Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy. Jurisdictional objections - applicant not an employee of respondent, application dismissed.

• [1] Ms Soledad Degendorfer has made an unfair dismissal application, alleging that she was unfairly dismissed by Australian Skin Clinics Knox Pty Ltd (ASCK) on Monday, 3 February 2025.

• [2] ASCK has raised jurisdictional objections to the application. It contends that the Applicant was never an employee, and that she was therefore never dismissed by ASCK. ASCK raises a further objection that even if she was an employee, she is not eligible to make an unfair dismissal application as she was not employed for the minimum employment period.

• [3] This decision deals with the jurisdictional objection that ASCK never employed Ms Degendorfer.

• [4] The application was dealt with at a hearing on Thursday, 24 April 2025, at which the applicant was represented by her husband, Mr Henri Dupont. The Respondent was given permission to be legally represented, as I was satisfied that it would enable the matter to be dealt with more efficiently. The Respondent called evidence from Mr Bronfman, the director and principal of ASCK. The Applicant did not give evidence, however, with the Respondent's consent, I treated the factual material in the documents filed on her behalf, as her evidence.

• [5] Throughout the course of the application, neither party conducted themselves particularly well. The Respondent's representative had to be admonished at one point as his witness, Mr Bronfman, was giving evidence. The material filed by the Applicant was confusing, duplicative and contained various authorities which did not exist. The Respondent made a costs application not in the proper form, and multiple strike out applications unsupported by evidence or proper details, and I do not deal with those applications further. If the Respondent wishes to pursue any costs application, they can make it in the appropriate form. Having had an order to produce issued at the Applicant's request, the Applicant's representative contended, without any proper foundation, that the Order had not been complied with. In circumstances where the Respondent's representative was a legal practitioner with professional duties I was not satisfied there was a proper basis for these submissions.

• [6] Whilst the Respondent's representative had to be admonished during Mr Bronfman's evidence, I find that Mr Bronfman was a credible witness and his evidence was not disturbed in any significant way through cross-examination and is consistent with the documentary material. I broadly accept his evidence as to what occurred.

• [7] In Kupiec v Australian Skin Clinics Knox Pty Ltd (Kupiec),[1] Commissioner Wilson dismissed an unfair dismissal application by another employee who was employed at the Knox franchise at the same time as the events concerning Ms Degendorfer. The Commissioner found that Ms Kupiec had not been employed by ASCK and dismissed her application. The Respondent contends that the circumstances are in all key respects the same, and Ms Degendorfer's application should also be dismissed. Whilst the Applicant acknowledges that both cases stem from the same franchise transfer, she contends that the operative facts and legal context are significantly different.

• [8] Based on the evidence of Ms Degendorfer and Mr Bronfman and adopting some of the uncontroversial findings in Kupiec, I make the following findings as to what occurred.

• [9] Ms Degendorfer was employed as a Clinic Manager at an Australian Skin Clinics (ASC) outlet in Knox. ASC is a franchise cosmetic procedures business. When the Applicant commenced employment in July 2022, she was employed by the then franchisee, Shariff Investments Pty Ltd (Shariff). The principal of Shariff was Mr Ray Shariff.

• [10] The franchise at Knox changed hands between Shariff and ASCK in very rushed circumstances. In January 2025, Mr Bronfman was approached by the Franchisor of ASC regarding the urgent acquisition of the Knox clinic, as Shariff was in financial distress and requested assistance to find a buyer as the business being conducted was potentially insolvent. Mr Bronfman was already operating other ASC franchises and was asked to step in to ensure business continuity. He agreed to acquire the business and assets through ASCK.[2]

• [11] The contract of sale required Shariff to terminate the employment of all employees and "to satisfy all liabilities associated with the employees."[3] The contract specifies that Shariff "agrees to sell and the Purchaser agrees to buy the Business and the Business Assets for the Price, as a going concern on the terms set out in this Contract", as well as providing that Shariff "acknowledges and warrants that, prior to the completion of this business and asset sale transaction, it has terminated all of its employees and has duly paid all statutory entitlements and other amounts owed to those employees in accordance with Australian law".[4]

• [12] The transaction was extremely rushed and consequently urgent steps were put in place to give effect to the transaction. To assist with continuity the franchisor proposed a secondment agreement arrangement where certain employees of Shariff could be seconded to ASCK temporarily.[5]

• [13] On Friday 31 January 2025, the Applicant received a WhatsApp group chat message from Mr Shariff stating that all wages and entitlements had been paid up to that date, and that he appreciates "your support, effort, and dedication throughout this transition. Wishing everyone the best."

