Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - jurisdictional objection - whether applicant had completed minimum employment period - whether respondent a small business employer - jurisdictional objection upheld

• [1] Colin McKerlie was employed by Private Fleet Group Pty Limited ("PFG") as a car buyer's agent. PFG terminated his employment on 2 May 2025.

• [2] On 21 May 2025, Mr McKerlie filed an unfair dismissal application under section 394 of the Fair Work Act 2009[1] ("Application"). Relevantly for present purposes, the Fair Work Act provides as follows:

• (1) To be protected from unfair dismissal, a person needs to have completed a period of a employment with their employer of at least the "minimum employment period".[2]

• (2) The minimum employment period is six months, unless the employer is a "small business employer", in which case the period is 12 months.[3]

• (3) An employer is a small business employer at a particular time if it employs fewer than 15 employees at that time.[4] In calculating the number of employees employed at a particular time, associated entities are taken to be one entity.[5]

• (4) An employee's "period of employment" at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.[6]

• (5) Where there has been a "transfer of employment" from one employer to another, service with the first counts as service with the second.[7]

• [3] PFG objected to the Application. It contended that as at the date of his dismissal, Mr McKerlie had not completed the minimum employment period with it ("Objection").

• [4] I have determined to uphold the Objection and to dismiss the Application. My reasons follow.

• [5] On 6 May 2024, Mr McKerlie commenced employment with a company called Private Fleet Pty Limited (not to be confused with Private Fleet Group Pty Limited). Effective from 1 November 2024, PFG took over ownership of the business.

• [6] I explored this change of ownership with the parties during the determinative conference I conducted in relation to the Objection. From the information provided by Jason Varone, PFG's Chief Executive Officer, and Mr McKerlie, I find as follows:

(1) PFG was not an associated entity of Private Fleet Pty Limited.

(2) There was a transfer of assets from Private Fleet Pty Limited to PFG.

(3) PFG "took over" the employees then working in the business. It offered Mr McKerlie employment from 1 November 2024, which he accepted

(4) PFG recognised the leave entitlements that Mr McKerlie had accrued during his employment with Private Fleet Pty Limited.

• [7] On 2 May 2025, Mr Varone sent a letter to Mr McKerlie informing him that his employment with PFG was terminated with effect that day.

• [8] In its submissions in support of the Objection, PFG contended that Mr McKerlie's employment commenced on 1 November 2024. However, during the course of the determinative conference and following the discussion outlined at [6] above, Mr Varone accepted that there had been a transfer of business[8] from Private Fleet Pty Limited to PFG; that Mr McKerlie was a "transferring employee";[9] that there had been a transfer of Mr McKerlie's employment from Private Fleet Pty Limited to PFG; and that as a result, Mr McKerlie's service with Private Fleet Pty Limited counted as service with PFG.

• [9] It follows that Mr McKerlie's period of continuous service with PFG is to be regarded as having been from 6 May 2024 to 2 May 2025. Self-evidently, that is less than 12 months.

• [10] The question which arises is whether Mr McKerlie had completed the minimum employment period with PFG at the time of his dismissal. The answer depends on whether PFG was a small business employer as at 2 May 2025. If so, Mr McKerlie had not completed 12 months continuous service and the Objection would have to be upheld. If not, Mr McKerlie had completed more than six months continuous service and the Objection would have to be dismissed.

• [11] For the reasons which follow, I find that PFG was a small business employer on 2 May 2025.

• [12] PFG led evidence that on that date it had 14 employees. It submitted that it had no associated entities at the time that had any employees. Mr McKerlie did not challenge that submission.

• [13] For Mr McKerlie to successfully oppose the Objection, he needed to demonstrate that PFG's evidence was inaccurate or incomplete. He identified four areas in which this might be the case. I will deal with each in turn, in no particular order.

• [14] Mr McKerlie gave evidence that in addition to the 14 employees identified by PFG, there was a role in the business of "follow-up caller". Their job, as the title suggests, was to follow up prospective customers of the business. If this generated a "lead", it was assigned to a sales agent such as Mr McKerlie.

• [15] Mr McKerlie stated that he had been told by the General Manager of the business, Anton Swampillai, that there was a person in the position of "follow-up caller". Mr McKerlie understood that the person was female and was engaged specifically to make follow-up calls to potential customers.

• [16] Mr McKerlie also produced a spreadsheet that he had created, which identified when he had been allocated leads as a result of calls made to prospective customers by the follow-up caller. He contended that this had occurred with sufficient regularity for me to be satisfied that the person was either employed on a part-time basis, or as a regular casual employee. In either case, he argued that the follow-up caller should be added to the list of PFG's employees as at 2 May 2025.

• [17] There is some evidence to support the existence of the position of "Follow Up User". That title appears in an extract from PFG's Customer Relationship Management ("CRM") system, which PFG had produced in response to an order to produce issued at Mr McKerlie's request ("Order to Produce").

