WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2017 WAIRC 00742

DELIVERED : Thursday, 6 July 2017

FILE NO. : M 3 OF 2017

Claimant

AND

Harman & Co Pty Ltd

Respondent

Catchwords : Claim by Industrial Inspector for recovery of unpaid long service leave – Whether employment was continuous – Whether respondent is deemed to be liable – Whether previous business owner is liable

Legislation : Fair Work Act 2009 (Cth)
Long Service Leave Act 1958 (WA)
Industrial Relations Act 1979 (WA)
Industrial Magistrates Courts (General Jurisdiction) Regulations 2005
Supreme Court Act 1935 (WA)

Case(s) referred to
in reasons : Miller v Minister of Pensions [1947] 2 All ER 372
  Cousens v Consolidated Ice Holdings Pty Ltd 2016 WAIRC 00305
  Trichet v Consolidated Ice Holdings Pty Ltd 2016 WAIRC 00308

Result : Judgment for claimant

Representation:

Claimant : Ms S. Teo with Ms A. Dowling instructed by the State Solicitor of Western Australia for the claimant.

Respondent : Mr C. Harman (director) for the respondent

REASONS FOR DECISION

(Edited version of Reasons for Decision which were delivered orally)

Introduction

1          The claimant is an Industrial Inspector appointed pursuant to s 98(1) of the Industrial Relations Act 1979 (WA) (IR Act).

2          The claimant brings this claim pursuant to s 12 of the Long Service Leave Act 1958 (WA) (LSL Act).

3          I observe that pursuant to s 11 of the LSL Act an Industrial Magistrates Court has jurisdiction to hear and determine all questions and disputes in relation to the rights and liabilities under the LSL Act and such jurisdiction is exclusive of any other court except on appeal (s 11(2) of the LSL Act).

4          The claimant alleges that the respondent has failed to pay its former employee Antonia Marie Canicais (formerly Antonia Marie Albanese) (Ms Canicais) her long service leave entitlement of $7,904. The claimant also seeks interest on that amount and the reimbursement of costs incurred in bringing the claim.

5          The respondent denies the claim.

6          The respondent says that:

1)     The claimant has failed to prove that Ms Canicais has an entitlement to long service leave because it cannot be established that her employment was continuous.

2)     Further, if an entitlement to long service leave does exist, it is the former owner of the business who is liable for it and not the respondent.

3)     In any event, the issue has already been resolved by settlement.

Employment of Ms Canicais

7          Ms Canicais testified that in October 2004 she posted a resume to James Hair Studio seeking work as an apprentice hairdresser. In late 2004 she was contacted by the manager of the salon and was subsequently interviewed. Following the interview, she worked a couple of trial days on Saturdays. That was towards the end of 2004.

8          During the trial period, she was offered an apprenticeship which ultimately commenced on 3 February 2005. Her evidence was that she commenced employment as an apprentice hairdresser with James Hair Studio as of that date which is the day she signed an employment declaration form evidencing the commencement of her employment. Mr James Fares (Mr Fares), who employed her at that time, corroborates her in that regard.

9          Both Ms Canicais and Mr Fares testified that Ms Canicais worked for James Hair Studio from 3 February 2005 until 23 October 2014 when the business was sold to the respondent. They both assert that thereafter Ms Canicais continued to work for the respondent until she resigned with effect on 1 April 2015.

10       The respondent does not take issue with the fact that it employed Ms Canicais from 23 October 2014 until 1 April 2015.

11       It is clear, that when Ms Canicais commenced employment with James Hair Studio that the business was owned by Mr James Fares as trustee of the James Fares Family Trust. On or about 10 December 2007 the business’ ownership was transferred to Ourworld Corporation Pty Ltd as trustee for the James Fares Family Trust (Ourworld). Essentially at that time there was change in trustee from a natural person to a corporation. It is axiomatic that there was a transmission of the business at that time. The transmission of the business  did not impact the employment of Ms Canicais.

12       By written agreement entered into on 8 October 2014 the respondent purchased James Hair Studio from Ourworld. Final settlement of the purchase occurred on 23 October 2014.

