DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Madalyn Baker
v
Orr, Chelsea Anne T/A CORR Hair Artistry
(U2020/8280)

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 Madalyn Baker pursuant to section 394 of the Fair Work Act 2009 (Cth) (Act) against her former employer, Ms Chelsea Orr trading as CORR Hair Artistry.

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

[3] On 31 August 2020 I conducted a hearing, by telephone, to determine the jurisdictional objection raised by Ms Orr. Evidence was given by Ms Orr and Ms Baker.

Legislative framework

[4] A person must have completed a period of employment with his or her employer of at least the minimum employment period to be protected from unfair dismissal (s 382(a) of the Act). The minimum employment period for a small business employer is 12 months (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] 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 (s384(1) of the Act).

[7] The meaning of continuous service is dealt with in s 22 of the Act. Section 22(1)-(3) of the Act provides:

“22  Meanings of service and continuous service

General meaning

(1)  A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).

(2)  The following periods do not count as service:

(a)  any period of unauthorised absence;

(b)  any period of unpaid leave or unpaid authorised absence, other than:

(i)  a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or

(ii)  a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or

(iii)  a period of leave or absence of a kind prescribed by the regulations;

(c)  any other period of a kind prescribed by the regulations.

(3)  An excluded period does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service.”

[8] Section 384(2)(a) of the Act is also relevant. It provides:

“(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…”

[9] In Bell v Aboriginal Legal Service (NSW/ACT) Limited, 1 a Full Bench of the Commission made the following observations in relation to s 384(2) of the Act (references omitted):

“[10] It is evident that s.384 does not proceed on the basis that a casual employee’s period of employment starts and ends with each separate contract of employment, as understood in the common law of employment.  Periods of casual employment punctuated by gaps between successive contracts may be included in a casual employee’s period of employment, depending on whether the employment was on a regular and systematic basis. It is the employment that must be on a regular and systematic basis, not the hours worked, but a clear pattern or roster of hours is strong evidence of regular and systematic employment.

[11] The word “regular” should be construed liberally.   It implies some form of repetitive pattern and does not mean frequent, often, uniform or constant. Employment on a “regular” basis may be constituted by frequent though unpredictable engagements. The word “systematic” requires that the engagement be “something that could fairly be called a system, method or plan”.  The concept of engagement on a “systematic” basis does not require the employee to be able to foresee or predict when his or her services may be required. It is sufficient that the pattern of engagement occurs as a consequence of an ongoing reliance on the employee’s services as an incident of the business by which he or she is engaged.

[12] The Act does not define the phrase “reasonable expectation of continuing employment”, nor does it set out any particular matters which should be taken into account in assessing whether a particular employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis during that employee’s period of service as a casual employee. Whether an employee had such an expectation will depend on the particular circumstances.

[13] It is also to be observed that the relevant “reasonable expectation” in s.384(2)(a)(ii) is as to continuing employment with the employer on a regular and systematic basis. This plainly suggests that the relevant reasonable expectation is as to continuing casual employment by the employer on a regular and systematic basis. Were it otherwise, the words “on a regular and systematic basis” would be otiose. The connection between “employment as a casual employee” and “on a regular and systematic basis” is established by s.384(2)(a)(i) and that connection seems to us to be maintained in s.384(2)(a)(ii). Section 384(2) is concerned with the circumstances in which a casual employee’s period of service as a casual employee is included in that employee’s period of employment for the purposes of s.383.”

[10] In Bronze Hospitality Pty Ltd v Hansson, 2 a Full Bench of the Commission gave guidance as to the meaning of the expression “reasonable expectation of continuing employment” in s 384(2)(a)(ii) of the Act (references omitted):

“[29] We make some observations about the construction of s.384(2)(a)(ii). First, ‘during’ can mean either ‘throughout the course of’ or ‘at a point in the course of’. In our view, the first of these meanings is intended. The sub-provision is an exception to an exception; a period of casual service does not count, unless two requirements are met. Both of these requirements concern states of affairs that can develop over time. This context points to the word ‘during’ connoting a continuous period, rather than a point in time. Further, the alternative construction would mean that a casual employee need only have a reasonable expectation of continuing employment for any fleeting period in the course of the casual employment. There is no apparent rationale that would support this being the intended meaning. Finally, we note that the explanatory memorandum to the Fair Work Bill states simply that ‘service as a casual employee does not count towards the period of employment unless it was on a regular and systematic basis and the employee had a reasonable expectation of continuing engagement on a regular and systematic basis.’ This wording is consistent with the interpretation we favour, and inconsistent with a ‘point in time’ meaning. The effect of this is that a particular period of service as a casual employee only ‘counts’ in respect of periods when the casual employment was regular and systematic and the employee had a reasonable expectation of continuing employment.

[30] Secondly, the continuing employment that is to be the object of the reasonable expectation is employment as a casual employee. So much is clear from the reference to ongoing employment on a ‘regular and systematic basis’. However, if an employee has an expectation of future permanent employment, this might be relevant to whether the employee also had an expectation of continuing casual employment pending the commencement of permanent employment.

