Ryan Murray v Dangan Pty Ltd

[2021] FWC 3872

[2021] FWC 3872

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 – Application for unfair dismissal remedy

Ryan Murray
v
Dangan Pty Ltd
(U2021/1554)

DEPUTY PRESIDENT LAKE BRISBANE, 5 JULY 2021

Application for relief from unfair dismissal – jurisdictional objection – small business – minimum employment period – jurisdictional objection dismissed

[1] On 24 February 2021, Ryan Murray (the Applicant) made an application to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (Cth) (the FW Act) alleging that he had been unfairly dismissed from his employment with Dangan Pty Ltd (the Respondent). The Applicant seeks compensation rather than reinstatement and for the non-compete agreement he made with the Respondent to be waived.

[2] The Applicant was notified on 4 February 2021 that he was being dismissed, effective as of 6 February 2021.

[3] The Applicant lodged this application with the Commission on 24 February 2021, within the 21-day time limit prescribed by the Act. The Respondent filed its response on 26 February 2021, therein raising a jurisdictional objection. The Respondent contended that it was a small business employer and that the minimum employment period is therefore one year. The Applicant was employed for just over six months. The Respondent further submitted that the dismissal was consistent with the Small Business Fair Dismissal Code.

[4] The central issue in contest was the number of employees employed by the Respondent at the time of the Applicant’s dismissal. The Respondent contended that it employed less than 15 employees for the purposes of the definition of “small business employer” in the Act. The Applicant submitted that the number was more than 15. After a conference with the parties and various emails, it was determined that the jurisdictional question could be dealt with on the papers, with a hearing to take place in relation to the merits should the matter proceed. The parties were each unrepresented but had the opportunity to put on material, which took the form of emails and other documentation. The Respondent also filed a sworn statement of Peta Britton, the accounts manager for the R&J Caravella Family Trust (R&J) who is also responsible for financial matters relating to Dangan Pty Ltd (Dangan).

[5] While it is Dangan that was named as the Respondent to this application, the Applicant alleged that R&J and Dangan were in fact associated entities for the purposes of assessing whether the Code should apply. The Applicant also refers to Caravella Football Academy (CFA) as being connected to Dangan.

[6] As summarised by Deputy President Colman in his decision of Harrison-Buckby v McMeckan Consulting Pty Ltd:

“The Commission can only order an unfair dismissal remedy if the applicant was a person ‘protected from unfair dismissal’ (s 390). This in turn requires that the person have completed a period of employment that is at least the minimum period of employment (s 382(a)). Section 383 provides that, if an employer is a ‘small business employer’, the minimum employment period is one year ending at the time when the person is given notice of dismissal, or immediately before the dismissal, whichever is earlier. If the employer is not a small business employer, the relevant period is 6 months.

…

Section 23 provides that an employer is a ‘small business employer’ at a particular time if it employs fewer than 15 employees at that time. For the purpose of calculating the number of employees employed at a particular time, all employees of the employer are counted, including the person who was dismissed. However, casual employees are not to be counted unless at the relevant time they had been employed by the employer on a ‘regular and systematic basis’ (s 23(2)(b)). Furthermore, in counting the number of employees employed by an employer, employees of associated entities of the employer ‘are taken to be one entity’; that is, persons employed by such entities are included (s 23(3)).” 1

[7] It is uncontentious that the Applicant commenced employment with the Respondent on 1 July 2020. He was employed continuously until on or around 6 February 2021, though the Respondent says he was asked not to come after 5 February 2021 following messages sent to customers. If the Respondent is a small business employer for the purposes of the Act, the Applicant has not completed the minimum employment period.

Associated entity

[8] For the purposes of the Act, the term “associated entity” takes its meaning from s.50AAA of the Corporations Act 2001 (Cth) which provides that:

(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.

[9] The Applicant’s submissions suggest that Dangan and R&J operate collectively as “the Grounds Cairns”. The Applicant also asserts that CFA is somewhat connected to Dangan. His submission seems to be that they are therefore associated entities. The Respondent claims that is not the case.