13       On 23 October 2014 Mr Christopher Harman (Mr Harman), the respondent’s director, met the staff of James Hair Studio and told them that nothing save parking arrangements would change in their employment and that essentially everything would continue as usual. The changed parking arrangement is not relevant for my purposes.

14       About a week after the respondent purchased the business, Ms Canicais informed Mr Harman that she was due for long service leave in February 2015 and asked whether he knew about it. Mr Harman replied that Mr Fares would sort it out with her.

15       On 14 March 2015 Ms Canicais handed Mr Harman a letter requesting eight weeks’ long service leave from 9 April 2015 to 9 June 2015. On 16 March 2015 Ms Canicais received a response not approving her application for long service leave.

16       On 18 March 2015 Ms Canicais emailed to Mr Harman her letter of resignation giving two weeks’ notice. Her last day at work was indicated to be 1 April 2015.

17       Upon termination of Ms Canicais’ employment, the respondent failed to pay her untaken long service leave and annual leave. Mr Harman said that was because the respondent had been given insufficient notice of termination.

18       It is not in dispute that throughout the course of her employment with James Hair Studio, Ms Canicais worked 38 hours per week and that at termination her pay rate was $24 per hour.  Further, it is not in issue that Ms Canicais’ apprenticeship was completed on 24 August 2008 and that at termination she was a fully qualified hair dresser.

Events Following Termination

19       It is not in dispute that on 28 May 2015 Ms Canicais lodged a claim in the Magistrates Court of Western Australia claiming payment of annual leave entitlements. The respondent admitted the claim and judgment was entered in her favour against the respondent.

20       During the course of his evidence and in submissions Mr Harman suggested that Ms Canicais’ claim for unpaid long service leave entitlements was settled in a mediation conference which preceded the Magistrates Court proceedings.

21       I observe that other than to raise it as an issue of settlement, the respondent has not produced any oral or documentary evidence which supports his contention that the issue, the subject of this proceeding, was resolved by  settlement.

The Issue

22       The issues to be determined in this matter are:

1)     Whether between 3 February 2005 and 1 April 2015 the respondent, for the purposes of the LSL Act, continuously employed Ms Canicais; and

2)     If Ms Canicais is entitled to a long service leave entitlement, whether it is the respondent or Ourworld who is liable for the same.

23       In determining those issues, the court must necessarily consider and resolve two specific contentious issues raised by the respondent.

24       The respondent asserts:

1)     That Ms Canicais’ employment commenced prior to 3 February 2005 and that her entitlement to long service leave had accrued prior to it purchasing the business. Therefore, any accrued long service leave entitlement was payable to her by her former employer, Ourworld, when it terminated her employment upon the sale of the business; and

2)     There was an interruption in Ms Canicais’ employment from 25 August 2011 to 29 December 2012 and that she therefore did not qualify for long service leave.

Burden and Standard of Proof

25       Although the claimant carries the legal burden of proof for the claim, the respondent carries the legal burden of proving those things which it asserts.

26       The standard of proof required to discharge the respective burden of proof is the balance of probabilities. This standard was explained by Lord Denning Miller v Minister of Pensions [1947] 2 All ER 372 as follows:

That degree is well settled. It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal it is not [374].

27       Accordingly, where in these reasons I say that ‘I am satisfied’ of a fact or matter or otherwise make a finding as to a fact or matter, I am saying ‘I am satisfied on the balance of probabilities’ of that fact or matter. Where I state that ‘I am not satisfied’ of a fact or matter I am saying that ‘I am not satisfied on the balance of probabilities’ of that fact or matter.

Did Ms Canicais’ Employment Commence Prior to 3 February 2005?

28       The respondent asserts that Ms Canicais’ employment commenced prior to 3 February 2005, however that assertion is unsupported by either direct evidence or documentary evidence. The respondent invites this court to speculate that such may have been the case. The court cannot speculate.

29       By contrast, the direct evidence by Ms Canicais and Mr Fares is that she commenced work as an apprentice on 3 February 2005. Their evidence is credible and acceptable. Furthermore, their evidence is supported by documentary evidence in the form of the Apprenticeship Agreement and the Tax Declaration form signed on 3 February 2005.