• [14] Ms Degendorfer had been aware of rumours that the business was about to be sold but was unaware of a confirmed sale until she received an email on 1 February 2025 from the clinic manager.[6] The email was ostensibly from Mr Shariff but signed by another person. The email advised that Mr Shariff had sold the business to a new owner effective immediately (1 February 2025) and that as part of the transition, Ms Degendorfer will be on a secondment from 1 February 2025 for up to 4 weeks. The email advised that during the secondment period she would remain an employee of Shariff and that 'the secondment does not create any employment relationship between you and ASCK' and nor does the 'secondment guarantee any continued employment with ASCK following the secondment period.'[7] Mr Shariff agreed for the email to be sent under his name.[8] Ms Degendorfer was sent and asked to urgently sign the secondment agreement. She did not do so, as she wanted to obtain legal advice before doing so.

• [15] On Friday, 1 February 2025, ASCK installed EFTPOS terminals at the clinic, however revenue was quarantined for Shariff.[9] This became necessary because Shariff advised Mr Bronfman at around 2:00 PM on 31 January that he was removing his point of sale terminals that day.[10] Shariff also handed over the keys to the premises that day.

• [16] On Monday, 3 February 2025, the Applicant attended work as she usually did whilst employed by Shariff and performed work until 5:30 PM. Mr Bronfman's evidence was that he had not scheduled Ms Degendorfer to work, and that the rosters were still being managed by Shariff using their legacy system. Mr Bronfman's evidence is that at no point did either he nor ASCK offer employment to the Applicant, either verbally or in writing or by conduct.[11]

• [17] At around 3:00 PM on 3 February 2025, Mr Bronfman visited the clinic for the first time, staying for about 30-60 minutes. He shook Ms Degendorfer's hand and said "hi, how are you, I'm Michael". The interaction lasted for about 20 seconds. At this time, ASCK was not the franchisee, and Mr Bronfman had not signed the contract of sale. At the same time, Shariff had exited the business by this time. Mr Bronfman's evidence is that, although he "assumed operational control of the premises on 1 February, this was a temporary, transitional measure until formal settlement occurred on 4 February." The Franchisor had told Mr Bronfman to make sure that customers could be served on the weekend and he had to ensure business continuity to avoid reputational damage.

• [18] The contract of sale was signed by Mr Shariff at 4:01 PM on Monday, 3 February 2025 and by Mr Bronfman the same day at 4:51 PM."[12] Before settlement occurred, ASCK had no legal title to the business, no franchise agreement, no licence to occupy the premises, no contractual insurances in place, no WorkCover insurance in place for any staff. It had no legal right to the beneficial use of its assets.

• [19] During the day, workers were installing a new CCTV camera and around 4:00 PM, a locksmith began changing the locks at the clinic.[13]

• [20] At 7:12 PM on 3 February 2025, Ms Degendorfer received an email from Mr Bronfman which stated that, effective immediately "Ray has made the decision to terminate your contract with Shariff Investments Pty Ltd"[14] Mr Shariff denied to Ms Degendorfer instructing sending this communication, stating the business had changed hands on 31 January 2025.[15] That is not the case.

• [21] On 4 February 2025, Mr Bronfman sent an email to Ms Degendorfer "confirming that she had not been employed by ASC Knox and that no employment relationship existed."[16] Mr Bronfman's evidence was that he considered sending this to be necessary, because he did not trust what Mr Shariff had done and he wanted to make it clear because the transaction was so rushed and he had made a deliberate decision to not employ Ms Degendorfer.

• [22] The Respondent submits that there was no employment relationship between ASCK and Ms Degendorfer. There was no offer made by it, and no mutual intention to create an employment relationship. It also submits:

a) The contract of sale for the business required Shariff to terminate the employment of all employees and satisfy all associated liabilities. Shariff may not have complied with this term of the sale contract, however it does not operate so as to impose obligations on the Respondent to employ the employees, including Ms Degendorfer.

b) Ms Degendorfer's attendance at the clinic on 3 February 2025 was done without the knowledge or direction of Mr Bronfman.

