafe Ms Reid relied solely on her knowledge of staff working between the businesses during periods of staffing shortfalls and article on that says Mr Weinzierl, along with four other individuals, is an owner of Gumbuya World. Mr Harrison gave evidence that the business structure was such that Gumbuya World was a separate entity made up of a partnership from four separate trusts and that Mr Weinzierl did not have any legal rights to exert control over any other party or the operation of the business. There is no evidence before me to indicate otherwise.

[26] The Cardinia Park Hotel is held in partnership by five separate trusts. Mr Weinzierl is a trustee of the ‘Cardy Park Pty Ltd atf Cardy Pub Trust’ which has a 35% shareholding. Mr Harrison submitted that, given the partnership structure of the Cardinia Park Hotel, Mr Weinzierl does not have the authority to exert any day to day influence over the Cardinia Park Hotel. He submitted that Mr Weinzierl does not have the capacity to determine the outcome of decisions about the Cardinia Park Hotel financial and operating policies nor does he exert any practical influence over the business directly. Whilst Mr Weinzierl may have benefitted from special treatment from staff whilst dining at the Cardinia Park Hotel and has a financial investment in the Hotel he is not a majority shareholder nor is there any evidence before me to satisfy me that he has controlling interests in the Cardinia Park Hotel.

[27] The company structure shows Car Mega Properties Pty Ltd is owned by a group of four separate trusts. The Australian Securities & Investments Commission Current & Historical Company Extract of 17 August 2018 has Mr Weinzierl listed as the sole Director of Car Mega Properties Pty Ltd in which Mr Weinzierl holds a minority shareholding of 29.45%.

[28] I have considered whether Mr Weinzierl controls Cardinia Park Hotel, Gumbuya World or Car Mega Properties Pty Ltd in the context of the definition of ‘control’ in section 50AA and I have also considered section 50AAA of the Corporations Act 2001. I am not satisfied that Cardinia Park Hotel and Megamart Cafe are associated entities. Nor am I satisfied that Gumbuya World and Megamart Cafe are associated entities.

[29] There is insufficient evidence to support a finding that Megamart Cafe and Car Mega Properties are associated entities. However, even if this was to be the case, I am satisfied that Car Mega Properties had only one employee at the time of Ms Reid’s dismissal. Therefore as the number of employees employed by Megamart Cafe is less than 15 they are a small business as defined in s.23 of the Act.

[30] Consequently I am not satisfied Ms Reid has met the minimum employment period and it follows that Ms Reid is unable to pursue her application. An order 12 dismissing Ms Reid’s application will be issued with this decision.

COMMISSIONER

Appearances:

A. Millar for the Applicant;

K. Thexton for the Respondent.

Hearing details:

2018

24 August 2018 (Telephone hearing)

Printed by authority of the Commonwealth Government Printer

<PR701121>

 1   Form F3 – Employer Response to Unfair Dismissal Application

 2   Exhibit R7

 3   Exhibit R3

 4   Exhibit R8

 5   Exhibit A1, [9]

 6   Ibid, [11]

 7   Exhibit A2, [2]

 8   Ibid, [10]

 9   Ibid, [9]

 10   Ibid, annexure 1

 11   Ibid, annexure 2

 12   PR701122