30       Had Mr Fares employed Ms Canicais prior to that date there would not have been a need for the Tax Declaration form to have been completed on 3 February 2005.

31       I am satisfied that Ms Canicais commenced employment with James Hair Studio on 3 February 2005.

Was There an Interruption in Ms Canicais’ Employment Between 25 August 2011 and 29 December 2012?

32       The respondent asserts that, on the claimant’s own case, an interruption in service is indicated. It says that for the period 25 August 2011 to 29 December 2012 no payments of wages are shown as being made into Ms Canicais’ bank account and that the Australian Taxation Office has no record of the PAYG summaries received for the year ended 30 June 2012.

33       The respondent goes so far as to say that the PAYG payment summaries produced (exhibits 3 and 4) relating to that period is in each instance something other than genuine.

34       I reject the respondent’s contention in that regard. Firstly, Ms Canicais and Mr Fares each testified that Ms Canicais was employed by James Hair Studio during the relevant period. Secondly, Ms Canicais explained, as did Mr Fares, that there was a period of time during which Ms Canicais was paid in cash. That is legally permissible and plausible.

35       Ms Canicais said that her cash payments were accumulated and deposited into her bank account in lump sums during that period. Her bank statements bear that out. Although she initially said that occurred over a short period of time, clearly that is not the case. In re-examination she said that her expression of it having occurred over a short period of time was in the context of her employment as a whole.

36       The claimant also relies on payslips and PAYG documents produced relevant to the material period to establish that Ms Canicais was employed during that time. I am satisfied that when one correlates the information contained in payslips, the PAYG summaries and the relevant copies of the tax returns produced by the claimant that they demonstrate ongoing employment during the period which the respondent asserts was not worked by Ms Canicais.

37       In that regard, I accept the submission made by counsel for the claimant. I accept the spread sheet produced for the purposes of submissions accurately represents the source evidence establishing the facts that the court relies upon to conclude that Ms Canicais’ employment was uninterrupted.

38       Finally, the respondent asserts that the PAYG documents for 2012, being exhibits 3 and 4, may have been fabricated. In that regard, there is not one scintilla of evidence to suggest fabrication. Mr Fares explained the existence of two PAYG summaries for the 2012 financial year by reasons of a change in software with respect to the payroll. I accept his evidence in that regard. I am satisfied that is the most probable explanation for their existence, having regard to the fact that they entirely correlate with the payslips and tax return produced with respect to that period.

39       The respondent’s allegation that the PAYG summaries produced to the court have been concocted has no evidentiary foundation.

Determination of Critical  Factual Issues

40       I am satisfied that Ms Canicais was employed by the James Hair Studio on 3 February 2005 and that she worked continuously for that business from that date until she resigned on 1 April 2015.

41       It follows that she was continuously employed by that business for a period exceeding 10 years.

42       During the period of her employment, the business was transmitted twice. Firstly it was transmitted from James Fares to Ourworld on 10 December 2007 and thereafter from Ourworld to the respondent on 23 October 2014.

The Law

43       Section 8(1) of the LSL Act provides:

 8. Long service leave

  (1) An employee is entitled in accordance with, and subject to, the provisions of this Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer.

44       The entitlement to long service leave is set out in s 8(2) of the LSL Act which states:

 (2) An employee who has completed at least 10 years of such continuous employment, as is referred to in subsection (1), is entitled to an amount of long service leave as follows — 

  (a) in respect of 10 years so completed, 8 2/3 weeks;

45       It follows that the entitlement to 8 2/3 weeks’ of leave accrues when an employee has been in continuous employment with the one and same employer, or with a person who being a transmittee, is deemed pursuant to s 6(4) of the LSL Act to be one and the same employer.

46       Relevantly s 6(4) and 6(5) provide:

(4) Where a business has, whether before or after the coming into operation hereof, been transmitted from an employer (herein called the transmittor) to another employer (herein called the transmittee) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee — the period of the continuous employment which the employee has had with the transmittor (including any such employment with any prior transmittor) shall be deemed to be employment of the employee with the transmittee.

