[2012] FWA 4954

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FAIR WORK AUSTRALIA

DECISION

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

Ms Kerry Thorne
v
Jura Australia Espresso Pty Ltd
(U2012/6500)

COMMISSIONER CARGILL

SYDNEY, 14 JUNE 2012

Termination of employment - Jurisdiction and extension of time.

[1] This decision arises from an application by Ms K Thorne (the applicant) pursuant to section 394 of the Fair Work Act 2009 (the Act) for a remedy in respect of her dismissal by Jura Australia Espresso Pty Ltd (Jura or the respondent). The application was lodged outside the statutory time limit. The respondent opposes the extension of time being granted. It also objects to the claim on the ground that the applicant had not completed the minimum period of employment under the Act.

[2] The matter was heard as part of the jurisdictional roster on 1 June 2012. The applicant was represented by Ms Bwadi, solicitor and the respondent by Mr Reitano of counsel. Both representatives appeared with permission.

[3] The applicant provided two statements, Exhibits Applicant 1 and 2 respectively. She adopted those statements under oath but was not cross-examined. Mr Reitano noted that the absence of such cross-examination was on the basis that the respondent reserved its rights to challenge the applicant’s evidence on the merits of the substantive claim should the matter proceed further.

[4] Evidence for the respondent was given by Mr Liakatos, Head of Sales for the respondent. Mr Liakatos provided two statements, Exhibits Respondent 1 and 2 respectively. Mr Liakatos also gave oral evidence and was cross examined.

FACTS AND EVIDENCE

[5] In July 2008 Coffee Machines Australia Pty Ltd (Coffee) entered into an agreement with Jura Elektroapparate AG (JEAG) a Swiss company which designs, manufactures and sells coffee machines. This agreement was that Coffee would arrange for Global Coffee Solutions Pty Ltd (Global) to provide labour to Jura for the purpose of selling coffee machines in Australia. The agreement also included the provision of other items and equipment such as vehicles and information technology services to Jura. Mr Liakatos described the arrangement as a service level agreement.

[6] The applicant began her employment with Global on 20 October 2009. She was engaged as a Retail Demonstrator/Merchandiser and was employed on a casual basis.

[7] On 13 July 2011 JEAG acquired the shareholding in Jura which was previously owned by Coffee. Jura is now wholly owned by JEAG although, prior to the share acquisition, the two companies were apparently not related. No other assets were transferred between any of the four entities.

[8] The agreement referred to in paragraph 5 ended at the time of the share acquisition by JEAG in July 2011. However it is the evidence of Mr Liakatos that, until a new agreement could be reached, the businesses operated on the basis of a shared service payback structure. At the end of 2011 the employment of all of the Global employees was terminated. A number of Global employees, including the applicant and Mr Liakatos, were offered positions with Jura. The letter of offer to the applicant is attached to the respondent’s objection to the claim, Form F4. The applicant accepted that offer on 4 January 2012. The applicant’s employment with Jura was as a casual.

[9] At no time was the applicant informed that her service with Global would not be recognised by Jura. Her evidence is that it was stated, and she believed, that there was a transmission of business between Global and Jura.

[10] It is the evidence of Mr Liakatos that he is a transferring employee and that his previous service with Global is recognised by Jura. He was not questioned as to the basis for the difference between his situation and that of the applicant.

[11] It is agreed that JEAG and Jura are associated entities, one with another. It is also agreed that Global and Coffee are associated entities, one with another. It is the evidence of Mr Liakatos that Global and Jura are not associated entities. His evidence is that Global continues in existence and was not taken over by Jura.

[12] On 27 January 2012 the applicant was telephoned by her manager and informed that her services were no longer required. When pressed for an explanation the manager initially said that, as the applicant was a casual, no reason was needed. She later said that it was because of complaints from franchisees. No letter of termination was provided.

[13] The applicant departed for the U.K. on 28 January 2012. This was a long planned holiday and an arrangement of which her manager had been aware for some time.

[14] The applicant’s evidence is that she was not aware of FWA and did not have time before her departure to consult with a solicitor or file an unfair dismissal application. The applicant did not have access to the internet during her time overseas.

