[2010] FWA 5374

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

Mr Shane Adams
Condamine Catchment Natural Resource Management Corporation Limited T/A Condamine Alliance



Summary: whether small business employer – whether other entity was an associated entity under the Corporations Act 2001 – whether “control” - whether qualifying investment held in entity – influence over financial and operational decision making - governance

[1] The Applicant in this matter is Mr Shane Adams, who seeks an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (“the FW Act”), in relation to the termination of his employment by the Condamine Catchment Natural Resource Management Corporation Limited (“the Respondent”).

[2] The Respondent contends that Fair Work Australia (“FWA”) has no jurisdiction to deal with the application for reason that at the relevant time the Respondent was a small business employer. Section 396(b) of the FW Act states that before dealing with the merits of the application, FWA must determine if the Applicant is protected from unfair dismissal.

[3] Section 382 of the FW Act reads as follows:

[4] The Respondent contends that the Applicant is not an employee who is protected against unfair dismissal because the Applicant, at the time the notice of termination was an employee who was yet to complete the minimum employment period, as further set out at s.383 of the FW Act:

[5] The Applicant was provided the opportunity to cross examine the Respondent's witnesses at a hearing (by telephone or by direct appearance) but declined. The Applicant requested that the matter of the jurisdictional hearing be determined ‘off-the-documents’. The role of procedural fairness in such circumstances was put to the Applicant in writing, but he confirmed his position nonetheless.

[6] It appears on the sworn evidence before me that the Respondent enters into contractual relationships with State and Federal agencies, and then awards contracts (mostly of 12 months in duration) to other bodies to deliver programs concerning sustainable natural resource management, which are evaluated against performance indicators or milestones set out in those contracts. Ongoing payments are made on the successful fulfilment of the contracted performance measures. The Respondent's activities are focused on the headwaters of the Darling River system in the Condamine area.

[7] The Respondent is a company limited by guarantee. 1

[8] The Applicant appears to have commenced work with the Respondent on 5 May 2009, in the role of an Indigenous Partnerships Officer. He performed duties for the Respondent for a period of some seven months, with his employment being terminated on 4 December 2009.

[9] The Respondent contends that because it is a small business employer for the FW Act’s purposes, the Applicant was required to be employed for a 12 month period of time.

[10] Schedule 12A of the Fair Work (Transitional and Consequential Amendments) Act 2009 (“FTCA Act”) reads as follows:

[11] Applying the formula set out above, the Respondent’s evidence is that in the four week period immediately preceding Mr Adam’s termination of employment, the Respondent's employees worked a total of 2,123.70 ordinary time hours. When this number is divided by 152, the result indicates the Respondent employed 13.97 full time equivalent employees. 2

[12] The Applicant contends that if the Respondent employs the requisite number of employees (less than 15) for reasons that it has not included employees of its associated entities, which were excluded in the above calculations.

[13] The issue that is before me now then is to determine is whether or not the Respondent has within its company structure any associated entities, if it does, whether those associated entities employ any persons who should be included in determining the number of employees employed by the Respondent at the relevant time.

[14] Section 50AAA of the Corporations Act 2001 (“the Corporations Act”) reads as follows in relation to associated entities:

[15] There is no argument that the Respondent has any related bodies corporate.

[16] The Applicant contends, however, that the Respondent has associated entities for other purposes, and that these are the Landcare organisations or groups in the Darling Downs. The Applicant appears to contend that the Respondent “controls” the Landcare groups because it provides funding to them to employ Landcare Coordinators.

[17] The Applicant appears to contend that this interrelationship between the Landcare groups and the Respondent constitutes control (in the sense contemplated in s.50AAA(3) of the Corporations Act) by the latter (as the Principal) over the former (as the associated entities).

[18] The Respondent also appears to contend that the Landcare groups are associated entities of the Respondent because s.50AAA(6) of the Corporations Act has been satisfied.

[19] Section 50AAA(6) of the Corporations Act sets out three interrelated conditions that must all be satisfied in order for the Landcare groups to be associated entities or associates of the Respondent.