• [18] However, Mr Varone stated that there was no standalone position of "follow-up caller" or "follow up user". He said that everyone in the business is responsible for making, and can be assigned to make, follow-up calls to clients. He stated that the "Follow Up User" reference in the CRM record reflected a generic logon that staff use for the purposes of making follow-up calls.

• [19] Mr McKerlie disputed the existence of such a "generic logon". He stated that any employee required to make follow-up calls does so using their own login details.

• [20] On the evidence available to me, I am unable to resolve that factual controversy. However, I do not consider that it is particularly germane to the question I need to answer.

• [21] Mr McKerlie's case in relation to the follow-up caller was in many respects speculative. His understanding that there was such a discrete position which was filled by a particular person is based on a conversation he had with Mr Swampillai. He did not say when that conversation took place. As a result, I am not able to determine whether what Mr McKerlie was told reflected the situation as at 2 May 2025. Further, Mr McKerlie was not able to identify the person who occupied the position on that (or any) date.

• [22] What I am left with is a statement by Mr McKerlie as to his belief in the existence of particular circumstances. He has not demonstrated that those circumstances in fact existed. He has not provided the basis on which to properly call into question the evidence of Mr Varone that PFG does not, and did not on 2 May 2025, have a person employed in the position of follow-up caller.

• [23] Still, Mr McKerlie invited me to reject Mr Varone's evidence. He relied in large part on what he said was the failure by PFG to properly respond to the Order to Produce. I accept that PFG appears not to have completely complied with the Order to Produce (for reasons which I come to briefly below), but that does not in my view go to Mr Varone's credit. I had no reason to believe that Mr Varone, or Mr McKerlie for that matter, were doing other than their best to assist the Commission.

• [24] I am not satisfied on the evidence that as at 2 May 2025 there was a person occupying the position of "follow-up caller", who is to be counted in addition to the 14 employees identified by PFG.

• [25] As noted above, Mr Swampillai is PFG's General Manager. His name does not appear in PFG's list of 14 employees.

• [26] Mr Varone stated that Mr Swampillai is engaged to provide services through a third-party company. He said that this was an arrangement that had been in place at the time that PFG took over the business and which has been maintained. He further stated that there is no contract that sets out the terms of Mr Swampillai's engagement.

• [27] Mr McKerlie submitted that "it is impossible to believe, on the balance, that the Respondent intended the engagement of its General Manager to be that of an independent contractor".[10] However, he stated at the determinative conference that he could not question Mr Varone's evidence.

• [28] It follows that there is no basis on which I could find that Mr Swampillai was an employee of PFG on 2 May 2025.

• [29] In response to the Order to Produce, PFG produced three documents titled "Independent Contractor Agreement - Standard Terms and Conditions". They were said to be the contracts under which PFG engages three workers in the business. As the title of the contracts suggests, they purport to create independent contract relationships between PFG and those workers. Two of the contracts are between PFG and individuals. The third is with a company. All of the contracts have a commencement date of 1 November 2024.

• [30] Mr McKerlie sought to challenge this evidence on two bases. First, he stated that at some stage during his employment, he had discussed with Mr Varone the possibility of becoming a contractor. He said that Mr Varone had told him that he would not enter into a independent contractor arrangement unless a third party company was involved. Mr McKerlie argued that Mr Varone had either been dishonest when he spoke to him, or was now being dishonest in claiming that PFG had entered into independent contracts with two individuals.

• [31] Mr Varone did not dispute the conversation described by Mr McKerlie., but he took exception to the suggestion that he had been dishonest. As I have stated, I saw no reason to call Mr Varone's credibility into question. In any event, even were I to accept that Mr Varone had adopted inconsistent stances over time, it would be an insufficient basis on which to find that the Independent Contractor Agreements did not properly reflect the relationship between PFG and the relevant workers.

• [32] Second, Mr McKerlie relied on the fact that none of the contracts was executed. Mr Varone said that PFG had executed copies of the contracts, and he could not explain why those documents were not produced in response to the Order to Produce. He offered to send them through. Mr McKerlie objected to him doing so and I declined to accept them.

• [33] However, the fact that the contracts before me are not executed is not ultimately material. It might have some bearing on the weight to attach to the documents, but I am not persuaded that they ought to be discounted in their entirety.

• [34] In essence, Mr McKerlie invited me to look behind the Independent Contractor Agreements to determine the true nature of the relationship between PFG and the individuals to whom they relate. But I was given no basis on which I could make such a determination.

• [35] For these reasons, I am not satisfied that any of the people working under an Independent Contractor Agreement is to be regarded as having been an employee of PFG on 2 May 2025.

• [36] Faith Wong was a PFG employee until 4 April 2025. At the time of Mr McKerlie's dismissal, PFG was recruiting to fill the position Ms Wong had occupied. The position was filled on 19 May 2025.

