DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Harry Moisidis
v
Bray on Hampton Pty Ltd T/A Sacred Alley Espresso Bar
(U2018/11284)

Application for an unfair dismissal remedy.

Introduction

[1] Mr Harry Moisidis worked at the Sacred Alley Espresso Bar for around four and a half years until he was dismissed from his employment in October last year. He subsequently lodged an unfair dismissal application. However, the Respondent has raised a jurisdictional objection in response, claiming that Mr Moisidis has not completed the required minimum employment period to enable him to bring an unfair dismissal application. The business changed hands shortly before Mr Moisidis was dismissed, and the Respondent claims that he was not a transferring employee in relation to a transfer of business, as required under the Fair Work Act 2009 (Cth) (“the Act”).

[2] Mr Alan Dircks from Just Relations was given permission to appear on behalf of Mr Moisidis under s.596(2)(a) of the Act as the jurisdictional objection involved a degree of complexity and his involvement might enable it to be dealt with more efficiently. Permission to appear was only granted at this point in regard to determination of the jurisdictional objection. Mr Ian Macpherson appeared on behalf of Sacred Alley Espresso Bar.

The Issue to Be Decided

[3] Section 382 of the Act of provides that a person is protected from unfair dismissal at a time if the person is “an employee who has completed a period of employment with his or her employer of at least the minimum employment period.” 1 The Act continues to provide that for a small business, being a business with less than 15 employees, the relevant minimum employment period is 12 months.

[4] Section 384 of the Act relevantly provides:

“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:

….

(b) if:

(i) the employer is a transferring employee in relation to a transfer of business from an old employer to a new employer; and

(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and

(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;

the period of service with the old employer does not count towards the employee’s period of employment with the new employer.”

[5] Section 22 of the Act deals with the meaning of “service” and “continuous service.” It relevantly provides:

“22 Meanings of service and continuous service

.…

When service with one employer counts as service with another employer

(5) if there is a transfer of employment (see subsection (7)) in relation to a national system employee:

(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and

(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee's continuous service with the second employer (taking account of the effect of paragraph (a)), but does not count towards the length of the employee's continuous service with the second employer.

.…

Meaning of transfer of employment etc.

(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:

(a) the following conditions are satisfied:

(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee's employment with the first employer;

(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or

(b) the following conditions are satisfied:

(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;

(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.”

[6] Section 311 of the Act also deals with when a transfer of business occurs. It states:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer: and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

….”

[7] The Commission is accordingly now required to determine whether Mr Moisidis was a transferring employee in relation to a transfer of business and has a period of continuous service with the Respondent that satisfies the minimum employment period required by s.383 of the Act. If the Commission finds in favour of the Respondent then Mr Moisidis’ unfair dismissal application must be dismissed. However, if it finds in favour of Mr Moisidis then his application will be relisted to deal with the substantive unfair dismissal application.

The Respondent’s Evidence and Submissions

Ms Veliamma (Maya) Macpherson

[8] Ms Macpherson is the owner and manager of the Sacred Alley Espresso Bar. She spoke to Mr Moisidis in the week prior to taking over the business and advised him that he would be employed as a casual chef on a trial basis at a casual rate of $23 per hour. She also advised him that there were some catering contracts which needed to be serviced, and while some renovations were taking place at the cafe he may be required to carry out some of this food preparation at home. He was also told that there would be no guaranteed or definite hours of work and this would remain until the renovations were completed. He agreed to this arrangement.

[9] In the week commencing 8 October Mr Moisidis worked for 12 hours on catering related duties only. In the week commencing 15 October, he did not work at all, as there was no catering work available. In the week commencing 22 October, he worked for a total of 40 hours, of which only 16 hours were normal chef duties as no gas appliances were available for a period of time, so only minimal preparation work was undertaken. He then worked for a period of 8 hours performing normal chef duties on 29 October.

[10] Ms Macpherson had serious reservations about his performance and suitability for the proposed chef role. She had to provide verbal warnings to him on several occasions, and these are documented in her diary. She subsequently asked Mr Macpherson to find out what notice of termination was required to be given, and subsequently decided to terminate his employment at the close of business on 29 October. Mr Moisidis was told at that time that his employment was being terminated because of the reason stated in the verbal warnings given to him previously.

