[2016] FWC 4946

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Paul (aka Pablo) Sorocuk
v
The Resident Cafe
(U2016/3972)

COMMISSIONER HARPER-GREENWELL

MELBOURNE, 22 JULY 2016

Application for relief from unfair dismissal—Threshold jurisdiction issue to be determined—Whether employer is a small business employer—Whether minimum employment period met—Application dismissed.

[1] Mr Paul Sorocuk filed an application under s.394 of the Fair Work Act 2009 (the Act) alleging that the termination of his employment by the The Resident Café on 31 December 2015 was unfair.

[2] Mr Sorocuk commenced his employment as a Barista with the Resident Café on 6 April 2015. Mr Sorocuk was dismissed for being intoxicated at work on 22 December 2015.

[3] On 11 February 2016, Ms Clare (Shaobo) Hu (Ms Hu) filed the Employer’s Response (Form F3) outlining two jurisdictional objections to the Application. The first objection was that the Resident Café was a small business, and the dismissal was consistent with the Small Business Fair Dismissal Code. The second was that Mr Sorocuk had not completed the minimum period of employment and therefore is not protected from unfair dismissal: s.382(a) of the Act.

[4] Should I find that the Resident Café was a small business, Mr Sorocuk will not have completed the requisite period of employment and therefore his Application will be dismissed. Should I find in the alternative, Mr Sorocuk will have completed the minimum period required under s.382(a) of the Act and his Application would therefore be granted.

Procedural History

[5] In the Form F3- Employer Response to Unfair Dismissal Application, the Resident Café submitted they employed 12 employees at the time of Mr Sorocuk’s dismissal.

[6] Directions were issued requiring the Resident Café to file submissions and evidence they wished to rely on by 4 March 2016. Mr Sorocuk was required to file his materials by 11 March 2016. The Resident Café’s submissions were filed on 7 March 2016 and Mr Sorocuk was granted an extension of time and subsequently filed his submissions on 15 March 2016.

[7] Mr Sorocuk’s submission was the Resident Café and Bluff Town were associated entities and as such the Resident Café could not be classified as a Small Business. 1

[8] Ms Hu’s submission was the Resident Café and Bluff Town were run by different entities and therefore were not associated entities. 2

[9] A Directions hearing was held on 16 March 2016. Directions were issued that day requiring the Resident Café to make further submissions to support their jurisdiction objection.

[10] On 18 March 2016, a jurisdiction hearing was held in Melbourne.

[11] Mr Sorocuk was self-represented and Ms Hu, Director appeared for the Resident Café.

[12] The Commission, under section 590 of the Act, may inform itself in relation to any matter before it in such a manner as it considers appropriate. Prior to the hearing, the Commission undertook an Australian Securities and Investment Commission (ASIC) search of the company names ‘Bydcafe Management Pty Ltd’ and ‘Bydcafe Ashburton Pty Ltd’. During the hearing on 18 March 2016, the Commission provided the parties with a copy of ASIC extracts it had obtained for Bydcafe Management Pty Ltd trading as Bluff Town and Bydcafe Ashburton Pty Ltd trading as The Resident Cafe. The Commission also provided the parties with copies of Section 50AA and section 50AAA of the Corporations Act 2001 (Cth) (Corporations Act). The ASIC searches identified Ms Hu as the sole director of both companies.

[13] Ms Hu was given the opportunity respond to the material provided by the Commission by way of written submission to be filed no later than 25 March 2016 and the hearing was adjourned.

[14] Ms Hu filed further submissions on 25 March 2016 and Mr Sorocuk filed a response to those further submissions on 14 April 2016. The matter was relisted for jurisdiction hearing on 2 May 2016.

[15] For the reasons set out below I have found that the Resident Café is a small business employer for the purposes of the Act. Mr Sorocuk has therefore not served the minimum employment period required by s.382 of the Act, and as a result Mr Sorocuk was not protected from unfair dismissal and his application is dismissed.

Background

[16] It is not in dispute that Mr Sorocuk attended his shift on 22 December 2015 intoxicated. Mr Sorocuk submits he voluntarily went home on the day of the incident and after evaluating the situation, met with his employer and provided an apology. Mr Sorocuk submits he believed at that point the matter had been dealt with and The Resident Café was not going to take any further action.

[17] Mr Sorocuk received an email on 31 December 2016 at 6:19pm from Ms Hu advising that his employment had been terminated. The reason provided by Ms Hu for the dismissal was serious misconduct in that Mr Sorocuk had been intoxicated at work. The dismissal took immediate effect. 3

[18] Ms Hu submitted when Mr Sorocuk attended work on 22 December 2015, he was asked to leave by the venue manager. Ms Hu submits as a result of his conduct the rest of his shifts for that week were cancelled by the venue manager.

