DECISION

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

Ms Janine Budden
v
Finke Enterprises Pty Ltd ATF M&L Carlson Family Trust T/A Fused Cafe Pender Place
(U2015/13072)

Application for relief from unfair dismissal – jurisdictional objection - minimum employment period – small business employer.

[1] This decision relates to an unfair dismissal application by Ms Janine Budden pursuant to section 394 of the Fair Work Act 2009 (Cth) (the Act) against her former employer, Finke Enterprises Pty Ltd (Finke Enterprises) as trustee for M&L Carlson Family trust, trading as Fused Café, Pender Place.

[2] Finke Enterprises objects to Ms Budden’s application on the basis that it was, at the time of Ms Budden’s dismissal, a small business employer and Ms Budden had not completed the minimum employment period (12 months) at the time of her dismissal.

[3] After taking into account the wishes of the parties to the matter as to the way in which the Commission would consider the application and inform itself in relation to the application, I decided to conduct a conference pursuant to section 398 of the Act to determine the jurisdictional objection raised by Finke Enterprises.

Legislative framework

[4] In order to be protected from unfair dismissal, a person must have completed a period of employment with his or her employer of at least the minimum employment period (s.382(a) of the Act). The minimum employment period is one year for a small business employer and six months for other employers (s.383 of the Act).

[5] A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at the time (s.23(1) of the Act). For the purpose of calculating a number of employees employed by the employer at a particular time:

(a) all employees employed by the employer at the time (including the dismissed employee who has made the unfair dismissal application) are to be counted subject to the caveat that a casual employee is not to be counted unless, at the time, he or she has been employed by the employer on a regular and systematic basis (ss.23(2) & (4) of the Act); and

(b) associated entities are taken to be one entity (s.23(2) of the Act). The expression “associated entity” has the meaning given by section 50AAA of the Corporations Act 2001 (Cth) (the Corporations Act).

[6] Section 50AAA of the Corporations Act provides as follows:

“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.”

[7] Section 50AA of the Corporations Act defines “control” as follows:

“(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.”

[8] Except in chapter 2E of the Corporations Act, a reference to an “entity” in the Corporations Act is a reference to “a natural person, a body corporate (other than an exempt public authority), a partnership or a trust” (s.64A of the Corporations Act).

Relevant facts

[9] Ms Budden was employed by Finke Enterprises for approximately 7.5 months from February 2015 until 21 September 2015, at which time she was dismissed without notice. It follows that if Finke Enterprises was a small business employer at the time of Ms Budden’s dismissal then she is not protected from unfair dismissal because she had not completed at least the minimum employment period (12 months) at the time of her dismissal.

[10] It is not in dispute and I accept on the evidence that, at the time of Ms Budden’s dismissal, Finke Enterprises employed 12 employees, seven of whom were employed by Finke Enterprises as casual employees on a regular and systematic basis.

[11] Ms Budden contends that Carlson Group Australia Pty Ltd (Carlson Group) is an associated entity of Finke Enterprises.

[12] The directors of Finke Enterprises are, and were on 21 September 2015, Mrs Lauren Carlson and Mr Michael Carlson. They are, and were on 21 September 2015, also the shareholders of Finke Enterprises.

[13] Mrs Carlson is, and was on 21 September 2015, the sole director of Carlson Group. The shareholders of Carlson Group are, and were on 21 September 2015, either Mrs Carlson or Mr and Mrs Carlson.

[14] Finke Enterprises owns and operates the Fused Café, Pender Place, Maitland where Ms Budden worked.

[15] Carlson Group acquired and commenced operating the Coffee Emporium at Greenhills in about mid August 2015. It has continued operating that business since about mid August 2015.

