PR974278 PR974278 Download Word Document AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Workplace Relations Act 1996 s.643 - Appl’n for relief re (HUU) termination of employment Reuben Engwerda and Strike Bowling on Chapel Pty Ltd (U2006/5268) COMMISSIONER GRAINGER MELBOURNE, 10 OCTOBER 2006 Termination of employment – jurisdiction – 100 employees or fewer DECISION Introduction [1] On 4 August 2006, Mr Reuben Engwerda (the applicant, Mr Engwerda) lodged an application in this Commission on the requisite Form R18 in respect of an alleged unfair termination of his employment on 17 July 2006 by Strike Bowling pursuant to the provisions of s.643 of the Workplace Relations Act 1996 (the Act). [2] On 29 August 2006 Strike on Chapel Pty Ltd (Strike on Chapel, the respondent) lodged a Notice of employers appearance in this matter on the requisite form R28 stating that it had been the employer of Mr Engwerda at the time of the termination of his employment and, on the attached Form R29, moved for dismissal of the applicant’s application in this matter pursuant to the provisions of s.643(10) of the Act on the basis that the employer had 100 or fewer employees. [3] The Commission invited written submissions from the parties on the jurisdictional issue and these were provided as follows: Strike on Chapel submitted an outline of submissions of the respondent on 5�September�2006 supported by the affidavit of Mr Travis Hatfield (Mr Hatfield), General Manager Operations of Strike on Chapel. The applicant made written submissions on 26 September 2006 supported by the affidavit of Mr Engwerda and attaching a copy of the contract of employment between himself and Strike on Chapel dated 10 January 2006. On 4 October 2006 the respondent submitted its submissions in reply together with a further affidavit of Mr Hatfield. Legislation [4] S.643 of the Act relatively provides: “ 643 Application to Commission to deal with termination under this Subdivision (1) Subject to subsections (5), (6), (8) and (10), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment: (a) on the ground that the termination was harsh, unjust or unreasonable; or (b) on the ground of an alleged contravention of section 659, 660 or 661; or (c) on any combination of grounds in paragraph (b) or on a ground or grounds in paragraph (b) and the ground in paragraph (a). … (10) An application under subsection (1) must not be made on the ground referred to in paragraph (1)(a), or on grounds that include that ground, if, at the relevant time, the employer employed 100 employees or fewer, including: (a) the employee whose employment was terminated; and (b) any casual employee who had been engaged by the employer on a regular and systematic basis for at least 12 months; but not including any other casual employee. (11) For the purposes of calculating the number of employees employed by an employer as mentioned in subsection (10), related bodies corporate (within the meaning of section 50 of the Corporations Act 2001) are taken to be one entity. (12) For the purposes of subsection (10): (a) the relevant time is the time when the employer gave the employee the notice of termination, or the time when the employer terminated the employee’s employment, whichever happened first; and (b) for the purposes of calculating the number of employees employed by the employer, employee has the same meaning as in paragraph (b) of the definition of that term in section 636.” [5] The Corporations Act 2001 (Corporations Act) relatively provides: “ 46 What is a subsidiary A body corporate (in this section called the first body ) is a subsidiary of another body corporate if, and only if: (a) the other body: (i) controls the composition of the first body’s board; or (ii) is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the first body; or (iii) holds more than one-half of the issued share capital of the first body (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or (b) the first body is a subsidiary of a subsidiary of the other body. 47 Control of a body corporate’s board Without limiting by implication the circumstances in which the composition of a body corporate’s board is taken to be controlled by another body corporate, the composition of the board is taken to be so controlled if the other body, by exercising a power exercisable (whether with or without the consent or concurrence of any other person) by it, can appoint or remove all, or the majority, of the directors of the first-mentioned body, and, for the purposes of this Division, the other body is taken to have power to make such an appointment if: (a) a person cannot be appointed as a director of the first-mentioned body without the exercise by the other body of such a power in the person’s favour; or (b) a person’s appointment as a director of the first-mentioned body follows necessarily from the person being a director or other officer of the other body. 48 Matters to be disregarded (1) This section applies for the purposes of determining whether a body corporate (in this section called the first body ) is a subsidiary of another body corporate. (2) Any shares held, or power exercisable, by the other body in a fiduciary capacity are treated as not held or exercisable by it. (3) Subject to subsections�(4) and (5), any shares held, or power exercisable: (a) by a person as a nominee for the other body (except where the other body is concerned only in a fiduciary capacity); or (b) by, or