[11] Ms Macpherson indicated in cross-examination that when the renovations had been concluded and the gas had been reconnected in the cafe Mr Moisidis worked as a chef and carried out normal chef activities. However, in the first week he was doing catering work.

Mr Ian Macpherson

[12] Mr Macpherson is married to Ms Macpherson and also acts as her accountant. He stated that a condition of the sale of the business was that all employees were to be terminated by the previous owner and their entitlements fully paid out. Much of the remainder of his witness statement was hearsay confirming the evidence provided by Ms Macpherson.

[13] Ms Macpherson informed him in the third week after the business had been acquired that she had serious doubts about Mr Moisidis’ performance and ability to carry out his role and had been required to warn him on several occasions. He advised her to document these warnings and keep records in her diary. She subsequently asked him to find out what notice period would be required if she wished to terminate his casual employment arrangement.

[14] She subsequently informed him that she did wish to terminate Mr Moisidis, and they met with Mr Moisidis at the conclusion of his shift on 29 October, when Ms Macpherson advised Mr Moisidis that he was being terminated for the reasons set out in the verbal warnings provided to him previously.

The Respondent’s submissions

[15] The Respondent objects to the application on jurisdictional grounds because Mr Moisidis has not met the required minimum employment period due to the fact there was no transfer of business between the old employer and the new employer as the transferring work Mr Moisidis performed was not the same, or substantially the same as the work he performed for the old employer, as required by s.311(1)(c) of the Act.

[16] The Respondent submits that the assets of the business where acquired on 5 October last year from the previous owner. All staff working for the previous owner were terminated as at that date. The cafe was then partially closed from 5 October, until 22 October, while some renovations were carried out. However, it was not fully operational until 25 November. During the period of closure some catering activities were carried out on a limited basis and some of the terminated staff who had been working for the previous owner were offered casual work on a trial basis to assess their suitability.

[17] The work that Mr Moisidis initially performed for the new owners was to prepare food in respect of various catering contracts, some of which he prepared at home. He worked for a total of 12 hours over 4 days in the first week on these occasions. He did not work at all in the second week. The cafe reopened in the third week, but was restricted in terms of the kitchen operations for the initial 3 day period as no gas appliances were available. The kitchen was then fully functional from Thursday, 25 October.

[18] Mr Moisidis was employed as a full-time head chef with the old employer, however, he worked as a casual chef with the new owner and received a casual rate of pay, without any guarantee of specific hours.

[19] The Respondent submits, in conclusion that because Mr Moisidis was not performing transferring work for the purposes of the transfer of business provisions in the Act, his employment with it and the old employer cannot be deemed to be continuous, and he cannot be considered to be a transferring employee for the purposes of s.311 of the Act. Therefore, his period of employment with the Respondent commenced on 8 October 2018 and ended on 29 October 2018. As the relevant minimum employment period is 12 months, he has no jurisdiction to pursue his unfair dismissal application.

The Applicant’s Evidence and Submissions

Mr Harry Moisidis

[20] Mr Moisidis commenced employment at the Sacred Alley Espresso Bar in February 2014 and was primarily involved in food preparation. He understood that he was employed on a full-time basis and worked on weekdays, typically commencing at 6.00 am and working until around 2.30 pm.

[21] The business was sold to new owners in October last year and he was paid his accrued annual leave at that time. He was also advised by the previous owner of the business that his employment with him would be ending at the time of the transfer of the business. However, he understood that the new owners wanted him to continue working in the business. Mr Moisidis had not met the new owners at that point.

[22] After the new owners took over the business, it was closed for just over a week while some renovations were carried out. Mr Moisidis continued working during this week, although he worked reduced hours and was involved in some food preparation associated with catering work. He performed this work from home.

[23] The business then reopened under the same business name and with the same hours of operation and the same or a similar menu. Most of the same staff also continued to be employed, apart from some who left of their own accord. Mr Moisidis continued to work the same hours as previously. He also assisted in training a new staff member who had just been employed.

[24] On the afternoon of Monday, 29 October last year, he was asked by a person that he understood to be one of the new owners, Ms Veliamma Macpherson, if he could stay behind at the conclusion of his shift. He then met with both Ms Macpherson and Mr Ian Macpherson and was told that his services were no longer required and he was not to attend at work again.