(5) In subsection (4) —

transmission includes transfer, conveyance, assignment or succession, whether voluntary or by agreement or by operation of law, and transmitted has a corresponding meaning.

47       The transmission of the business James Hair Studio on the two occasions previously referred to did not sever the continuum of Ms Canicais’ employment.

48       I am satisfied that there was no interruption in Ms Canicais’ employment other than permitted absences or reasons within the meaning of s 6(1), s 6(2)(a) and (b) of the LSL Act. I am satisfied further that the provisions of s 6(2)(c) to (i) of the LSL Act have not been relevantly raised or have any application in this matter.

Conclusion

49       Sections 8(1) and 6(4) of the LSL Act deem Ms Canicais’ service with James Fares and Ourworld to be employment with the respondent for the purpose of long service leave entitlements. Consequently, as soon as Ms Canicais qualified for long service leave on 3 February 2015, the obligation to give her leave became the respondent’s obligation. That was irrespective of what was contained in the contract of sale of the business entered into between Ourworld and the respondent.

50       Nothing in that contract could have excluded or did exclude the respondent’s liability for long service leave. It did not and could not have ousted Ms Canicais’ statutory entitlement.

51       Whether or not the respondent can, under the contract of sale, recover any money it is liable to pay to Ms Canicais is not a matter this court can consider (see Cousens v Consolidated Ice Holdings Pty Ltd 2016 WAIRC 00305 and Trichet v Consolidated Ice Holdings Pty Ltd 2016 WAIRC 00308).

52       The respondent was at all material times a constitutional corporation and therefore a national systems employer as defined under s 14 of the Fair Work Act 2009 (Cth) (FW Act).

53       The provisions of the LSL Act apply to Ms Canicais’ employment with the respondent because there were no applicable award-derived or agreement-derived long service leave terms within the meaning of Division 9 of Chapter 2 Part 2-2 of the FW Act.

54       Ms Canicais’ employment was terminated before long service leave to which she was entitled was taken. Pursuant to s 9(2) of the LSL Act the respondent was required upon termination to pay Ms Canicais a sum equivalent to the amount which would have been payable in respect of the period of leave to which she was entitled, being 8 2/3 weeks’ leave.

55       At termination on 1 April 2015 Ms Canicais’ remuneration for her normal weekly number of hours of work was $912, comprising of 38 normal hours at $24 per hour. It follows that she was, pursuant to s 9(2) of the LSL Act, entitled to a payment of $7,904 for long service leave. The respondent failed to make such a payment and therefore owes Ms Canicais that amount.

56       Interest is sought on that amount. This court’s power to award interest is found in regulation 12 of the Industrial Magistrates Courts (General Jurisdiction) Regulations 2005. The exercise of such power is discretionary.

57       In this instance the respondent should be ordered to pay interest because it is clear that it has never had a valid defence to the claim. The various arguments raised had little or no prospect of success. In the circumstances the respondent has unnecessarily delayed Ms Canicais’ rightful entitlement.

58       Although the respondent argues that Ms Canicais delayed bringing the proceeding, I do not accept that. I am satisfied that the gathering of material for the initiation of proceedings necessarily took time and was unavoidable. In any event there was no substantial delay on the claimant’s part. Any substantial delay in Ms Canicais receiving her entitlement is attributable to the respondent. Ms Canicais ought to be compensated for the delay in receiving her entitlement.

59       An award of interest at 6% per annum (being the rate fixed under the Supreme Court Act 1935) is appropriate. Such is to be calculated from the date the cause of action arose on 1 April 2015. Interest is payable at 6% on $7,904 for two years and 96 days in the amount of $1,072.30.

60       I am satisfied also that the claimant is entitled recover its disbursements incurred in bringing the claim in the amount of $334.62.

61       The orders that I make are as follows:

1)     It is determined that Ms Canicais is owed $7,904 in unpaid long service leave; and

2)     The respondent is liable to pay her that amount, plus interest thereon fixed at $1,072.30; and

3)     The respondent pay the claimant costs in the sum of $334.62.

G. CICCHINI

INDUSTRIAL MAGISTRATE