…

[32] Bronze’s principal contention in its third ground of appeal was that it is not possible for a casual employee to work on a regular and systematic basis, or to have or develop a reasonable expectation of continuing employment, after some eight weeks of casual work. We reject this contention. As we have said above in relation to s.23, there is no minimum period of time that is required in order for casual employment to assume a regular and systematic character, nor is any minimum period necessary for an employee to develop a reasonable expectation of continuing employment. This can be simply illustrated by the example of a casual employee who is told on commencement that his or her casual employment will be ongoing, as well as regular and structured in some way, and who is then rostered accordingly.

[33] Where nothing is said about the regularity or system of engagement, or its possible duration, all of the circumstances are to be considered in order to ascertain whether s.384(2) is engaged. Clearly upon a person’s first engagement, without more, one could not speak of regularity or system, and in the very early phase of a casual employment relationship it may be difficult to substantiate that it is either regular or systematic, or that any reasonable expectation exists as to ongoing employment. However, a short period might well be sufficient, depending on the circumstances. The question in the present matter is whether it was reasonably open on the evidence for the Commissioner to conclude that Ms Hansson’s circumstances fell within s.384(2).”

Relevant Facts

[11] There is no dispute that Ms Orr did not have any “associated entities” and was a small business employer at the time she dismissed Ms Baker. Accordingly, the minimum period of employment for Ms Baker was 12 months.

[12] On 1 November 2018 Ms Baker commenced employment with Ms Orr as a casual salon assistant. At that time Ms Baker was still at school. Ms Orr asked Ms Baker which hours she would be able to work, which were principally after school and on Saturdays. Ms Orr told Ms Baker that she would not have any definite shifts, but she may be offered work after school on a Tuesday and/or Thursday and possibly on a Saturday, if there was work available. Ms Orr’s business, which she had only recently commenced, was open late on a Tuesday and Thursday evening. Ms Baker was not provided with a contract of employment or a letter of offer at the time she was employed by Ms Orr.

[13] Ms Baker remained in casual employment with Ms Orr until 30 January 2020. On 31 January 2020 Ms Baker signed an agreement to take up a part-time hairdressing apprenticeship with Ms Orr from that day. From that time until her dismissal on 15 June 2020, Ms Baker was employed by Ms Orr as a part-time apprentice hairdresser.

[14] Returning to Ms Baker’s period of employment as a casual from 1 November 2018 until 30 January 2020, Ms Baker did not have any set hours of work. Whether or not she was offered work on a particular day would depend on how busy Ms Orr was on that day. The number of hours worked by Ms Baker for Ms Orr each week varied, but I accept Ms Orr’s evidence that Ms Baker always worked at least one shift per week for her as a casual employee unless Ms Baker was sick or on holidays or Ms Orr was on holidays. Ms Orr did not take many holidays in that period because she was just starting up her business.

[15] Ms Orr gave evidence, which I accept, that the most common days Ms Baker worked for Ms Orr as a casual employee were on Tuesday (after school into the evening), Thursday (after school into the evening) and Saturday. The time and wages records produced by Ms Orr support this finding. Ms Baker also worked on days other than Tuesday, Thursday and Saturday when she was on school holidays or when she was undertaking distance education in 2019.

[16] From about early 2019 until Ms Baker’s commencement as a part-time employee, Ms Orr included in her work computer, which was accessible to Ms Baker, details of the general days and times on a Tuesday, Thursday and/or Saturday on which Ms Baker would be offered work in the coming two or three weeks. However, those days and times were subject to change, depending on how busy Ms Orr was on those days. In practice, Ms Orr informed Ms Baker either in person at the end of a shift, or by text message or telephone call, of the actual days and times she was to work each week. Further, in the busy period of about two weeks leading into Christmas in 2018 and 2019, Ms Orr made up a paper roster setting out the days and hours on which Ms Baker would be offered work, but those days and hours were subject to change.

[17] Ms Baker worked for Ms Orr as a part-time apprentice from the 31 January 2020 until she became unwell on 16 February 2020. Ms Orr was absent from work from Monday, 17 February 2020 until 28 April 2020. By certificate dated 25 February 2020, Ms Baker’s general practitioner certified that she was unfit to work from 24 February 2020 until 30 March 2020. Although the medical certificate does not cover the period from 17 February until 23 February 2020, there is no dispute that Ms Baker was sick and unable to come to work in that period.

[18] From 4pm on 27 March 2020 until 13 April 2020, Ms Orr closed her hair salon due to COVID-19 concerns. Ms Orr says that she did not stand Ms Baker down during this period because she believed Ms Baker was unwell for part of the period and then Ms Baker remained absent from work due to COVID-19 related concerns.

[19] By certificate dated 28 April 2020, Ms Baker’s general practitioner certified that she had recovered from a medical condition and was fit to return to work from 28 April 2020.