[10] The sworn statement of Ms Britton provides the following information about the relationship between R&J and Dangan:

“The relationship between the two entities mentioned above is connected by both the sharing of directors but also with [the Trust] providing financial support to Dangan and contracting key staff to Dangan for operations.

Zenon Caravella because a Director of [the Trust] and Dangan in 2016 … However, he is one of several directors with the ultimate controlling interest being held by Julie Caravella for both [the Trust] and Dangan.

Initially the only employees that were shared between [the Trust] and Dangan was myself as finance/administration and a maintenance employee. While Dangan was able to resume operations after COVID, a cleaner was shared between both entities to ensure enough work was available to that employee given the closure of [the Trust]’s primary business of backpacker accommodation.”

[11] As to the relationship between Dangan and CFA, Ms Britton gave evidence that:

“ZenKat Family Trust which trades as [CFA] is owned and operated by Zenon Caravella and Katherine Caravella. The connection to Dangan and R&J is through Zenon… as a Director of these entities. Katherine… has no ownership of either R&J or Dangan. This is a deciding factor in why each of the entities are treated separately due to the differing parties involved in each.

CFA was founded in 2015 as an entity separate to R&J. CFA utilises my services in accounts and pays for that time to R&J. This arrangement was established on commencement of my employment to allow the position offered to be permanent part-time with more hours to secure a suitable applicant. There is no reliance from CFA on either entities to support its business.

CFA is a commercial tenant of Dangan and trains at the Grounds. It is one of several sporting tenants at Dangan. CFA provides a coaching service to children between the ages of 5-15. Zenon… conducts the bulk of the training sessions and engages various other individuals to assist with sessions (average session is 45 minutes to 1 hour).

…

[The Applicant] was offered the option to coach for CFA as he had raised concerns that he was struggling financially with the stand down of his full-time employment by his sponsored employer Happy Travels and the limited hours on offer with Dangan. It was decided that Ryan would be paid for his coaching sessions by Dangan in his fortnightly pay and Dangan would invoice CFA to recover that cost. This had never been done before as CFA is managed completely separate to Dangan but it felt it would make tracking of Ryan’s hours and payments easier for both himself and I, as his CFA coaching sessions would generally occur in between his duties at Dangan. This also ensured Ryan benefit by being compensated for his time rather than per session like other coaches.”

[12] Based on this evidence, I am satisfied that R&J and Dangan were associated entities within the meaning of the Act. I accept that there are individuals who are involved in one entity but not the others and in that way, this decision may seem unusual. However, the evidence demonstrated the interrelated nature of the entities and many of the persons involved. The fact, for example, that the payment of employees could simply be dealt with by the most convenient entity suggests that, in practice, they likely fit the definition of associated entities.

[13] Similarly, I am satisfied that Dangan and CFA were associated entities within the meaning of the Act. It is therefore necessary to consider the total number of employees employed by all three entities.

Number of employees

Applicant’s submissions

[14] By email dated 6 April 2021, the Applicant submitted that during his employment, he believed the Respondent had 26 related employees who undertook constant and rostered work at The Grounds Cairns. The Applicant named the director, head coach, accounts/admin person, photographer/media, administrative assistant, tournament coordinator, HPP partner, seven football academy coaches, a maintenance person and a cleaner. He also listed 12 people referred to as “referees”.

[15] That Applicant stated that he believed them to be fixed employees, not contractors, because they were not captured by the following definition:

“contractor (plural contractors)

1. A person or company that builds or improves buildings.

2. A person or company that performs specific tasks like electrical or plumbing work in construction projects.

3. A person or company hired to maintain existing facilities like air conditioning systems, groundskeeping, etc.

4. A person hired to do a job on a business contract, as opposed to a permanent employee.”

[16] The Applicant further submitted that the “referees” were fixed employees because:

"1. They are under 16 years old.

2. I used to train them for the first couple of weeks to make sure they understood the rules and format of the competition.

3. I used to constantly manage them daily in terms of roster, standards, and availability.

4. They would undertake constant work on a weekly basis and have rostered shifts.

5. I would fulfil timesheets for Accounts team to pay the refs.”

[17] The Applicant stated that evidence of rosters and the steps taken to manage the referees would be available on the work laptop and phone and that he could get statements from the parents of the referees to back up his submissions. That information has not been provided.