[15] The applicant returned to Australia on Saturday 10 March. On 14 March the applicant visited some of the franchisees with whom she had worked to obtain references. Some of those franchisees suggested that she seek legal advice about her dismissal. She contacted FWA and was told that she couldn’t do anything because an application had to be filed within 14 days.

[16] The applicant’s evidence is that she thought about it for a few days, contacted her usual solicitor and was provided with Ms Bwadi’s details. She rang that firm on 19 March. The earliest available appointment was 21 March. The application was lodged on 23 March 2012. That is 42 days outside the 14 day time limit.

SUBMISSIONS ON BEHALF OF THE APPLICANT

[17] Written outlines of submissions in relation to the two issues were provided prior to the hearing. Ms Bwadi also made oral submissions.

[18] It is submitted that the time for lodgement of the applicant’s claim should be extended. Reference is made to the provisions of section 394(3) of the Act.

[19] The applicant has provided a good explanation for the delay in lodgement. She was overseas from the day after she was informed of her dismissal and had no access to a legal advisor during her absence. Reference is made to the decision of Lawford v Sydney Essential Oil Co. Pty Ltd [2012] FWA 1718 @ para 25 (Lawford). It is submitted that the time during which the applicant was overseas is an exceptional circumstance.

[20] It is submitted that upon becoming aware of the dismissal the applicant made enquiries of her clients, the franchisees, as to whether there was any basis for the allegation that they had made complaints about her. It is submitted that those enquiries are a clear indication that the applicant did not accept her dismissal.

[21] There is no evidence of any prejudice to the respondent.

[22] It is submitted that the applicant’s case is meritorious. She was a good performer and the best sales person for the respondent. The termination of the applicant’s employment did not follow any fair process and was harsh. The decision was conveyed over the telephone the day before the applicant was due to leave the country for a six week holiday.

[23] Fairness as between the applicant and others in a like position supports the application of the comments in paragraph 25 of Lawford to the applicant.

[24] Ms Bwadi submitted that there are exceptional circumstances in this case such that the time for lodgement should be extended. Sections 577 and 578 of the Act also support the time being extended.

[25] In relation to the second issue, it is submitted that the applicant had completed the minimum period of employment as at the date of her dismissal. The applicant was a transferring employee and had not been informed in writing that her service with Global would not be recognised by Jura. Consequently her period of service with Global counted and the applicant had more than the minimum period of employment.

[26] It is submitted that the circumstances of the applicant’s employment satisfies the meaning of “transfer of employment” under section 22(7)(b) as there had been a transfer of business from Global to Jura. The applicant relies on the decision of Martin v Donut King Chirnside Park T/A Hersing Pty Ltd [2011] FWA 8862 @ para 18. It is noted that the decision did not require that the provisions of section 311 must be satisfied for the purposes of section 384(2)(b).

[27] If there is a requirement for a transfer of business under section 311, it is submitted that there is no doubt that the provisions of subsection (1)(a), (b) and (c) have been met. Further, (1)(d) has also been met as there is a connection between Global and Jura. The correspondence received by the applicant indicates that Jura had some level of control over Global. JEAG and Jura are associated entities and related bodies corporate within the meaning of the Corporations Act 2001.

[28] It is submitted that the arrangement by which Global provided labour to JEAG or Jura was an outsourcing arrangement. Section 311(1)(d) and (5) are met because that outsourcing arrangement has now ceased and the labour is provided by Jura itself.

SUBMISSIONS ON BEHALF OF THE RESPONDENT

[29] Written submissions were provided prior to the hearing. Mr Reitano also made oral submissions.

[30] It is submitted that the time for lodgement of the application should not be extended. It is noted that the time for lodgement begins from the date of dismissal not from the applicant’s return to Australia. Mr Reitano submitted that the applicant could have taken action in relation to her claim before she left the country or while she was away.

[31] It is submitted that the applicant did not take prompt action upon her return. She spoke to various people, including FWA, and thought about the matter for some days before seeking legal advice and lodging the claim. The applicant has not provided a satisfactory explanation for the whole delay.

[32] It is submitted that the applicant did not take any other action to dispute the termination. There are no exceptional circumstances on which to base an extension of time.

[33] In relation to the second issue it is noted that, in order for the applicant to have met the minimum employment period it needs to be shown that she is a transferring employee within the meaning of section 311 of the Act. It is submitted that the applicant has to substantiate that such is the case.

