| [2022] FWC 878 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Domenico Catalano
v
Transilvania Constructions Pty Ltd
(U2021/8991)
COMMISSIONER WILLIAMS |
PERTH, 14 APRIL 2022 |
Application for an unfair dismissal remedy
[1] This decision concerns an application made under section 394 of the Fair Work Act 2009 by Mr Domenico Catalano (Mr Catalano or the Applicant). The Respondent is Transilvania Constructions Pty Ltd (the Respondent).
[2] Evidence at the hearing was given by Mr Catalano himself and Ms Sandra Klarich. For the Respondent evidence was given by the Managing Director Mr Vasile Onicas and Mr Benjamin Badita an employee of the Respondent.
[3] The Applicant was represented by Ms Klarich, who is not a lawyer nor a paid agent, and the Respondent was self-represented.
[4] It became evident during the hearing of this matter that central to the conflict between the Applicant and the Respondent is the Respondent’s view that the Applicant is not an employer but rather a subcontractor.
[5] The witness evidence in this matter was somewhat difficult to follow and at times only tangentially concerned the issues the Commission has to determine in an unfair dismissal remedy application such as this.
[6] The Applicant has been a registered builder since 1981.
[7] He says prior to 2004 he was engaged by the Respondent on a per job basis of $3000 plus GST per build.
[8] He says he was employed by the Respondent as a supervisor from April 2004.
[9] The Applicant has provided a copy of a document headed “Contract of employment” dated 7 April 2004 which appears to have been signed by the Applicant and Mr Onicas.
[10] The document says it is between the Respondent and the Applicant. It says the Respondent hereby agrees to employ the Applicant for an unlimited period as a full-time building supervisor.
[11] The document says the Applicant’s duties will include supervision of all construction jobs undertaken by the company from the commencement to completion, including coordinating the subcontractors, checking the quality of work. Remuneration is $32,000 per annum. Either party may terminate this contract by giving one months written notice.
[12] He says his accountant for that period confirms he was paid at the rate of $600 plus GST per week by the Respondent from 2006 onwards through to 2021. 1
[13] His evidence was that in September 2010 the Builders Registration Board requested that the employment contract between himself and the Respondent be redrafted.
[14] The letter he has provided from the Builders Registration Board is addressed to Mr Onicas of the Respondent and copied to the Applicant and requests that the contract be redrafted so that he is a bona fide employee of the company and receives standard employee entitlements including the payment of a wage, superannuation, workers compensation, holiday and sick leave. The letter was dated 30 September 2010. 2
[15] The Applicant says an amended contract was signed between himself and the Respondent. This was provided to the Commission and is dated 6 October 2010. 3
[16] That document of this date (the 2010 Contract) says it is made between the Respondent, as the employer, and the Applicant as the employee.
[17] The first clause reads as follows,
“Employment.
The employer hereby employs the employee and the employee here by accepts employment upon the terms and conditions hereinafter set forth.”
[18] Amongst other things the 2010 Contract says that the employee being a registered builder agrees to become the nominated supervisor for the employer and the employee must attend at the times requested by the employer.
[19] It says the employer shall pay the employee a salary of $31,200 per year gross.
[20] It says the employee shall have four-week’s paid vacation per year and the employer shall provide 10 days sick leave for the employee for legitimate illness per year. It says the employer will contribute 9% of the employees gross wages into a superannuation fund of the employee’s choice.
[21] The 2010 Contract says either party shall be given 13 weeks written notice of termination.
[22] The 2010 Contract says the employee’s duties shall be to attend construction jobsites as requested by the employer or the office of the employer for meetings on a weekly basis and when necessary, supervise building work and report to the employer on progress thereof.
[23] It says the employee will work a minimum of 15 hours per week on fulfilling these duties.
[24] It says it is the sole entire agreement between the parties and supersedes other agreements.
[25] Having reviewed the documents and noting Mr Onicas’ denials that he signed this contract I do accept the 2010 Contract was signed by the Applicant and by Mr Onicas.