[18] The Applicant went on to say that, “In total, in my time of employment there were 12 employees as referees. There are also the 16 listed above, of which, I'm very confident at least 3 (Myself, Pita and Vanessa) would be classed as constant employees for 'Dangan Pty Ltd'.”

Respondent’s submissions

[19] Ms Britton’s statement provided that when the Applicant’s employment was terminated, the Trust’s employees were Ms Britton herself (accounts manager) and Sumi Doyle (cleaner), Bambang Suprainto (maintenance). Dangan employed Ryan Murray as the tournament co-ordinator. The entities shared Vanessa Hoedlmayr-Wales, who was primarily employed by Dangan in an administrative role, but also worked for the Trust as a casual front of house employee. In total, the Respondent submits, the entities had five employees.

[20] In respect of the Applicant’s assertions about the “referees”, Ms Britton gave the following evidence:

“the referees … are paid on a ‘per game’ basis by Dangan ... These referees have never been viewed or treated as employees.

The referees are generally secondary school students who have completed a Statement by a supplier form… and advise what games or days they wish to work which changes on a week to week basis. Prior to commencing with the structure of the referees being paid as suppliers, advice was sort from our accountant as to the correct way of making payments to referees. Based on their recommendations we have engaged the referees as suppliers and treated them as such.

The commitment from these refs do not match in with what is expected from an employee as there is frequently now shows, last minute withdrawals etc. With the referees being school students, they may not available for weeks/months on end for reasons such as school camp, exams, representative sport, injury, social commitments etc. They treat their time at Dangan as a hobby and an easy way to earn some extra money without the commitment of a job. The referees are viewed by us as the same as other sporting competitions where they provide a service on a per game basis and no further requirements or expectations are in place.

Tournament dates change and are seasonal so there is no expectation of ongoing work. We only trade during the school terms and so there are significant periods of no games on at all such as an eight-week hiatus during Christmas.”

[21] Ms Britton then went on to list eight referees who were engaged during the week of the Applicant’s termination and two additional people engaged as a referee that week who were “never meant to be a referee just helped out last minute due to a referee no show”. Ms Britton went on to say that the number of referees required at this time was inflated given the seasonal “summer” competition. Ms Britton stated that there were four further coaches working for CFA at the time of the Applicant’s dismissal. She concluded her evidence by stating that, “it is my genuine belief that neither the referees nor coaches can be considered employees as per the definition provided. There is no expectation for ongoing or regular systematic work from either party.”

[22] As to the role of the coaches, Ms Britton’s evidence was that:

“The coaches that conduct sessions for CFA have full time careers elsewhere and coach 1 or 2 sessions a week generally because they are passionate about their sport and development of players. Once again there is no reliance on these coaches as employees as they dictate their availability around their work and personal lives. Coaches complete the Statement by a Supplier classing their coaching activities as a hobby. They have no expectation of ongoing or regular work with CFA.”

[23] While I note that the Statement of Supplier document completed by the coaches refers to their coaching activities being a hobby, I understand that this classification is focused upon taxation requirements rather than employment. Accordingly, I do not find that it is persuasive in relation to the present employment dispute.

Consideration

[24] The central question here is whether the referees and the coaches were engaged on a “regular and systematic basis”.

[25] The operation of this provision was discussed by a Full Bench in Shortland v The Smiths Snackfood Co Ltd[2010] FWAFB 5709 (Shortland) which said:

“[10] As a matter of the common law of employment, and in the absence of an agreement to the contrary, each occasion that a casual employee works is viewed as a separate engagement pursuant to a separate contract of employment. Casual employees may be engaged from week to week, day to day, shift to shift, hour to hour or for any other agreed short period. In this sense no casual employee has a continuous period of employment beyond any single engagement. Moreover, it is common for a casual employee to transition between a period in which their engagements with a particular employer are intermittent and a period in which their engagements are regular and systematic and vice versa. It is against that background that s.384 must be construed.

