Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - small business fair dismissal code - less than 15 employees - minimum employment period

[1] Mr Travis van Dreven was employed by Safety Xpress Unit Trust t/a Safety Xpress. He was given notice of the termination of his employment on 19 June 2017 and his dismissal took effect on 30 June 2017. Mr van Dreven has made an application to the Fair Work Commission (the Commission) seeking relief from unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[2] Mr van Dreven commenced working for Safety Xpress in October 2016.

[3] Safety Xpress says that it is a small business as defined in the FW Act and that Mr van Dreven has not been employed for the minimum employment period such that he is not eligible to make an application for unfair dismissal.

[4] Mr van Dreven agrees that Safety Xpress employed less than 15 employees at the time his employment ended but says that there is a related company - Durasafe Pty Ltd. He says that when Durasafe's employees are also considered, the two companies employed more than 15 employees. He therefore has worked the minimum employment period of at least six months which makes him eligible to apply for an unfair dismissal remedy.

"382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person's annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold."

[6] This matter turns on whether Mr van Dreven has served the minimum employment period.

[7] Section 383 of the FW Act states:

(a) if the employer is not a small business employer - 6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(b) if the employer is a small business employer - one year ending at that time.

[8] As is apparent from s.383(a)(i), the date on which the number of employees is to be determined (and hence a decision be made as to whether the business is a small business or not) is 19 June 2017, the date Mr van Dreven was given his notice of termination.

[9] A small business is defined in s.23 of the FW Act.

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

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee's employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.

[10] Section 383 of the FW Act requires that the determination of whether Mr van Dreven was employed by a small business be made as at 19 June 2017 (as this is the earlier of the date given notice or the date of dismissal).

[11] In deciding if Safety Xpress is a small business it is necessary to consider the number of employees of Safety Xpress and those of any associated entities.

[12] In this respect, Mr van Dreven argues that Durasafe Pty Ltd is an associated entity.

[13] Safety Xpress is a small online business specialising in safety equipment.

[14] Safety Xpress has three directors - Mr Ben Hosie, Mr Shane Siegersma and Mr Raymond Siegersma. It operates out of premises in Scoresby. Mr Hosie is the Managing Director of the business and works full time for the business.

[15] At the time Mr Van Dreven was given notice, Safety Xpress had six employees.

[16] These are:

1. Frank I[1]

[17] Durasafe Pty Ltd is a small business working in the area of line marking (factory floors, car parks, roads etc) and surfacing including epoxy work.

[18] Durasafe is owned by Mr Shane Siegersma and he is the only Director of the company. He is also a Director of Safety Xpress.

[19] At the time Mr Van Dreven was given notice of termination of his employment, Durasafe had the following employees:

1. Shane Siegersma

2. Raymond Siegersma

3. Danny

4. Clayton B

5. Chris

6. Kerry W

7. Sean

8. Chaddy

9. Aaron

10. Nick

11. Phil J

[20] Of these, Aaron and Nick were employed on a temporary basis to assist in a contract at Tullamarine. Phil was, on the uncontroverted evidence of Shane Siegersma, a contractor paid on invoice.

[21] It is not clear on the material before me if Nick and Aaron were employed on a casual or on-going (but fixed term) basis. A payslip supplied to me suggests that neither accrued any leave entitlements whilst working (suggesting casual employment) but the pay slip does not otherwise indicate if the employment was casual (it shows no casual loading and indicates the employment was "full time"). If Aaron and Nick were casual employees, I am satisfied they were not regular and systematic employees. Each was employed from late May until the end of June 2017.

[22] If Aaron, Nick and Phil were not employees for the purpose of s.23 of the FW Act then, even if Safety Xpress and Durasafe are related entities, the combined total number of employees was not 15 as at 19 June 2017. If any of the named persons were an employee as defined in s.23 of the FW Act as at 19 June 2017 I need to determine if Safety Xpress and Durasafe are associated entities.

Are Safety Xpress and Durasafe associated entitles?

[23] Mr van Dreven submits that there were employees of Safety Xpress or Durasafe who also worked for the other company - that is, they should be counted against both companies. Mr van Dreven bases this on his circumstances where, initially, he was employed on a part time basis by each company. On this basis, he also submits that the companies are virtually one and the same organisation.

[24] Mr van Dreven submits that Safety Xpress and Durasafe:

• Share staff. He says that when he commenced casual work at Durasafe he met the store person from Safety Xpress. Mr van Dreven infers from this that the store person from Safety Xpress was therefore working for both companies;

• Share premises;

• Share tools and equipment. He says that the tools that were shared were a grinder, a saw and smaller tools like screw drivers etc;

• Shared vehicles. He says that he has driven vehicles belonging to Durasafe and specifically did this when the two business moved to new premises;

• Sometimes require staff from one business to work in the other business. This is based on instructions given to him, when he first started working for Safety Xpress and was directed to work for the remainder of the day at Durasafe Pty Ltd.