by a nominee for, a subsidiary of the other body (not being a subsidiary that is concerned only in a fiduciary capacity); are treated as held or exercisable by the other body. (4) Any shares held, or power exercisable, by a person by virtue of the provisions of debentures of the first body, or of a trust deed for securing an issue of such debentures, are to be disregarded. (5) Any shares held, or power exercisable, otherwise than as mentioned in subsection�(4), by, or by a nominee for, the other body or a subsidiary of it are to be treated as not held or exercisable by the other body if: (a) the ordinary business of the other body or that subsidiary, as the case may be, includes lending money; and (b) the shares are held, or the power is exercisable, only by way of security given for the purposes of a transaction entered into in the ordinary course of business in connection with lending money, not being a transaction entered into with an associate of the other body, or of that subsidiary, as the case may be. 49 References in this Division to a subsidiary A reference in paragraph 46(b) or 48(3)(b) or subsection 48(5) to being a subsidiary, or to a subsidiary, of a body corporate includes a reference to being a subsidiary, or to a body corporate that is a subsidiary, as the case may be, of the first-mentioned body by virtue of any other application or applications of this Division. 50 Related bodies corporate Where a body corporate is: (a) a holding company of another body corporate; or (b) a subsidiary of another body corporate; or (c) a subsidiary of a holding company of another body corporate; the first-mentioned body and the other body are related to each other. 50AAA Associated entities (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. (4) This subsection is satisfied if: (a) the associate controls the principal; and (b) the operations, resources or affairs of the principal are material to the associate. (5) This subsection is satisfied if: (a) the associate has a qualifying investment (see subsection�(8)) in the principal; and (b) the associate has significant influence over the principal; and (c) the interest is material to the associate. (6) This subsection is satisfied if: (a) the principal has a qualifying investment (see subsection�(8)) in the associate; and (b) the principal has significant influence over the associate; and (c) the interest is material to the principal. (7) This subsection is satisfied if: (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. 50AA Control (1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies. (2) In determining whether the first entity has this capacity: (a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and (b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust). (3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies. (4) If the first entity: (a) has the capacity to influence decisions about the second entity’s financial and operating policies; and (b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members; the first entity is taken not to control the second entity.” The submissions [6] The submissions of the respondent in this matter, supported by the two affidavits of Mr Hatfield, may be summarised as follows: 1. The respondent in this matter is Strike on Chapel Pty Ltd and that company is neither a subsidiary nor a holding company of another body corporate for the purposes of s.50 of the Corporations Act. 2. At the relevant time the directors of the respondent were also the directors of the other body corporates, as follows: Strike Entertainment Pty Ltd Strike @ QV Pty Ltd Strike Bayside Pty Ltd Strike Brisbane Pty Ltd Strike NSW Pty Ltd Strike on Cavill Pty Ltd Strike KSW Pty Ltd 3. The directors of Strike on Chapel at the relevant time were: Michael Schreiber Bennie Schreiber Simon Jones Cavin Chait Gregory Kahan 4. The shareholders of Strike on Chapel at the relevant time were: Cavin Chait – 60 out of 400 shares Bennie Schreiber – 170 out of 400 shares Simon Jones – 85 out of 400 shares Gregory Kahan – 85 out of 400 shares 5. Whilst the various companies under the Strike name (Strike group) do have directors in common with the respondent, the respondent did not at the relevant time control the composition of the board of any of those other companies nor was it in a position to cast or control the casting of more than one half of the votes that might be cast at a general meeting of those or any other bodies corporate. 6. In any event, the total number of employees of the respondent and of the other Strike group companies at the date of termination of Mr Engwerda’s employment on 17 July 2006 was 39 full time and 15 casual who had been employed for 12 months or more. 7. Therefore the provisions of s.643(10) of the Act operate to exclude the jurisdiction of the Commission in this matter. [7] The submissions of the applicant in this matter, supported by the affidavit if Mr�Engwerda, may be summarised as follows: 1. Mr Engwerda commenced employment with Strike on Chapel on 16 January 2006. On 24 April 2006 Mr Engwerda was employed by Strike Bayside Pty Ltd (Strike Bayside). On 22 May 2006 Mr Engwerda was employed by Strike City Pty Ltd (Strike City). All these three offers of employment refer to separate corporate entities, but the letterhead all refers to Strike Head Office at 125 Flinders Lane, Melbourne; and all three letters of employment are issued under the signature of Chelsea Mannix “Human Resources”. 