• c) The Respondent assumed limited interim operational control of the premises on 1 February 2025 as a temporary measure intended to preserve the business prior to formal settlement.[17]

d) Although ASCK installed its POS terminals on 1 February 2025, all revenue was quarantined for the benefit of Shariff.

• e) The contract of sale was exchanged at 4:51 PM on 3 February 2025, and pursuant to the terms of the Contract, the Respondent became the owner of the business on 4 February 2025.[18]

• [23] The applicant submits that her employment with Shariff Pty Ltd ended on 31 January 2025 and that she then commenced employment with ASCK. In support of her submission that she was employed by ASCK the Applicant relies on:

a) That she worked a full shift on 3 February 2025 (for which she has not been paid), which was concurrent with or after the transfer of business to ASCK; > > b) Her duties remained unchanged and ASCK obtained the benefit of the performance of her duties; > > c) In doing so she was under the operational control of ASCK, including working under a new EFTPOS system installed by them on 1 February 2025 and in the presence of employees of ASCK; > > d) The ASCK had received the keys to the premises on 31 January 2025; > > e) The ASCK banked proceeds from sales from 1 February 2025 and exercised control over staffing and business functions; and > > f) Her role remained unchanged.

• [24] Ms Degendorfer submits that in relation to the decision in Kupiec, there are important differences in her circumstances, including:

"- Degendorfer worked after legal settlement (post 4.51 PM on 3 Feb), Kupiec did not.

- Degendorfer never signed the secondment agreement, Kupiec did sign.

- Degendorfer alleges dismissal on discriminatory grounds, Kupiec did not."[19]

And that Ms Degendorfer's claim "raises specific facts unique to her engagement, including:

• A different start date and role for Ms Kupiec.
• Specific communications, rosters and documented interactions with management.
• Particular conduct by the Respondent alleged to constitute dismissal.

• • Distinct conditions of employment and work performance history."[20]
• [25] Ms Degendorfer also submits that there are some findings in Kupiec that support her case, in particular:

• - "At [26]: ASC Knox drafted secondment document stating the sale was 'effective immediately (1 Feb 2025)';
• - At [34]: 'The evidence leans toward there being a transfer of business'; and
• - At [17]: Contract signed at 4.51 PM on 3 Feb; Degendorfer worked until 5.30 PM'."[21]

• [26] Similar to Ms Kupiec, Ms Degendorfer's case is based on an argument that she was employed by ASCK immediately following the termination of her employment by Shariff on 31 January 2025. As in Kupiec, unless Ms Degendorfer was an employee of ASCK, she could not have been a transferring employee, and more fundamentally, cannot have been dismissed by them.

• [27] I respectfully agree with, and adopt, Commissioner Wilson's reasoning at paragraphs [29]-[34]:

[29] Because of Shariff Investment's removal of its POS terminals on 31 January 2025 and its other actions, and because the sale contract had not been finalised with ASC Knox, the franchisor was likely left with the difficult question of who would run the clinic in the meantime. That task appears to have fallen to ASC Knox, even though there appears to be no contractual requirement for that to occur.

[30] That is, the Knox clinic appears to have been operated by ASC Knox on Saturday 1 February 2025 and Monday 3 February 2025, without a formal requirement that it do so. The reasons why this was done are obvious: no franchisor would want its store front in a major shopping centre closed, even for one day. All hands would have been directed to the pumps to make sure the business, as seen by customers, remained afloat.

[31] The "hands" though were not just Mr Bronfman or his Clinic Manager, Ms Bullen: instead they included Ms Kupiec and other people who likely had worked for Shariff Investments.

[32] This situation comes directly to the question of who employed [Ms D] after 31 January 2025?

[33] ASC Knox argue there has been no transfer of business and that a finding that there was a transfer is a prerequisite for determination of the questions of jurisdiction: was Ms Kupiec employed; was she dismissed; and has she completed the minimum employment period?

[34] While the evidence leans toward there being a transfer of business, it is not necessary for me to finally determine the subject as I am not satisfied [Ms D] was ever employed by ASC Knox. In turn, that also means it is not necessary to consider the questions of whether [Ms D] was dismissed by ASC Knox or whether she had completed the minimum employment period.