[25] Mr Moisidis indicated that there had been no discussion about his conduct or his work performance prior to this time, and no discussion about him working for the new owners on a trial basis. He also takes issue with a number of matters contained in Ms Macpherson’s witness statement:

•  He did not work from 9.00 am to 12 noon when the business re-opened but continued working his usual 8 hour shift.

•  He had not previously seen the timesheet referred to in the witness statement and it does not contain his handwriting.

•  He was never warned about his work performance by the new owners.

•  He never acted in an intimidating manner towards Ms Macpherson, or anyone else during the time that he was employed.

•  He was not provided with any reason at any time by the new owners of the business about why his services were no longer required.

The Applicant’s submissions

[26] Mr Moisidis submits that he was never told that his period of service with the old employer would not be recognised. He worked with that business as a full-time employee for more than 4 years. He also meets the definition of a transferring employee as he was employed by the new owners within 3 months of the transfer of the business.

[27] He next refers to s.311 of the Act, and submits that his employment with the previous employer was terminated. He was then employed by the new employer within 3 months. The transferring work was also the same or substantially the same, in that at all times he was essentially performing normal chef duties and the substantive role that he was employed to carry out with the new employer was essentially the same as the role that he had performed when employed by the previous owner.

[28] He continues to submit that it is irrelevant whether he was paid as a casual employee, rather than as a full-time employee, by the new employer. However, it is also submitted that there is no clear evidence that he was ever paid or engaged as a casual, and that he performed the same full-time hours when employed by the new owners. He also appears to have been paid at the relevant full-time rate of pay.

[29] In addition, the period of 4 days that Mr Moisidis performed work away from the workplace involved food preparation and does not in any way act to suggest there was no transfer of employment.

[30] He submits, in conclusion, that the period of employment was accordingly 4 years and 6 months, which is in excess of the minimum employment period for a person employed by a small business. Mr Moisidis is accordingly entitled to pursue an unfair dismissal application.

Consideration

[31] In order to be a person who is protected from unfair dismissal Mr Moisidis must have served the relevant minimum employment period as required by s.382(a) of the Act. There is no dispute about the fact the Respondent had less than 15 employees at the time that he was dismissed, so the relevant minimum employment period is 12 months. It is also not disputed that he worked at the cafe for a total period of around four and a half years. However, he was dismissed from his employment 21 days after the business was acquired by the current owners.

[32] It is evident at the outset that the previous employer and the new employer were not associated entities at the time Mr Moisidis became employed by the new employer. It also appears that the new employer did not inform Mr Moisidis in writing that his period of service with the old employer would not be recognised. Therefore, the exclusions in s.384(2) of the Act in regard to continuous service are not applicable, and do not of themselves mean that he has not completed the required minimum employment period.

[33] The Commission is therefore required to determine whether any period of Mr Moisidis’ employment with the previous employer is now to be counted as service. It will only count if the Commission is satisfied that there was a transfer of his employment within the meaning of s.22(8)(b) of the Act. This requires him to have been a “transferring employee in relation to a transfer of business” pursuant to s.22(7)(b) of the Act.

[34] Section 311 of the Act sets out the requirements for a transfer of business to be established. In broad terms, it requires there to be a “transferring employee” and “a connection between the old employer and new employer” as defined in s.311(3) to s.311(6).

[35] Section 311(2) of the Act then provides that a person is a “transferring employee” if the following requirements are satisfied:

•  The employment of the employee with the old employer has terminated.

•  Within 3 months after the termination the employee becomes employed by the new employer.

•  The work the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer.

[36] Mr Moisidis submits in this context that his employment with the old employer was terminated. This does not appear to be at issue and it is noted to this end that the old employer paid out all of Mr Moisidis’ accrued annual leave at the time the business was sold.

[37] It also does not appear to be at issue that the Respondent, or the new employer, employed Mr Moisidis within 3 months after his employment was terminated by the old employer.

[38] However, the next requirement is contested. The Respondent submits that the work Mr Moisidis performed was not the same as the work he performed for the old employer. It points to the fact that after it acquired the business, it was closed for a period of time while some renovations were carried out. During this time Mr Moisidis was involved in some food preparation work associated with a catering contract, and performed some of this work from home. In addition, when the business reopened it was restricted for a short period of time because the gas stoves had not been connected. It also claims that Mr Moisidis was employed on a full-time basis by the old employer, whereas it employed him on a casual basis.