2. Companies within the Strike group of companies have directors in common between themselves. The companies in the Strike Group include: Strike on Chapel Strike @ QV Pty Ltd Strike Bayside Pty Ltd Strike Wintergarden Strike EQ Pty Ltd Strike NSW Pty Ltd Strike on Cavill Pty Ltd Strike Brisbane Pty Ltd Strike Entertainment Pty Ltd 3. A company called Strike Entertainment Pty Ltd (Strike Entertainment) was the managing entity of the Strike group of companies and had at the relevant time de facto control of the other companies in the Strike group of companies. The directors of Strike Entertainment were: Michael Schreiber Bennie Schreiber Simon Jones Cavin Chait Gregory Kahan There were 399 issued shares in Strike Entertainment as follows: Joshsam Pty Ltd – 60 shares Prime Ridge Pty Ltd – 85 shares Schreiber Investments Pty Ltd – 169 shares SDJ Enterprises Pty Ltd – 85 shares Bennie Schreiber – 1 share 4. Mr Engwerda’s employment was terminated by Aaron Land, Venue Manager of Strike�@�QV Pty Ltd. 5. The combined effect of s.46, s.50 and s.50AA of the Corporations Act should apply to establish that all of the companies in the Strike group of companies should be considered in relation to the decision as to whether s.643(10) of the Act should apply to exclude the Commissions jurisdiction in this matter. [8] The submission of the respondent in reply supported by a further affidavit from Mr�Hatfield of 4 October 2006 claimed: 1. s.50AA of the Corporations Act does not apply to s.46(a)(i) or s.50 of the Corporations Act because it refers to an entity rather than to control of a body corporate’s board. 2. As at 17 July 2006 each of the companies in the Strike group of companies had the following number of full time employees and casual employees who had been employed for 12 months or more: Strike on Chapel Pty Ltd – 9 Strike @ QV Pty Ltd- 7 Strike Bayside Pty Ltd – 6 Strike in Cavill Pty Ltd – 1 Strike Brisbane Pty Ltd – 11 Strike NSW Pty Ltd – 6 Strike Entertainment Pty Ltd – 20 giving a total of 60 employees for the entire Strike group within the meaning of s.643(10) of the Act and that the Commission should therefore dismiss the applicant’s application for want of jurisdiction. [9] On 9 October 2006 the Commission wrote to the solicitors for Strike on Chapel asking for further submissions to be made in respect of: Strike Wintergarden Strike EQ Pty Ltd Strike KSW Pty Ltd and requesting details as to these entities, including the number of employees of the relevant kind employed by them as at 17 July 2006. [10] On 9 October 2006 the solicitors for Strike on Chapel provided the following further submissions: Strike Wintergarden is not a separate corporate entity but merely a trading name of Strike Brisbane Pty Ltd Strike EQ is not a separate corporate entity but merely the trading name of Strike NSW Pty Ltd Strike KSW Pty Ltd does not trade and does not employ anyone, and nor did it as at 17 July 2006. Findings [11] s.643(10) of the Act requires the Commission to dismiss an application under s.643(1) if at the time of termination the employer employed 100 employees or fewer, including full time employees and casual employees who had been engaged by the employer in a regular and systematic basis for at least 12 months. s.643(1) provides that related bodies corporate (within the meaning of s.50 of the Corporations Act 2001) are to be taken to be one entity for the purpose of calculating employee numbers. s.50 of the Corporations Act sets out a number of specified circumstances which would cause companies to be found to be related. I consider it highly probable that the s.50AA Corporations Act definition as to when an entity controls a second entity does need to be considered when determining whether a body corporate is a subsidiary of another body corporate. [12] In the present case, whilst it seems undoubted that all three of the companies in the Strike group who purportedly employed Mr Engwerda from January to July 2006 operated in tandem and had a common Human Resources officer, Chelsea Mannix, this does not enable me to reach a definitive conclusion as to whether they are related corporations. To do this would require further evidence and a hearing in which cross-examination of witnesses could occur. Even the issue of who the employer of Mr Engwerda was at the time of termination of his employment cannot be settled with certainty on the basis of the evidence presently before the Commission in this matter, though it seems undisputed that Mr Engwerda’s original employer was Strike on Chapel. [13] However, the evidence before the Commission in this matter does show that all of the companies or entities in the Strike group of which the Commission has been informed, including Strike on Chapel, only employed 60 relevant employees at the date of termination of Mr Engwerda’s employment and I therefore find that the provisions of s.643(10) apply to deny jurisdiction to the Commission to accept Mr Engwerda’s application in this matter. Determination [14] It follows inexorably from those findings that, as the applicant’s application in this matter was made on the grounds set out in s.643(1)(a) of the Act and as the respondent and its related bodies corporate at the relevant time employed 100 employees or fewer, the Commission does not have jurisdiction in this matter taking into account the provisions of s.643(10) of the Act. Printed by authority of the Commonwealth Government Printer <Price code C>