• [28] The transition took place without proper regard to the employees, including Ms Degendorfer, affected. Whilst understandable to some degree in light of the urgency with which it occurred, it remains the case that the way it occurred was confusing, distressing and very difficult for the employees and without due regard to them.

• [29] Given the total lack of clear communication by either Shariff or ASCK, it is not at all surprising that Ms Degendorfer believed that her employment continued with the new owner, and that she turned up and performed work on 3 February 2025 in accordance with her usual arrangements. However, I am unable to conclude that a contract of employment existed between Ms Degendorfer and ASCK. The necessary preconditions for such a conclusion of there being a mutual intention to create legal relations, an offer and acceptance, and the passing of any valuable consideration are absent.

• [30] The ownership of the franchise did not change until 4 February 2025, after Ms Degendorfer had ceased working. This is because under the terms of the contract of sale, because the contract was signed after 3:00 PM (and there was no written agreement to alter this), legal settlement occurred on the next business day, namely 4 February 2025.[22]

• [31] The involvement of Mr Bronfman, the fact that the keys were handed over and new EFTPOS machines were installed and the locks changed, occurred as a matter of necessity, but without ownership of the business having changed.

• [32] Mr Bronfman's evidence clearly establishes that there was no intention on the part of ASCK to employ Ms Degendorfer. That does not determine the issue, as an intention can be inferred by conduct. The issue is to be viewed objectively having regard to the words and conduct of the parties, with regard to all the surrounding circumstances and to the facts of each case. However, in Ms Degendorfer's case, I cannot identify any conduct, viewed objectively, that evinces any intention on the part of ASCK to offer employment to Ms Degendorfer. The distinctions Ms Degendorfer sought to draw between her case and Ms Kupiec do not establish any such intention. Indeed, that Ms Degendorfer was not paid for the shift on 3 February 2025, supports a conclusion that there was no contract of employment, in the particular circumstances. The usual indicia of employment such as receiving payment, payslips, superannuation, taxation, etc were absent. There was no representation to her that she was an employee of ASCK. Whilst Ms Degendorfer worked on 3 February 2025 performing the same duties using the new EFTPOS machines, this occurred before ASCK owned and was legally responsible for the business. ASCK did not obtain the benefit of her work, as the income generated that day was quarantined for Shariff.

• [33] Having regard to all the circumstances in this matter, whilst Ms Degendorfer may well have believed that her employment would continue after the change of franchisee, no contract of employment existed between her and ASCK. As she was not an employee, she is not a person protected from unfair dismissal, and her application must be dismissed. An order to that effect will be issued with this decision.[23]

[1] [2025] FWC 1073.

[2] Witness Statement Bronfman at 2-3 DHB p.134, Kupiec para 9-12.

[4] Kupiec para [12]; Exhibit B to Document List provided by Respondent's representative on 3 April 2025, DHB p.100.

[5] Witness Statement Bronfman at 3 DHB p.134.

[6] Applicant's chronology of events, Additional Notes [2] attached to F2 application, DHB p.24.

[7] F2 application attachment 5, DHB p.24.

[8] Email Ray Shariff to Manager Knox City Australian Skin Clinics, 1 February 2025 1:16 PM, DHB p.95 (attached to Respondent's outline of submissions).

[9] Witness Statement Bronfman at [7], DHB p.135.

[10] Respondent's outline of submissions at 2.9, DHB p.88.

[11] Witness Statement Bronfman at [5]-[8] DHB p.135.

[12] Kupiec para [17], Docusign Certificate of Completion DHB p.69).

[14] Attachment 8 to Form F2 application DHB p.27.

[15] Attachment 6 to F2, Attachment 14 to Form F2.

[16] Witness Statement Bronfman at 6, DHB p 135, Attachment 9 to F2 DHB p.30.

[17] Respondent's outline of subs at 3.5-3.6, DHB p.89.

[18] Respondent's outline at 4 DHB p.89.

[20] Email Henri Dupont to Chambers dated 28 March 2024 at 1:54 PM.

[22] Respondent's Outline of submissions 3-4, DHB p.88-90.

[23] PR790817.

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