[26] There are a number of only partially legible handwritten notes on the agreement; the author, the status and the relevance of which is unknown.
[27] The Applicant’s evidence was notwithstanding this agreement being signed by him and Mr Onicas he continued to receive his remuneration with GST added.
[28] His evidence was he believed he was an employee and he has provided service personally for over 17 years.
[29] He says he has not taken annual leave or long service leave.
[30] He says he should be paid up until 16 September 2021.
[31] He agrees that in September 2021 he refused to sign a letter confirming Mr Onicas competency as a supervisor. He says he had previously signed such letters in 2014 and early 2021. He says he was not required to sign the letter and so refusing to sign it was no ground to terminate him.
[32] He says there was no opportunity to discuss this before he was given his letter of termination. 4
[33] The termination letter dated 20 September 2021 says it is to confirm that the Applicants contract of employment with the Respondent is terminated as of that date. The last line reads as follows,
“Reason for termination Grossly Misconduct and refusing to sign requested documents by the director Vasile Onicas” (sic)
[34] In his evidence in reply to Mr Onicas evidence in chief the Applicant says that he was provided no warning or notice at all. He received neither 30 days nor 12 weeks notice which was in the latest employment contract.
[35] The applicant’s evidence was that his illness meant he was in and out of hospital in 2020 but he did frequent the site when he could. He says he told Mr Onicas he could be absent at times depending on his treatment and how unwell he got. He says he did attend site when possible. 5
[36] He strongly disagrees that he was absent from the Callison Road site until early September 2021. He says he was absent at times however was on-site to inspect the first-floor brickwork, the roof cover and plaster.
[37] He says he was vigilant in visiting the sites frequently to ensure all milestones were inspected and would do so often when no one was present.
[38] He also says that Mr Badita’s evidence is not true and he spoke with him many times on site.
[39] He says he was absent during the ground floor brickwork and slabs due to his illness. He gave a number of specific examples he says where he was on site at times also with Mr Onicas and/or Mr Badita during 2021.
[40] He denies he, or anyone he noticed, fabricated the payslips.
[41] He says what occurred was that payslips in the letter dated 15 April 2021 were provided to him by Mr Onicas following the Applicant’s request to Mr Onicas as he was applying to the bank for a loan and needed proof of his income.
[42] He agrees that he also engaged in his own business Dom’s Building Company and undertook bricklaying contracts for the various builders at the same time he was personally employed, he says, by the Respondent.
[43] Relevantly the evidence of Ms Klarch was that with guidance from the Applicant and Mr Onicas, she had prepared a contract of employment in 2004. This document is the same as the contract of employment dated 7 April 2004 the Applicant refers to in his evidence.
[44] She did not prepare the contract dated 6 October 2010 that the Applicant has referred to in his evidence. She believes this was prepared by Mr Onicas.
[45] The evidence of Mr Onicas was that he did sign an agreement with the Applicant on 4 April 2004 for him to work as the Respondent’s nominated building supervisor. The remuneration was to be $30,000 per annum. He says either party could terminate the agreement by 30 days notice.
[46] I note this evidence closely, but not exactly, aligns with the 2004 contract of employment the Applicant refers to in his evidence. 6
[47] He says that in September 2021 he was shocked while on-site to have a worker mention that the Applicant had not been seen in ages. He later confirmed with Mr Badita that the Applicant had not attended this site for nearly 11 months.
[48] He says he then asked the Applicant about this and for him to provide a time sheet to show the time he was in hospital and missed work in the last two years but the Applicant refused. He says the Applicant told him his job still got done and his building licence was still used without him being on-site and Mr Onicas says from there, the argument started.
[49] He says he asked the Applicant if he had told the Building Commission about his prolonged absence, because if they found out the Respondent could lose its building contractor license and the Applicant said he had not told them.
[50] Mr Onicas says he also became aware through his accountant, which he has in common with the Applicant, that the Applicant was seeking advice about backpay of superannuation and other employee entitlements. He says their accountant told the Applicant that he was a subcontractor all these years and was not entitled to paid leave or superannuation.