[19] Ms Hu submits she was advised of the incident when she returned from leave on 27 December 2015. Ms Hu requested Mr Sorocuk attend a disciplinary meeting on 28 December 2015 and Mr Sorocuk was not available due to his carer responsibilities. A meeting was subsequently held on 29 December 2015 in which Mr Sorocuk acknowledged he had attended for work intoxicated. Ms Hu submits after consultation with her lawyer she dismissed Mr Sorocuk.

[20] Mr Sorocuk submits he worked for both Bluff Town and The Resident Café and that the two businesses are owned and operated by Ms Hu. Mr Sorocuk submits the combined number of employees employed by Bluff Town and The Resident Café exceeds 15 and consequently the Resident Café is not a small business.

[21] For the purpose of calculating the number of employees employed by The Resident Café at the time Mr Sorocuk was dismissed, associated entities are taken to be one entity. The Act at section 12 provides that the expression “associated entity” has the meaning given by section 50AAA of the Corporations Act.

[22] Ms Hu, after considering the information provided to the parties by the Commission during the hearing on 18 March 2016, submits Bydcafe Ashburton Pty Ltd trading as The Resident Café and Bydcafe Management Pty Ltd trading as Bluff Town are associated entities.

The Statutory Framework

[23] The Commission exercises its powers in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 of the Act. The relevant provisions from Part 3-2 of the Act are set out below together with the definition of the term “associated entity” set out in s.12 of the Act and s.23 which deals with the meaning of small business employer.

“12 The Dictionary

In this Act:

…

associated entity has the meaning given by section 50AAA of the Corporations Act 2001.”

“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.”

[24] 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.”

[25] 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.

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

[27] 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.

[28] 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

…”

[29] As stated earlier, Ms Hu’s submission of 2 May 2016 gave consideration to the definitions at sections 50AA and 50AAA of the Corporations Act and concedes, as the sole director of both entities, that the Resident Café and Bluff Town are indeed associated entities.

Regular and Systematic Casuals

[30] In Commissioner Roe’s decision in Ponce v DJT Staff Management Services Pty Ltd⁴ (Ponce), Roe C undertook an analysis of regular and systematic employment and concluded the following:

“[66] It is the employment which must be on a regular and systematic basis. This does not mean that the hours or days of work must be regular and systematic. Although the previous legislation referred to the period or periods of casual engagement rather than the period of casual employment I do not think that this change is of much practical significance. The previous authorities have also established that employment or engagement can be regular and systematic even if it is seasonal, or where the times and dates of work are quite irregular or are not rostered, or where there are breaks due to school holidays or other needs of the employee. In Summerton v Jabiru Golf, the hours worked varied from 3 to 39 in a week but it did not stop SDP Duncan finding that the employment was regular and systematic. It is clear that to establish ‘regular and systematic’ there must be sufficient evidence to establish that a continuing relationship between the employer and the employee has been established. This is clearly a reason why there is a legislative requirement for a reasonable expectation of continuing employment.

[67] In my view, full-time and part-time work must be regarded as meeting the definition of regular and systematic. This is one reason why regular and systematic casual work meets the jurisdictional hurdle and why it is distinguished from irregular, occasional or non-systematic casual work for the purposes of a range of entitlements under the Act and Awards as discussed above. Legislators have deemed it fair to give regular and systematic casuals the same entitlements as other workers because they are engaged regularly and systematically, like full and part-time employees (in respect to matters such as parental leave and unfair dismissal jurisdiction).” (endnotes not reproduced)

[31] Vice President Lawler in his decision of Burke v Marist Brothers St Joseph’s College,⁵ whilst adopting the approach of Roe C in Ponce, provides the following note of caution:

“one must not treat the summary of Roe C as a substitute for the language of the statute: the ultimate question always remains whether the employment was ‘regular and systematic’ within the meaning of section 384(2)(a) and care must be taken not to invert the test to one which asks the question whether the employment was ‘occasional or irregular’.” (emphasis added)

[32] I have adopted the approach of Roe C in Ponce, in that to determine if a casual is a regular and systematic casual, there must be sufficient evidence to establish that a continuing relationship between the employer and the employee has been established. It is the employment which must be on a regular and systematic basis. This does not mean that the hours or days of work must be regular and systematic.

The evidence

[33] Mr Sorocuk made a number of submissions being Bluff Town and the Resident Café were associated entities, and when combined they were not a small business as they employed greater than 15 employees. Mr Sorocuk did not provide a submission as to how many employees were employed by either entity.

[34] On the question of whether or not when combined with Bluff Town the Resident Café was a small business, the Commission considered the submissions and evidence advanced by the parties.

[35] Ms Hu submits at the time of Mr Sorocuk’s dismissal Bluff Town employed a total of four employees and The Resident Café employed a total of seven employees. Ms Hu’s submission is that when combined, the Resident Café and Bluff Town still constitute a ‘small business’ within the definition of the Act.