[11] The criteria in s.384(2)(a) make it clear that s.384 does not proceed on the basis that a casual employee’s period of employment for the purposes of the unfair dismissal remedy starts and ends with each engagement as understood in the common law of employment.

[12] Moreover, it is more than tolerably clear that s.384 is concerned with how an employee’s period of employment is calculated for the purposes of s.382(a). Section 384(2) draws a distinction between a period of service and a period of employment. It also draws a distinction between a period of continuous service and a period of service: a period of continuous service can be made up of a series of periods of service, some of which count towards the period of continuous service (ie. where the conditions in s.384(2)(a)(i) and (ii) are met) and some of which do not (ie. where one of the conditions in s.384(2)(a)(i) or (ii) is not met). It is clear from the language of s.384(2) that an employee may have series of contiguous periods of service with an employer that may count towards a single period of employment with that employer. Any given period of service in such a contiguous series of periods of service will count towards the employee’s period of employment only if the requirements in s.384(2)(a)(i) and (ii) are met. Section 384(2) is concerned only with determining which periods of service in such a contiguous series count toward the employee’s period of employment with the employer for the purposes of s.382(a).

[13] Continuous service by a casual employee who has an established sequence of engagements with an employer is broken only when the employer or the employee make it clear to the other party, by words or actions that there will be no further engagements. The gaps between individual engagements in a sequence of engagements should not be seen as interrupting the employee’s period of continuous employment within the meaning of s.384. In particular, a period of continuous service within the meaning of s.384(1) is not to be seen as broken by a period of ‘leave’ or an absence due to illness or injury.”

[29] In the earlier decision of Ponce, Roe C after considering the changes introduced by the Act and a range of authorities, coherently summarised his approach as follows:

“[75] I conclude from this that the set of facts in each case must be examined and that, if the number of hours worked is small and the gaps between days and times worked is long and irregular this means that there needs to be other evidence that the employment of a casual is regular and systematic. Conversely, if there is a clear pattern or a roster for the hours and days worked then this would be strong evidence of regular and systematic employment.

[76] In situations where there is not a clear pattern or roster of hours and days worked or a clear agreed arrangement between the employer and employee, then evidence of regular and systematic employment can be established where:

•  The employer regularly offers work when suitable work is available at times when the employer knows that the employee has generally made themselves available; and

•  Work is offered and accepted sufficiently often that it could no longer be regarded as simply occasional or irregular.

[77] Positive evidence of these two situations establishes regularity and a system to the employment. It is also positive evidence of a reasonable expectation of continuing employment on a regular and systematic basis. That is an expectation that this pattern of when work will continue to be offered and be accepted will continue.

[78] If the hours worked over a lengthy period are similar to or exceed that of full-time ordinary hours then this would also be strong evidence that work is being performed when offered and that work is being offered when available at the time parties know this is practical. Hence this would also be evidence of regular and systematic employment.”

[30] More recently, the Full Bench in Chandler v Bed Bath N’ Table Pty Ltd[2020] FWCFB 306 (Chandler) provided a summary of approach to determining whether a casual could be deemed regular and systematic: (emphasis added)

“[11] It is apparent on the face of the decision that the Deputy President’s determination as to whether Ms Chandler’s casual employment was regular and systematic was attended by a significant error of principle. In her application of s 384(2)(a) to the facts of the case, the Deputy President proceeded on the basis that it was necessary to identify a consistent pattern of engagement in the number of days worked each week, the days of the week worked and the duration of each shift in order to be able to conclude that the employment was regular and systematic. We do not consider this to be the correct approach. In Yaraka Holdings Pty Ltd v Giljevic, the Court of Appeal of the ACT gave consideration to the proper construction of s 11 of the Workers Compensation Act 1951 (ACT), which for relevant purposes deemed as workers for the purpose of that Act casual workers if their “engagement, under the contract or similar contracts, has been on a regular and systematic basis” taking into account a range of matters including the contractual terms, the working relationship and all associated circumstances, the period or periods of engagement, the frequency of work, the number of hours worked, the type of work, and the normal arrangements for someone engaged to perform that type of work. Crispin P and Gray J observed that the concept of employment on a regular and systematic basis was drawn from the Workplace Relations Act 1996, and went on to say (emphasis added):