[51] His evidence was that he believes the Applicant created false payslips and a false letter of employment which was another reason why he terminated him for Gross Misconduct.
[52] Whilst Mr Onicas did not mention it in his evidence in the Form F3 Employer response to unfair dismissal application at section 3.1 para 3 he states that the Applicant not inspecting sites daily gives him grounds to terminate his employment for gross misconduct. Noting he is self-represented I accept this as his evidence.
[53] The evidence of Mr Badita was that he works full-time for the Respondent and has done so since 2010.
[54] He says he knew that the Applicant was working as the nominated supervisor for the Respondent but says that the Applicant rarely came to any of the jobs especially in the last few years because he had cancer.
[55] He says in 2020 he worked on two building sites where the Applicant’s building company was the builder, not the Respondent’s company. He says that these two sites he would see the Applicant there daily, telling everyone what to do.
[56] But his evidence was that on the other sites where Mr Badita worked for the Respondent, he rarely saw the Applicant. He says the Applicant would come and say hello, have a look around and leave.
[57] His evidence was he was always wondering why Mr Onicas was keeping the Applicant because he was never doing anything or telling anyone what to do like he did on the previous jobs.
[58] Mr Badita’s evidence was that in September 2021 he was on-site with Mr Onicas at the Respondent’s Callison Road site. He says some tradesman came onto the site and shook hands and then said to the Applicant that he hadn’t seen him in ages and was he okay. His evidence was the Applicant had replied that he was in and out of hospital battling with cancer.
[59] His evidence was that after the Applicant had left site Mr Onicas asked Mr Badita when was the last time he saw the Applicant on any of the jobs. He replied that he thought the Applicant was no longer working for Mr Onicas.
[60] In this matter the Respondent Transilvania Constructions Pty Ltd disputes that the Applicant was an employee. Consequently, the Commission must first consider this jurisdictional objection to this application having been made.
[61] Recently the High Court of Australia in CFMMEU v Personnel Contracting (2022) HCA 1 (Personnel Contracting) considered the proper approach to determining whether a relationship between parties is one of employment or otherwise. In the decision Kiefel CJ, Keane and Edelman JJ held as follows;
“43. While there may be cases where the rights and duties of the parties are not found exclusively within a written contract, this was not such a case. In cases such as the present, where the terms of the parties' relationship are comprehensively committed to a written contract, the validity of which is not challenged as a sham nor the terms of which otherwise varied, waived or the subject of an estoppel, there is no reason why the legal rights and obligations so established should not be decisive of the character of the relationship.
…
59. Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties' rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute, there is no occasion to seek to determine the character of the parties' relationship by a wide ranging review of the entire history of the parties' dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties' rights and obligations, not to form a view as to what a fair adjustment of the parties' rights might require.
60. In this respect, the principles governing the interpretation of a contract of employment are no different from those that govern the interpretation of contracts generally. The view to the contrary, which has been taken in the United Kingdom, cannot stand with the statements of the law in Chaplin and Narich.
61. The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider “the totality of the relationship between the parties” by reference to the various indicia of employment that have been identified in the authorities. What must be appreciated, however, is that in a case such as the present, for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties' contract, and not simply an aspect of how the parties' relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.”
(References omitted)
[62] This approach was also accepted by Gordon J at [162] and [173] and by Steward J at [203] agreeing with Gordon J.
[63] The High Court’s approach above is applicable to Mr Catalano’s application because the parties had comprehensively set down the terms of their relationship in the 2010 Contract.
[64] The evidence is common between the parties that in 2004 they had entered into an agreement which was a contract of employment 7.
[65] It is not contested that on 30 September 2010, the Builders Registration Board wrote to Mr Onicas requesting the employment contract between the Respondent and the Applicant be redrafted so that he is “.. a bona fide employee of the company with standard employee entitlements”. 8
[66] One week later, on 6 October 2010, I find that Mr Onicas and Mr Catalano signed the 2010 Contract. 9
[67] The 2010 Contract, as the Builders Registration Board had requested, expressly states that the Respondent, as the employer, employs the Applicant as the employee.