[34] The respondent does not contest that section 311(1)(a)(b) and (c) are made out. The issue is whether paragraph (d) is met. In this regard it is necessary to consider section 311(3) to (6). Mr Reitano submitted that there was no evidence that there had been a transfer of any assets between Global and Jura which would fall within subsection (3). Subsection (4) does not arise. Mr Reitano submitted that Global and Jura are not associated entities and consequently subsection (6) is not attracted.

[35] Mr Reitano submitted that the only subsection which could be relevant is subsection (5). He submitted that the question of whether it is relevant depends upon the meaning of “outsource” as used within it. Mr Reitano noted that there was no relevant definition in the Act. He submitted that the word did not encompass every arrangement in which labour is provided by another entity. For example, a joint venture agreement would not be covered.

[36] Mr Reitano submitted that the evidence of Mr Liakatos was clear that the arrangement by which Global had provided labour to Jura was a service agreement. Mr Reitano submitted that it was a pure joint venture arrangement. It was not an outsourcing arrangement and its termination did not trigger the application of subsection (5).

[37] Consequently the applicant is not a transferring employee, her service with Global does not count and hence she had not completed the minimum period of employment.

CONCLUSIONS

[38] There are two issues to be determined in this matter: whether the applicant has completed the minimum period of employment set out in the Act, and, whether an extension of time should be allowed for the lodgement of the applicant’s claim. I shall deal with the issues in that order.

[39] Section 382 of the Act provides, among other things, that a person is protected from unfair dismissal if they have completed a minimum employment period with their employer. Section 383 provides that, if the employer is a small business employer, that minimum period is one year, otherwise it is six months.

[40] There was no evidence as to whether the respondent is a small business employer. However, that issue is not crucial to my determination. If the applicant’s period of employment with Global is counted as continuous service with her employment with Jura, then she has completed the minimum employment period regardless of whether it is six months or one year. Alternatively, if her employment with Global does not count, then she has not completed even a six month minimum period.

[41] Section 384 provides that an employee’s period of employment is the period of continuous service that employee has completed with the employer at the particular time. Subsection (2) then sets out two qualifications. The first of these is not an issue in this matter. The second is and reads as follows:

“(2) However:

(a) .............

(b) if:

(i) the employee 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.”

[42] It needs to be noted that, in considering the application of this provision, and other related statutory provisions set out below to the facts in this case, the “old employer” is Global and the “new employer” is Jura.

[43] The first aspect of section 384(2)(b) that requires consideration in this matter is the phrases “transferring employee” and “transfer of business” as contained in subparagraph (i). Section 12, The Dictionary, provides definitions of those phrases as follows:

“transferring employee, in relation to a transfer of business: see subsection 311(2).”

“transfer of business: see subsection 311(1).”

[44] Consequently, section 311 of the Act establishes the meaning of the terminology “transfer of business” and “transferring employee” as contained in subsection 384(2)(b) of the Act. Section 311 of the Act is in the following terms:

“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.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[45] The respondent concedes that the matters set out in section 311(1)(a),(b) and (c) have been satisfied in this case. The issue in dispute is whether paragraph (d) has been satisfied. In order to decide this it is necessary to consider the provisions of subsections (3) to (6) to ascertain if any of them have been met.

[46] The evidence is that there has been no transfer of assets, that relate to or are used in connection with the transferring work, between the various assets. Consequently subsection (3) has not been made out. It is also the evidence that, while JEAG and Jura are associated entities, Jura and Global are not. It follows that subsection (6) has not been made out. There is no suggestion that subsection (4) is relevant in this matter.

[47] The application or otherwise, of subsection (5), turns on whether the arrangement by which Global had been providing labour could be considered to be “outsourcing” or something else. The evidence of Mr Liakatos is that Global was the company by which labour was provided for the shareholders of Jura. In my view the fact that there was an arrangement by which other things such as vehicles and IT services were provided does not mean it was not an outsourcing arrangement.

[48] I am satisfied that Jura had outsourced the transferring work to Global and, as at the end of 2011, had ceased to outsource that work. It follows that subsection (5) is met and, consequently, so is subsection (1). There has been a transfer of business and the applicant is a transferring employee as contemplated by subsection (2).