[39] Mr Moisidis submits in response that while he was involved, briefly, in some food preparation work associated with catering arrangements, once the business was fully operational he resumed working as a chef with similar hours of work to those he had performed previously. He also takes issue with being employed on a casual basis and states that the hourly rate he received was clearly deficient if it was intended to also include payment of the casual loading.

[40] I am satisfied, in response, that this requirement has also been satisfied. While the renovations caused some change to the work Mr Moisidis performed, once the business was again fully operational he returned to essentially the same duties he had been performing previously, even if this only occurred in the 3 days prior to his employment being terminated. This was confirmed in the evidence of Ms Macpherson. It also appears that regardless of whether he was employed on a full-time or a casual basis his hours of work on those days were essentially the same as what they had been previously.

[41] However, s.22(7)(b)(i) also requires that the employee be a transferring employee in relation to a transfer of business from the first employer to the second employer. For a transfer of business to occur, s.311(1) requires that the above three requirements be satisfied. However, s.311(1)(d) also requires that:

•  There is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

[42] There was no suggestion that s.311(4) to s.311(6) have any application in the circumstances involved in this matter. For example, there is no suggestion that the old employer has outsourced any work to the new employer, or that the new employer has ceased to outsource work to the old employer, or that the new employer is in any way an associated entity of the old employer.

[43] Section 311(3) deals with the circumstances in which there is a transfer of assets from old employer to new employer. If it is found that there was a transfer of assets in this case from the old employer to the Respondent, being the new employer, then there can be said to have been a transfer of business under s.311(1) by virtue of the interaction between s.311(1)(d) and s.311(3). Section 311(3) states:

“(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or a used in connection with, the transferring work.”

[44] The parties did not directly address this matter in their submissions, although it appears that the business has continued to trade under the same name and operate in a similar manner under the new owners. However, the Commission was not provided with detailed evidence about the nature of the arrangements between the old employer and the Respondent, although the witness statements of Ms Macpherson and Mr Macpherson both state under the heading “Transfer of business details”:

“The business assets including plant and equipment, appliances etc and intellectual property were acquired at arms length from the previous owners. As a condition of sale all employees were to be terminated and their entitlements fully paid out which has been confirmed by their previous employer. The previous owners entity Café Nero Pty Ltd and Bray on Hampton Pty Ltd were not related parties.” 2

[45] The Respondent’s submissions also indicate that the assets of the business were acquired on 5 October 2018 from the previous owner. It is also understood that the Cafe is continuing to trade under the same trading name.

[46] As indicated s.311(3) provides that there will be “a connection” between the old employer and the new employer if, in accordance with an “arrangement” between them, the new employer “owns or has the beneficial use of some or all of the assets (whether tangible or intangible)” that the old employer “owned or had the beneficial use of” and “that relate to or are used in connection with the transferring work.”

[47] There is no specific definition of the word “arrangement” in the Act. However, the Explanatory Memorandum to the Fair Work Bill 2009 states that “The word arrangement is intended to be interpreted broadly.” 3

[48] It is clear that the Respondent has continued to operate the business in a similar manner to the way in which it was operated previously and it continues to operate with some of the same equipment and assets that existed previously. It also continues to operate under the same trading name. I am accordingly satisfied that under an arrangement that existed between the old employer and the new employer, the Respondent now owns or has the beneficial use of assets that the old employer owned or had the beneficial use of and are now used in connection with the transferring work. I accordingly find that there was a transfer of business within the meaning of s.311 of the Act.

[49] It follows that the conditions contained in s.22(7), and therefore s.22(5), are satisfied and Mr Moisidis’ service with the old employer does count as part of the minimum employment period. He has therefore completed the required minimum employment period in order to be a person protected from unfair dismissal under s.382 of the Act. His unfair dismissal application will now be relisted to enable his substantive unfair dismissal application to be dealt with and determined.

COMMISSIONER

Appearances:

A Dircks of Just Relations for the Applicant.

I Macpherson for the Respondent.

Hearing details:

2019.

Melbourne:

January 25.

Printed by authority of the Commonwealth Government Printer

<PR710727>

 1   Fair Work Act 2009 (Cth) at s 382(a).

 2   Witness Statement of Maya Macpherson dated 22 December 2018 at [2]; Witness Statement of Ian Macpherson dated 22 December 2018 at [2].

 3   Fair Work Bill 2009 at cl 1222.