[20] Section 50AA of the Corporations Act defines “control” in the following way:

[21] It appears to me that Landcare (which is itself a voluntary community program) in one of a number of founding members of the Respondent. As such it holds one of the various directorships on the Board. There is also an independent chairperson.

[22] The Respondent appears to have no knowledge of the extent of the Landcare funding arrangements outside those purchaser-provider contracts it enters into with that entity. 3

[23] The practical control which the Respondent exercises over Landcare is limited principally to the contractual relationship it forms with Landcare as the service providers to which it awards funding for project work. 4 Such control does not extend to the meaning of control defined at s.50AA of the Corporations Act.5 It appears from the contracts themselves that the degree of control over the contracted entity’s (that is in this case, Landcare’s) financial and operational policies that arises is limited to the provision of funding, subject to availability of the government funding and the achievement of the key deliverables or outcomes. Indeed, the contractual relationship between the Respondent and Landcare appears to be an ordinary contract to render services for a consideration (subject to the availability of funding and competent performance).

[24] This relationship seems to me to be remote from the breadth of the notion of control envisaged by s.50AA of the Corporations Act. Such contracts are likely of only one of a number of sources of revenue for Landcare and, in any event, do not appear to extend to determining decision making about its wider financial or its operational policies. 6

[25] Further, nothing about the operation of conduct of the Respondent's Board or its general governance arrangements that suggest to me that the Respondent is capable of influencing Landcare’s financial or operational policies.

[26] Whilst the Respondent employs a Landcare Coordinator, the evidence suggests this is a role that provides information and training to assist affiliates of Landcare (farmers and graziers) to coordinate their activities and apply for funding. The Respondent is not itself a member (or a shareholder) of any Landcare group (which is a separate legal entity in its own right with its own constitution and governance arrangements and independent financial affairs).

[27] Because of this, it cannot be found (contrary to the apparent claims of the Applicant) that the Respondent has any capacity to exercise control in any practical way over Landcare’s governance processes and through that its financial or operational decision making.

[28] The Applicant also contended that the Respondent had a “qualifying investment” in Landcare. The Applicant appears to contend that the contractual relationship between the Respondent and Landcare constitutes a “qualifying investment”.

[29] I note that the Corporations Act defines an investment as follows:

[30] The evidence of the Respondent's auditor is that the Respondent holds no shares, debentures, options or interests in Landcare. 7 This is consistent with the Respondent's corporate circumstances as set out above.

[31] Of course, none of the converse arrangements apply. There could be no share holdings in the Respondent, for example, by Landcare because s.124 of the Corporations Act precludes a company limited by guarantee (as the Respondent is) from issuing shares. And the Principal in regard to the contractual relationships is not Landcare, such that it would be particularly difficult to argue Landcare exercised any control over the Respondent’s financial and operational affairs.


[32] On the basis of the above findings, the Respondent is a small business employer for the FW Act’s purposes. As such the Applicant, in order to be protected against an unfair dismissal, must have been employed for a minimum period of 12 months. The Applicant was employed for a period less than the minimum period applying to a small business employer. Therefore the application under s.394 of the FW Act must be dismissed as it is beyond Fair Work Australia’s jurisdiction to deal with it further.


 1   Statutory Declaration of Mr John Herbert dated 17 May 2010 at PN5

 2   Statutory Declaration of Mr Phillip J McCullough dated 12 March 2010 at Annexure PM-4; Statutory Declaration of Mr Phillip J McCullough dated 12 March 2010 at PN13; Statutory Declaration of Mr Phillip J McCullough dated 19 July 2010 at PNS5 and 9 in respect of the status of Landcare Coordinators.

 3   An example of such a contract is provided in annexure JH-4 to the statutory declaration sworn by Mr John Herbert, Chairman of the Respondent’s Board, on 17 May 2010

 4   Statutory Declaration of Mr John Herbert dated 17 May 2010 at PN 7(e)-(i)

 5   Statutory Declaration of Mr John Herbert date17 May 2010 at PN 8(m)

 6   Annexure JH-3 and JH-4 of Mr John Herbert’s Statutory Declaration dated 17 May 2010

 7   Statutory Declaration of Mr William J Dingle dated 10 May 2010 at PN6(c)(i)

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