[25] Mr Hosie of Safety Xpress gave evidence that Safety Xpress and Durasafe are separate companies with no cross over. He said that while they share the same building, any relationship with Durasafe is through formal engagement, invoicing and payment.

[26] Mr Hosie said that on one occasion when Mr van Dreven first started and while he was a casual employee there was not enough work for Mr van Dreven to do at Safety Xpress so he was given some work at Durasafe. He said that there ceased to be any cross over once Mr van Dreven was permanently appointed to Safety Xpress.

[27] Mr Hosie said that there is no general sharing of tools with Durasafe although there might be some incidental sharing that occurs.

[28] Mr Shane Siegersma gave evidence that there was one occasion when Mr van Dreven was employed casually by Safety Xpress when it did not have enough work for him to do, so he was sent to Durasafe for the remainder of the day.

[29] Mr Shane Siegersma said that the only things the two companies had in common was the premises they shared (along with a third totally unrelated business) and him, as a common Director.

[30] The matter to determine is if Safety Xpress and Durasafe are "associated entities."

associated entity has the meaning given by section 50AAA of the Corporations Act 2001.

[31] Section 50AAA of the Corporations Act 2001 (Cth) (the Corporations Act) states:

(1) One entity (the associate ) is an associated entity of another entity (the principal ) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.

(2) This subsection is satisfied if the associate and the principal are related bodies corporate.

(3) This subsection is satisfied if the principal controls the associate.

(b) the operations, resources or affairs of the principal are material to the associate.

(a) the associate has a qualifying investment (see subsection (8)) in the principal; and

(b) the associate has significant influence over the principal; and

(a) the principal has a qualifying investment (see subsection (8)) in the associate; and

(b) the principal has significant influence over the associate; and

(a) an entity (the third entity) controls both the principal and the associate; and

(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.

(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:

(a) has an asset that is an investment in the second entity; or

(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.

[32] On the basis of the evidence before me I am not satisfied:

• That Safety Xpress and Durasafe are related to each other in the sense that one is a holding company of the other; a subsidiary of the other or a subsidiary of a holding company of the other (s.50AAA(2));

• That either company controls the other (s.50AAA (3), (4));

• That either company has a qualifying investment in the other but in any event that either company has a significant influence over the other (s.50AAA(5), (6));

• That there is a third company that has a qualifying investment or significant influence over both of the companies.

[33] Given that I am not able to be satisfied of any of these I cannot find that Safety Xpress and Durasafe are associated entities.

[34] Whilst I understand that the two companies share a Director and a premises this is not enough to make them associated entities as defined in the FW Act and Corporations Act.

[35] Further, that Mr van Dreven may have worked for both companies at the same time, he was paid separately by each of them. This is demonstrated by the material from his bank account. I accept that at this time he was working for both companies but this does not make them associated entitles. It is not unusual for employees to work for more than one employer, particularly so when the work is not full time. In any event working for both entities ceased when Mr van Dreven commenced full time work for Safety Xpress (although an employee working full time for one company and part time for another would not make the companies associated entities).

[36] Even if there was some sharing of tools in the warehouse this is not enough to make the companies associated entities.

[37] For these reasons Safety Xpress and Durasafe are not associated entities. The size of Safety Xpress is therefore determined on the basis of its employees only.

[38] On the basis of the information provided by both Mr van Dreven and Mr Hosier I am satisfied that, at the time Mr van Dreven was notified of his dismissal Safety Xpress had six employees.

[39] Safety Xpress is therefore a small business as defined by the FW Act.

[40] Mr van Dreven commenced employment as a casual employee with Safety Xpress on 11 November 2016. He was notified of his dismissal on 19 June 2017. He therefore has not served the 12 month minimum employment period and is therefore not protected from unfair dismissal.

[41] Even if Mr van Dreven's employment with Safety Xpress commenced in October 2016 he would still not meet the 12 month qualifying period.

[42] Mr van Dreven is not protected from unfair dismissal as he has not served the minimum employment period necessary under the FW Act. His application must therefore be dismissed.

[43] An order to this effect will be issued with this decision.

[2] Sharon had submitted her resignation by 19 June 2017 and her replacement - Sandra - had just commenced for a handover. Because the relevant date is 19 June 2017 both employees are included in the head count.

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