[68] The 2010 Contract also sets out the agreed employee entitlements, being a salary of $31,200 per year gross, four weeks paid vacation per year, employer contribution of 9% superannuation and that the employment may be terminated at the discretion of either the employer or the employee by giving 13 weeks written notice of termination.
[69] The contract also details with some specificity the employee’s duties and that the employee will work a minimum of 15 hours per week.
[70] The 2010 Contract expressly states that it supersedes any and all other agreements between the parties.
[71] Considering the applicable principles set down by the High Court in Personnel Contracting the circumstances here are that the parties have comprehensively committed the terms of their relationship to a written contract, that being the 2010 Contract.
[72] Consequently, the characterisation of their relationship as one of employment or otherwise is to be determined by reference to the rights and obligations of the parties under the 2010 Contract, not how the parties' relationship has come to play out in practice.
[73] The rights and obligations of the parties under the 2010 Contract expressly and unambiguously are those of employer and employee.
[74] Consequently, my decision is that Mr Catalano was an employee of Transilvania Constructions Pty Ltd at the time his employment was ended by the letter of the Respondent dated 20 September 2021. 10
[75] Given the conclusion that the Applicant was an employee of the Respondent he was entitled to make this application alleging that his dismissal was unfair.
[76] Section 387 of the Act sets out the matters the commission must have regard for when considering whether the dismissal of an employee is harsh, unjust and reasonable. This section are set out below.
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.”
[77] I will now turn to consider those matters prescribed in section 387.
Valid reason to dismiss?
[78] The Applicant concedes his poor health did at times interfere with him attending the Respondents sites but he downplays the extent of this in his evidence. Mr Badita’s evidence however is that the Applicant was rarely onsite and I accept this evidence. Consequently, I am satisfied that at times in 2020 and 2021 because of his poor health the Applicant was not attending site to the extent required of him to properly discharge his responsibilities as the nominated supervisor.
[79] The Applicant did not keep the Respondent regularly informed of the impact his poor health was having on his work as the nominated supervisor. Mr Onicas had been aware the Applicant had health problems but was unaware that the Applicant had at times been unable to attend site as regularly as would be expected of him.
[80] Mr Onicas clearly found this to be unacceptable when he became aware of what had been occurring. 11
[81] In all the circumstances, Mr Catalano not attending site with the regularity that was required of him and not making his employer aware that he was unable to do so for an extended period of time was a valid reason for the Applicant’s dismissal.
[82] However, the termination of employment letter dated 20 September 2021 expressly refers to the reason for termination as being the Applicant’s refusal to sign documents as requested by Mr Onicas.
[83] In addition, Mr Onicas evidence was that the Applicant falsifying payslips and a letter of employment was another reason for his dismissal.
[84] There is nothing before the Commission that demonstrates that the Applicant was obliged to sign the particular documents Mr Onicas had requested. Consequently, the Applicant’s refusal to sign the documents was not a valid reason for his dismissal.
[85] Separately, I am not satisfied that the Applicant falsified payslips or a letter of employment. Consequently, these allegations are not a valid reason for his dismissal.
[86] There was no notification as to why the Respondent was going to dismiss the Applicant before it occurred.
[87] The Applicant was not given an opportunity to respond to the reason he was dismissed before the dismissal occurred.
[88] There was no refusal to allow the Applicant to have a support person.
[89] There were no warnings by the Respondent regarding the Applicant’s performance.
[90] The Respondents is a very small business with three employees including the Applicant. It is clear that the small size of the enterprise negatively impacted the procedure followed in effecting the dismissal.
[91] It is clear the Respondent has no in-house Human Resource Management specialists nor expertise and this also negatively impacted the procedure followed in effecting the dismissal.
[92] The Applicant has been employed for approximately 17 years.
[93] It is apparent that in the past Mr Catalano and Mr Onicas had a positive working relationship and for many years their informal arrangements, which were contrary to the 2010 Contract, were apparently mutually beneficial for both parties.