[36] Ms Hu’s evidence included payroll records and rosters for both Bluff Town and the Resident Café. Ms Hu’s evidence was that Bluff Town employs three full-time employees and one part time employee. The Resident Café employs four part-time employees and three full-time employees. 6

[37] Mr Sorocuk did not contest the list of employees identified as engaged in a part-time or full-time capacity at either Bluff Town or the Resident Café.

[38] Ms Hu submits both Bluff Town and the Resident Café employ casuals however they are not engaged on a regular or systematic basis. Ms Hu also submits full-time and part-time employees are moved between Bluff Town and the Resident Café to fill in rostered gaps.

[39] Mr Sorocuk’s submission was that he was at times rostered to cover Bluff Town although he was primarily engaged to work at the Resident Café. 7

[40] Ms Hu’s evidence was the rosters for the front of house are prepared one week prior to the date the casuals are rostered on to work as the rosters are based on excess hours available after the hours have been allocated, in the first instance, to part-time employees and dependent on the whether or not full time employees are either sick or otherwise unavailable. Ms Hu’s oral evidence is that for those reasons, the casual rosters are only prepared on a weekly basis and casual employees are not provided with regular shifts. Ms Hu submits casuals are then rostered on based on their availability which varies.

[41] Ms Hu’s evidence was that there were no rosters for the back of house as it is largely staffed by permanent employees for which she provided payroll records. 8 Ms Hu’s oral evidence was that back of house casuals are only called in on weekends or at short notice when the need arises and thus not warranting rosters.

[42] During the examination of Ms Hu’s evidence, Mr Sorocuk put to Ms Hu that she had not included a number of employees for which he says he had been informed worked regularly in the back of house. Ms Hu invited Mr Sorocuk to name the employees he was referring to.

[43] Mr Sorocuk named a number of additional employees starting with ‘Adele’ but was unable to provide any other information. Ms Hu’s oral evidence was that Adele was a university student who was on the payroll whilst working, however had not worked for some time and had left prior to Mr Sorocuk’s dismissal. Mr Sorocuk did not contest Ms Hu’s response.

[44] Mr Sorocuk also named ‘Darius’. Ms Hu’s oral evidence was that Darius was a casual who had returned to China sometime around November and she was aware he would not be returning to Australia for approximately four months. Mr Sorocuk did not contest Ms Hu’s response.

[45] Mr Sorocuk also named ‘Justin’, who by Ms Hu’s account had left in November. Again Mr Sorocuk did not contest Ms Hu’s oral evidence.

[46] Mr Sorocuk’s oral submission was that Ms Hu employed a number of additional staff that were not on the rosters. Mr Sorocuk’s oral evidence was he could not be certain as to whether those employees he refers to were employed on the date of his dismissal. Mr Sorocuk submits that there were a number of casuals employed on a cash in hand basis however advanced no evidence to support his submission.

[47] The rosters admitted into evidence by Ms Hu identified six casual employees. Ms Hu submits all six casuals identified are not regular or systematically engaged. On the evidence before me, I am satisfied that four of the six casuals are not regular and systematic casuals. There is insufficient evidence for me to make a finding as to whether or not the other two casuals identified on the rosters are, or alternatively are not, regular and systematic casuals.

Conclusion

[48] Although Mr Sorocuk made submissions in support of his application, the majority of the evidence put before me was from the respondent. I have carefully considered the submissions and the evidence.

[49] Mr Sorocuk contested Ms Hu’s submission that the Resident Café and Bluff Town were not associated entities. Ms Hu conceded that and it is no longer in contention that the Resident Café and Bluff Town are associated entities.

[50] It is also not in contention that at the time of Mr Sorocuk’s dismissal Bluff Town employed a minimum of three full-time employees and one part-time employee, and the Resident Café employed three full-time employees and four part-time employees as identified in the payroll records and the rosters. I am therefore satisfied there were no less than six full-time employees and five part-time employees being a total of 11employees.

[51] There was no evidence advanced to support Mr Sorocuk’s submission that the Resident Café regularly engaged additional staff on a ‘cash in hand’ basis, therefore I am unable to make a finding in favour of Mr Sorocuk’s submission.

[52] Even if I was to find the two casuals referred to earlier were regular and systematic, the combined total number of employees for the Resident Café and Bluff Town remains fewer than 15 employees. I am therefore satisfied on the evidence before me that the Resident Café is a small business as defined in s.23 of the Act.

[53] It follows that Mr Sorocuk has not completed the minimum employment period required under s.383 of the Act. I dismiss Mr Sorocuk’s application.

[54] An order 9 dismissing Mr Sorocuk’s application will be issued in conjunction with this decision.