[20] Towards the end of April 2020, Ms Orr paid Ms Baker $3,000 in respect of JobKeeper for the month of April. Ms Orr continued to make JobKeeper payments to Ms Baker for the balance of her employment.

[21] The only payments Ms Baker received from Ms Orr in respect of the period from 16 February 2020 until 27 April 2020 were the JobKeeper payments for April 2020. Having only recently commenced permanent employment with Ms Orr, Ms Baker did not have any accrued paid sick leave to take during that period.

[22] Ms Baker worked her part-time hours from 28 April 2020 until her dismissal on 15 June 2020, save for days off sick on 9 and 13 June 2020.
[23] Ms Baker gave evidence that throughout her period as a casual employee with Ms Orr she had an expectation of continuing employment by her on a regular and systematic basis. Ms Baker points to both her regular hours of work with Ms Orr from 1 November 2018 and her personal friendship with Ms Orr to support this contention; both Ms Baker and her mother were clients of Ms Orr before Ms Baker commenced work for Ms Orr. In addition, Ms Baker points to the fact that in mid-2019 she and Ms Orr discussed Ms Baker completing her year 10 studies in 2019 and commencing work with Ms Orr as an apprentice hairdresser at the beginning of 2020. It is said that those discussions confirmed Ms Baker’s belief that she had an expectation of continuing employment by Ms Orr on a regular and systematic basis.

Consideration

[24] I am satisfied on the evidence that throughout the period from 1 November 2018 until 30 January 2020 Ms Baker’s casual employment with Ms Orr was on a regular and systematic basis. It was regular because it was constituted by frequent engagements, many of which were in a repetitive pattern through shifts commonly worked on Tuesday afternoons/evenings, Thursday afternoons/evenings, and/or Saturdays. Indeed, Ms Baker worked at least one shift every week, unless she was sick or on holidays or Ms Orr was on holidays. The employment was systematic because it was arranged according to a system, the details of which are set out in paragraphs [14] to [16] above. Further, or in the alternative, Ms Baker’s casual employment with Ms Orr was on a systematic basis because her shifts in Ms Orr’s hair salon occurred as a consequence of an ongoing reliance on Ms Baker’s services as an incident of the business by which she was engaged.

[25] I am satisfied on the evidence that throughout the period from 31 January 2019 until 30 January 2020 Ms Baker had a reasonable expectation of continuing employment by Ms Orr as a casual employee on a regular and systematic basis. I have made the finding that the reasonable expectation commenced on 31 January 2019, not the commencement of employment on 1 November 2018, because the expectation was in part based on the regular hours Ms Baker was working in Ms Orr’s hair salon. Ms Baker could not, in my assessment, have had a reasonable expectation of continuing employment as a casual employee until she worked in the salon on a regular basis for some time, particularly in circumstances where Ms Baker was not told anything on the commencement of her employment which gave her an expectation of continuing employment. By 31 January 2019, Ms Baker had been employed by Ms Orr for three months and was still working for Ms Baker on a regular basis after a break over the Christmas – New Year period. I am satisfied that Ms Baker’s expectation became reasonable on 31 January 2019 and remained so until her period as a casual employee ceased on 30 January 2020. The reasonableness of Ms Baker’s expectation was enhanced by her discussions with Ms Orr in mid-2019 about Ms Baker finishing year 10 that year and commencing as an apprentice hairdresser in Ms Orr’s salon in 2020.

[26] Accordingly, I find that Ms Baker’s period of service as a casual employee in the period from 31 January 2019 until 30 January 2020 counts towards her period of employment (s 382(2) of the Act).

[27] Ms Baker’s period as a part-time employee from 31 January 2020 until Saturday 15 February 2020 and 28 April 2020 until 15 June 2020, save potentially for a few unpaid sick leave days, also count towards Ms Baker’s period of employment with Ms Orr.

[28] Ms Orr was on unpaid leave or an unpaid authorised absence when she was ill and unable to work from 17 February 2020 until at least 26 March 2020. This period does not count towards Ms Baker’s service with Ms Orr (s 22(2)(b) of the Act).

[29] The period from 27 March 2020, when Ms Orr closed the salon for about two weeks due to COVID-19, until 27 April 2020, the day before Ms Baker returned to work, is open to argument concerning whether it was a stand down and/or a period of paid leave (JobKeeper), but I do not need to determine those questions because the balance of the findings I have made mean that Ms Baker was employed by Ms Orr for more than 12 months prior to her dismissal.

Conclusion

[30] For the reasons stated, I find that, at 15 June 2020, Ms Baker had completed a period of employment with Ms Orr of at least the minimum employment period (12 months). It follows that Ms Orr’s jurisdictional objection to Ms Baker’s unfair dismissal application must be dismissed. The matter will be listed shortly for directions.

DEPUTY PRESIDENT

Appearances:

Ms Baker on behalf of herself
Ms Orr on behalf of the Respondent

Hearing details:

2020.
Newcastle (by telephone):
31 August.

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 1   [2018] FWCFB 6102

 2   [2019] FWCFB 1099