[49] It should be noted that section 22 also contains a definition of “transfer of employment”. However, in this case it really does not have any work to do because of section 311. For abundant caution I note that there has been a transfer of employment in this matter by reason of section 22(7)(b).

[50] Having established that the applicant was a transferring employee for the purposes of the Act it is important to note the respondent’s concession that the applicant was not informed in writing before her new employment began that her period of service with Global would not be recognised.

[51] Consequently by virtue of the operation of subsection 384(2)(b)(iii) of the Act, the applicant’s period of employment with the old employer is not excluded and must be recognised as a period of employment relevant to the minimum employment period that must be completed after which an employee is protected from unfair dismissal. Therefore the applicant’s period of employment for the purposes of subsection 382(a) of the Act included the period of employment with the old employer which commenced in October 2009. At the time of her dismissal the period of employment exceeded the minimum period as prescribed by section 383 of the Act.

[52] I now turn to deal with the issue of whether or not the time for lodgement of the claim should be extended.

[53] Section 394(2) provides that an application for an unfair dismissal remedy must be made within 14 days after the dismissal took effect or within such further period as Fair Work Australia allows under subsection (3). That subsection is in the following terms:

“FWA may allow a further period for the application to be made by a person under subsection (1) if FWA is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.”

[54] A Full Bench of FWA in Nulty v Blue Star Group [2011] FWAFB 975 reviewed the authorities on the meaning of “exceptional circumstances”. A very helpful summary is at paragraphs 13-15 of the decision. I adopt and follow the approach of the Full Bench in this matter.

[55] The reason for a large part of the delay in this case is that the applicant was absent from Australia from the day following her dismissal, 28 January 2012, until 10 March 2012. Her unchallenged evidence is that she did not have access to the internet during her time overseas. I accept that, in the circumstances, it would not have been reasonable to have expected the applicant to have taken action before she went away or whilst she was away.

[56] The day on which the applicant returned was a Saturday. On the following Wednesday she visited some of her former clients to obtain references. Suggestions were made that she seek advice about her situation and she contacted what she calls “FWA”. I suspect this was the Helpline rather than the Tribunal. In any event, her evidence is that she was told that she couldn’t do anything because a claim had to be filed within 14 days. It is somewhat troubling that it appears that she was not informed that she could seek an extension of time.

[57] The applicant thought about it for a few days, sought legal advice and the claim was lodged on 23 March which was 13 days after her return to Australia, but 42 days after the end of the statutory time limit.

[58] I consider that the applicant has provide a proper explanation for the whole period of the delay. It is noteworthy that she made relatively prompt inquiries upon her return only to be told by an official source that she was too late to do anything. The few days delay after that is perfectly explicable in view of that advice.

[59] The applicant became aware of her dismissal on 27 January 2012 which was the day on which it took effect.

[60] The applicant took no action to dispute her dismissal other than by lodging this claim. I note the submission on the applicant’s behalf that she had challenged her dismissal by way of speaking to her former clients. However, it seems to be relatively clear that any other action needs to be brought to the attention of the former employer for it to be relevant in relation to this factor.

[61] There does not appear to be any particular prejudice to the respondent other than the usual prejudice which might flow from having to defend a claim such as this.

[62] I have not formed any concluded view in relation to the merits of the substantive claim. The applicant challenges the allegation that complaints were made against her and submits that there was procedural unfairness. In the circumstances and on the basis of the limited material before me, I am prepared to accept that the application is not without merit.

[63] There has been nothing put to me which satisfies me that the issue of fairness as between the applicant and others in a similar position has any particular relevance in this matter.

[64] I have taken into account each of the factors set out in paragraphs (a) to (f) of section 394(3). I am satisfied that, taken as a whole, there are exceptional circumstances in this case which are sufficient to justify granting an extension of time. These exceptional circumstances are the applicant’s absence from Australia from the day following her dismissal and the misleading advice which she received shortly after her return that it was too late to make a claim.

[65] The respondent’s jurisdiction objection is dismissed and the time for lodgement of the claim is extended to 23 March 2012.

COMMISSIONER

Appearances:

M Bwadi, solicitor, for the applicant.

R Reitano of counsel, for Jura Australia Espresso Pty Ltd

Hearing details:

2012.

Sydney.

June 1.

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