[65] It should be noted that it is the "engagement" that must be regular and systematic; not the hours worked pursuant to such engagement. Furthermore, the section applies to successive contracts and non-continuous periods of engagement. It is true that subs (3) provides that, in working out whether an engagement has been on a regular and systematic basis, a court must consider, inter alia, the frequency of work, the number of hours worked under the contract or similar contracts and the type of work. However, these statutory criteria relate to the decisive issue of whether the relevant engagement has been on a regular and systematic basis. The section contains nothing to suggest that the work performed pursuant to the engagements must be regular and systematic as well as frequent.

…

[67] Connolly J was right to conclude that the absence of any contractual requirements for the respondent to work at set times or of any assumption that he be present on a daily weekly or monthly basis unless told otherwise did not preclude a finding that his engagements had been regular and systematic.

[68] The term "regular" should be construed liberally. It may be accepted, as the Magistrate did, that it is intended to imply some form of repetitive pattern rather than being used as a synonym for "frequent" or "often". However, equally, it is not used in the section as a synonym for words such as "uniform" or "constant". Considered in the light of the criteria in s11 (3)(a)-(g), we are satisfied that the pattern of engagement over the years from 1995 to 2002 satisfied this description.

[69] Mr Rares argued that the course of engagement over these years had not been shown to have been systematic because it had not been predictable that the respondent would be engaged to work at particular times, on particular jobs or at particular sites. Again, that is not the test. The concept of engagement on a systematic basis does not require the worker to be able to foresee or predict when his or her services may be required. It is sufficient that the pattern of engagement occurs as a consequence of an ongoing reliance upon the worker’s services as an incident of the business by which he or she is engaged.

[12] Similarly, Madgwick J said (emphasis added):

[89] … a ‘regular ... basis’ may be constituted by frequent though unpredictable engagements and that a ‘systematic basis’ need not involve either predictability of engagements or any assurance of work at all.

[90] The respondent’s work for the appellant was certainly frequent enough to be termed ‘regular’ within an acceptable understanding of that term, which may, even in ordinary speech, be used to denote ‘frequent’.

[91] Engagement under contracts on a ‘systematic basis’ implies something more than regularity in the sense just mentioned, that is, frequency. The basis of engagement must exhibit something that can fairly be called a system, method or plan (cf the definition of ‘systematic’ in the Macquarie Dictionary, revised 3rd edn, 2001).

[13] The reasoning in Yaraka Holdings has been applied to the concept of casual employment on a regular and systematic basis in the FW Act. In WorkPac Pty Ltd v Skene, the Federal Court Full Court favoured (without needing to finally adopt) the view that the construction in Yaraka Holdings should be applied to the definition of “long term casual employee” in s 12 of the FW Act (which includes a requirement that the employee has been employed “on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months”). The Commission in its own decisions has consistently applied Yaraka Holdings to s 284(2)(a), including in the Full Bench decisions in Pang Enterprises Pty Ltd ATF Pang Family Trust v Sawtell and Bronze Hospitality Pty Ltd v Janell Hansson as well as in numerous first instance decisions.”

[26] For the purposes of my analysis, I have excluded the two referees who were described by Ms Britton as, “never [having been] meant to be a referee just helped out last minute due to a referee no show”.

[27] As to whether the employment of the remaining referees was systematic, it is clear that the business had an ongoing reliance on the referees. Although the hours worked may not be systematic and regular, their engagement with the business would fit the definition set out above. To apply the analysis of Madgwick J, there was a ‘system’ or ‘plan’ or method of engagement. Accordingly, I find that pursuant to the legal definition under the Act, the referees are regular and systematic and do count as employees. For the same reasons, I find the coaches in a similar position.

[28] In light of that finding, and the finding in respect of associated entities, I conclude that the Respondent is not a small business employer in accordance with the Act thus that jurisdictional objection fails.

[29] I will issue directions in respect of the substantive application in due course.

DEPUTY PRESIDENT

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 1   Harrison-Buckby v McMeckan Consulting Pty Ltd trading as Basils Farm[2018] FWC 6614 [4], [6].