[16] It is not in dispute and I accept on the evidence that Mrs Carlson controls, and on 21 September 2015 controlled, both Finke Enterprises and Carlson Group. In particular, Mrs Carlson has overall responsibility for the management and financial operation of both Finke Enterprises and Carlson Group. Although managers are employed to work in each business, they report directly to Mrs Carlson and she is the person who prepares the rosters for employees to work in each business, decides who will be employed in each business, and has managerial and financial responsibility for each business. In addition, Mrs Carlson works in the Coffee Emporium three or four days per week for a few hours each day. Having regard to the practical influence Mrs Carslon can, and does, exert over both Finke Enterprises and Carlson Group, there is no question that Mrs Carlson has, and had on 21 September 2015, the capacity to determine the outcome of decisions about the financial and operating policies of both Finke Enterprises and Carlson Group.

[17] Mr Carlson undertakes the odd handyman job in each business and provides advice to Mrs Carlson from time to time on management and staff issues. His involvement in each business is very limited.

[18] Ms Budden named about six employees who she contends were employed on 21 September 2015 by Carlson Group to work in the Coffee Emporium business. Mrs Carlson confirmed in her evidence that the employees named by Ms Budden were in fact employed by Carlson Group to work in the Coffee Emporium business on 21 September 2015 and to the extent that those employees were engaged as casuals they were employed on a regular and systematic basis on 21 September 2015.

Is Carlson Group an associated entity of Finke Enterprises?

[19] It is not in dispute and I am satisfied on the evidence that subsections 50AAA(2), (3), (4), (5) and (6) of the Corporations Act are not satisfied in this case. The question I need to determine is whether subsection 50AAA(7) of the Corporations Act is satisfied.

[20] For the reasons set out in paragraph [16] above, I am satisfied that Mrs Carlson controlled both Finke Enterprises and Carlson Group on 21 September 2015. Mrs Carlson also gave evidence, which I accept, that the operations, resources and affairs of Finke Enterprises and Carlson Group are, and were on 21 September 2015, both material to her, particularly in so far as she is responsible for the overall management and affairs of, and she earns income from, each company. In light of this evidence, Mr Carlson, who appeared for Fink Enterprises at the conference on 15 December 2015, accepted in submissions that subsection 50AAA(7) of the Corporations Act would be satisfied in this case if a natural person such as Mrs Carlson could be “an entity (the third entity)” within the meaning of subsection 7.

[21] Section 64A of the Corporations Act defines “an entity” to include “a natural person”. It follows, in my view, that Mrs Carlson is “an entity (the third entity)” within the meaning of subsection 50AAA(7) of the Corporations Act. My conclusion in this regard is supported by a decision of Judge Riley of the Federal Circuit Court of Australia in Director of the Fair Work Building Industry Inspectorate v Vic Metro Brick and Blocklaying Pty Ltd [2015] FCCA 2266. In that case, Judge Riley held (at [85]) that a natural person who was the sole director and shareholder of two corporations was “an entity [who] controls both the principal and the associate” within the meaning of subsection 50AAA(7) of the Corporations Act.

[22] Accordingly, I am satisfied that Finke Enterprises and Carlson Group were, on 21 September 2015, associated entities within the meaning of section 50AAA of the Corporations Act. Because the combined employees of Finke Enterprises and Carlson Group on 21 September 2015 were at least 15 in number, Fink Enterprises was not, at that time, a small business employer within the meaning of section 23 of the Act. Finke Enterprises’ jurisdictional objection 1 is therefore dismissed and the matter will proceed to a determination in due course of the merits of Ms Budden’s unfair dismissal application. Directions in relation to the future conduct of the matter will be issued shortly.

COMMISSIONER

Appearances:

Ms Janine Budden, on her own behalf;

Mr Michael Carlson and Mrs Lauren Carlson, on behalf of Finke Enterprises.

Hearing details:

2015.

Newcastle:

December, 15.

 1   In particular, Finke Enterprises objects to Ms Budden’s application on the basis that it is, and was at the time of Ms Budden’s dismissal, a small business employer and Ms Budden had not completed the minimum employment period (12 months) at the time of her dismissal.

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