[94] Their attitude towards each other has unfortunately soured and their interactions at the hearing were characterised by emotional recriminations about various disputes, real or imagined.
[95] It is obvious that Mr Catalano was not transparent with Mr Onicas about his illness and its’ impact on him regularly attending to his work. This went unnoticed for a lengthy period because of the trust between the two men built up over their long relationship.
[96] Mr Onicas negative reaction when he became aware that Mr Catalano had not been regularly attending site was however further complicated by other interests Mr Onicas had in himself obtaining his own building licence to become the nominated registered supervisor with the Builders Registration Board. Mr Catalano’s subsequent refusal to sign letters to assist Mr Onicas in this endeavour, probably because Mr Catalano was upset with Mr Onicas criticism of his infrequent site attendance, then triggered Mr Catalano’s dismissal.
[97] Applying the statutory considerations to this relationship breakdown, on the one hand there was a valid reason for Mr Catalano’s dismissal, because he had not been attending site as regularly as would have been required because of his illness and he had not made his employer aware of the extent of this. However, on the other hand Mr Onicas did not expressly dismiss him for this reason but instead, in the termination letter, says he dismissed Mr Catalano because he had refused to sign a letter for him. He also says he was dismissed because he believed the Applicant had falsified payslips and an employment letter which however is not mentioned in the termination letter.
[98] In any event Mr Catalano was not notified of any reason he was to be dismissed for before his employer took the decision to dismiss him. He was also not given an opportunity to respond to the reason/s his employer was considering dismissing him.
[99] Self-evidently, the procedure followed by the Respondent was unsatisfactory and prejudicial to Mr Catalano. However, these procedural deficiencies are explained by the very small size of the business and by the absence of Human Resource Management specialists or expertise.
[100] Ultimately though Mr Catalano has lost his employment of 17 years. Consequently, weighing up all these matters I do find that the dismissal was harsh and unreasonable.
[101] Mr Catalano was unfairly dismissed.
[102] The once positive relationship between Mr Catalano and Mr Onicas unfortunately is in the past.
[103] Given the very small size of the business and the negative relationship between the two men reinstatement is inappropriate.
[104] I will turn to consider the remedy of compensation which is appropriate and is provided for in section 392 of the Act.
[105] There is no evidence that an order of compensation would affect the viability of the enterprise.
[106] The Applicant had been employed for approximately 17 years at the time of his dismissal.
[107] It is apparent that Mr Onicas was approaching the point when he would no longer need to use Mr Catalano as his nominated building supervisor and he intended in future, after satisfying the various requirements of the Builders Registration Board, that he would himself take on this role. 12
[108] Consequently, if Mr Catalano had not been dismissed when he was, my assessment is that his employment in the circumstances would have lasted only a further three months.
[109] The 2010 Contract provides for payment of $31,200 per year gross for working 15 hours per week. This equates to $7,800 gross for a further three months employment.
[110] There is no evidence that Mr Catalano has earned any other remuneration for the 15 hours per week he would otherwise have worked for the Respondent since he has been dismissed.
[111] I am however satisfied that Mr Catalano’s misconduct in not attending site as regularly as was required of him and not having advised his employer of this fact did contribute to the employer’s decision to dismiss him. Consequently, it is my decision that one month’s salary should be deducted from the compensation payable.
[112] The amount of compensation to be paid to Mr Catalano will then be the equivalent of two months salary which is $5200 gross from which PAYG tax will be deducted.
[113] An Order to that effect will now be issued.
Printed by authority of the Commonwealth Government Printer
<PR740408>
1 Applicant’s statement, Attachment 1
2 Applicant’s statement, Attachment 7
3 Applicant’s statement, Attachment 8
4 Applicant’s statement, Attachment 5
5 Applicant’s statement, Paras 36 to 40
6 Applicant’s statement, Attachment 14
7 Applicant’s statement, Attachment 14
8 Applicant’s statement, Attachment 7
9 Applicant’s statement Attachment 8
10 Applicant’s statement Attachment 5
11 Form F3 section 3.1 para 3
12 Form F3 section 3.1 para 1