• [37] Mr McKerlie contended that although the position previously occupied by Ms Wong was vacant at the time of his dismissal, it should "count" for the purposes of determining whether PFG was a small business employer at that time. He submissions went to the proper interpretation of section 23(1), which reads:

A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

• [38] Mr McKerlie submitted:[11]

"5. The Applicant submits that the use of the word 'employs' means that the section defines the number of employees to include a position which is vacant at the time of the dismissal. As such, where a position is vacant but in the process of being filled, that position is to be included. In this case, the position previously occupied by Faith Wong and subsequently filled - by the Respondent's admission - after the Applicant's dismissal must be included in the number of employees.

6. The meaning of the word 'employs' in s.23(1) is refined by the subsequent text of the section. The fact that the section specifically includes 'a regular casual employee' makes clear that the section defines the number of people the employer 'employs' as the number of people routinely employed over time, whether or not any particular position is occupied at any specific time.

7. On this interpretation, the position previously occupied by Faith Wong and actively being filled by the Respondent at the time of the Applicant's dismissal must be included in the number of employees, bringing the total to at least 15. Grammatically, the term is used in the 'third person singular present' tense, 'employs' ie. 'He employs five workers.' The application of the term to a general state of affairs is implicit."

• [39] I do not accept those submissions. Mr McKerlie's proposed construction calls for words to be read into the section. During the determinative conference, he accepted that on his interpretation, the section should be read as if "usually" or "customarily" were inserted before "employs". It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do.[12] No such necessity arises in the present case. The language of section 23(1) is clear. It calls for a point in time assessment - whether the employer is a small business employer "at a particular time" by reference to the number of employees it has "at that time".

• [40] Further, the fact that regular casual employees are to be counted does not assist Mr McKerlie. Even were I to assume that such employees are defined by having been "routinely employed over time", the assessment required by section 23(1) remains confined to identifying the number of such employees employed by the employer as at the date of dismissal.

• [41] For these reasons, I do not accept that the vacancy created by the departure of Ms Wong is to be regarded for the purposes of determining the number of employees that PFG employed as at 2 May 2025.

• [42] In light of the matters canvassed above, I have no basis on which to find that as at 2 May 2025 PFG employed more than the 14 employees it identified. It follows, and I find, that at that time it was a small business employer.

• [43] As a result of that finding, the minimum employment period that Mr McKerlie was required to have served with PFG was 12 months. I have already determined that Mr McKerlie's period of employment with PFG is to be taken to have been from 6 May 2024 until 2 May 2025. It follows that at the time of his dismissal, Mr McKerlie had not completed the minimum employment period. Consequently, he was not a person protected from unfair dismissal.

• [44] In what must be regarded as an alternative submission, Mr McKerlie contended that such a conclusion should not result in the Objection being upheld. He submitted:[13]

"12. The Applicant's submission is that any interpretation of the law which characterises the Applicant as an employee of a small business employer at the time of his dismissal is so fundamentally unfair as to be contrary to the Act, which is grounded in the concept of fairness.

13. It is common ground that at the time of his dismissal, the Applicant had been employed by the original employer, Private Fleet Pty Ltd - not a Small Business Employer - for two days short of six months; and by the Respondent, Private Fleet Group Pty Ltd, for six months and two days during which time, by the Respondent's admission, had 15 permanent employees for the whole period up to 14 April, two weeks short of six months, in all a period of 11 months and 29 days.

14. If the Respondent's objection to jurisdiction is upheld, this means the Applicant had essentially completed six months employment each with two employers which each purported to have 15 or more employees and was only only [sic] able to be terminated as a small business employee due to the Respondent's incompetence or connivance in not having filled a permanent part-time position within three weeks of it becoming vacant."

• [45] I observe at the outset that Mr McKerlie's submission as to PFG's "incompetence or connivance" is mere assertion. It is unsupported by any cogent evidence. I reject the submission.

• [46] In any event, whether or not Mr McKerlie considers that it would be unfair for me to uphold the Objection is not to the point. Even were the outcome to be considered "fundamentally unfair", it cannot render it "contrary to the Act". Rather, the outcome is entirely consistent with the Act. It is the result of the application of the requirements laid down by the legislature.

• [47] I have found that Mr McKerlie was not a person protected from unfair dismissal. It follows that the Objection must be upheld.

• [48] I order that the Application be dismissed.

[1] In this decision, all references to legislative provisions are to provisions of the Fair Work Act

[10] Applicant's Outline of Submissions on Jurisdiction, par 10

[11] Applicant's Outline of Submissions on Jurisdiction

[12] Thompson v Goold & Co [1910] AC 409 at 420. This passage has often been cited - see for example, JJ Richards v Fair Work Australia [2015] FACFC 56 at [51], which was in turn quoted with approval in Construction, Forestry, Mining and Energy Union v Central Queensland Services Pty Ltd T/A BHP Billiton Mitsubishi Alliance [2016] FWCFB 288 at [13]

[13] Applicant's Outline of Submissions on Jurisdiction

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