This extract from a recent unfair dismissal decision of the Fair Work Commission contains an excellent summary of the legal issues currently used to determine whether a person was at the material time an employee or some other classification of person working for the employer.
“Consideration – initial matters
[170] Having dealt with that issue, the first task is to consider the initial matters as required by section 396 of the Fair Work Act.
[171] Section 394(2) requires an application to be made within 21 days after the dismissal took effect. It is not disputed and I find that the application was made within the period required in subsection 394(2).
[172] The Respondent did not defend the application on the basis of genuine redundancy.
[173] The remaining initial matters to be determined, having regard to section 396 of the Fair Work Act, are whether Mr Chou was protected from unfair dismissal when the engagement came to an end, and if so whether the dismissal was consistent with the Small Business Dismissal Code.
Protected from unfair dismissal – whether employee
[174] I have set out above when a person is protected from unfair dismissal. The Respondent did not defend the claim on the basis that Mr Chou was above the high income threshold. The live issue between the parties was whether Mr Chou was an employee. If he was not an employee he would not have reached the minimum employment period.
[175] It is therefore necessary to make a finding as to the nature of the engagement and of any relationship between Mr Chou and Steadfast.
[176] To have been protected from unfair dismissal, Mr Chou had to, among other things, have been an employee and have completed a period of employment with his employer of at least the minimum employment period.53
[177] Despite the date given in the initiating application, I find that the engagement came to an end on 13 August 2024. The application was made on 2 September 2024.
[178] Having regard to the provisions of the Fair Work Act, the issue of whether Mr Chou was an employee is determined according to the ordinary meaning of that term. From 26 August 2024, the ordinary meaning, for the purposes of the Fair Work Act, is affected by the operation of section 15AA of that Act.
[179] The transitional provisions for section 15AA54 include items 116, 118, and 119 of the relevant schedule to the Fair Work Act.55 In my view the effect of item 116 is, relevantly, that section 15AA applies to a relationship in existence as at the provision’s commencement on 26 August 2024, but the enactment of the provision does not cancel any accrued right from prior to that date. The effect of item 118 is, relevantly, that where a right – such as a right to be protected from unfair dismissal – is contingent on the person having completed a minimum employment period, then the nature of the relationship between the applicant and the respondent, for the period up until 26 August 2024, is to be ascertained under the Act as it was before section 15AA was added.56 The effect of item 119 is that if proceedings had already been on foot prior to 26 August 2024, the Act as it was prior to the addition of section 15AA applies.
[180] Taken together, these items mean that I do not accept the Respondent’s submission that section 15AA has no retrospective effect. Section 15AA applies to applications made on or after 26 August, regardless of whether the termination date fell before 26 August 2024. However, section 15AA does not apply to any part of the minimum employment period that fell prior to that date.
[181] So, whether or not Mr Chou was an employee on the termination date, to have been protected from unfair dismissal he also needs to have been an employee for sufficient time prior to the termination date to have completed the minimum employment period, without any reliance on section 15AA.
[182] Steadfast claimed to have had only one employee during the period in which Mr Chou was engaged. Other than arguing that he himself was an employee Mr Chou did not contest this. Steadfast was at all relevant times a small business employer.57 The minimum employment period was one year ending at the termination date (which was the same date on which Mr Chou received notice of termination, given the termination was effective immediately).58
[183] To have completed a period of employment with his employer of at least one year,59 Mr Chou needed to have completed a year’s continuous service.60 Some periods of employment do not count towards continuous service.61
[184] Did Mr Chou have a year’s continuous service as an employee prior to the date on which the engagement ended? There is nothing before me to indicate, all else being equal, that if Mr Chou was an employee, his continuity of service was broken, or there were any periods that did not count as service, in the twelve months to 13 August 2024. That being the case the question is whether he was an employee throughout that period.
[185] For the reasons set out above this is to be considered disregarding section 15AA of the Fair Work Act. This means that it is unambiguous that the High Court of Australia authorities CFMMEU v Personnel Contracting [2022] HCA 1 (which I will refer to as “Personnel”) and ZG Operations v Jamsek [2022] HCA 2 (which I will refer to as “Jamsek”) apply undisturbed by the enactment of that new provision. A Full Bench has summarised the approach under Personnel:62
(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties.
(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms.
(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract.
(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.
(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship.
(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative.
(references omitted)
[186] A different Full Bench has dealt with the application of Personnel and Jamsek in the case of a contract that is not wholly in writing. In Gang Ma v Yan Massage Wynnum West Pty Ltd63 the Full Bench said:64
The task becomes more complex in circumstances in which there is no written contract at all, or the contract is partly written and partly oral. In either of those circumstances, it is likely to be necessary for a court or tribunal adjudicating the question to consider the conduct of the parties for the purpose of ascertaining the nature of the legal rights and obligations that the parties have taken on. That is likely to be required where the evidence as to the nature of any oral agreement is scant and it is necessary to infer the substance of the agreement between the parties from their conduct.
[187] The Full Bench then considered the judgement in EFEX Group Pty Ltd v Bennett,65
before going on to say:66
However, that does not mean the approach adopted prior to Personnel Contracting and Jamsek is revived where there is no comprehensive written contract. Although it may be necessary in such a case to have regard to the conduct of the parties, the focus of the analysis is different. Even where there is a purely oral contract, the nature of the relationship between the parties is determined by the legal rights and obligations created by the contract. The parties’ conduct, including the way in which the contract is performed, is only relevant to the extent that it assists in ascertaining the terms of the
contract, express or implied. The conduct of the parties is irrelevant if it does not touch upon, or provide a basis for inferring, their legal rights and obligations.
[188] The Full Bench then described the task once the terms had been identified:67
Once the terms of the contract have been ascertained, it is necessary to characterise the relationship created by the contract. Two considerations will often be critical in the task of characterisation: the extent to which the putative employer has the right to control how, when and where the putative employee performs the work; and the extent to which the putative employee can be seen to be working in their own business as distinct from the putative employer’s business. The way that the contractual terms address the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the delegation of work, and where the right to exercise direction and control resides may also be relevant to whether the relationship is one of employer and employee.
(references in all excerpts omitted)
[189] Following Personnel and Jamsek I will first observe that it was common ground that there was no written contract between the parties, or between Steadfast and Fresh First. Contrary to Mr Chou’s submissions that does not mean there was no contract. It is incompatible with his argument that he was an employee to argue that there was no contract, as there is no employment without a contract.68
[190] In this case Mr Chou, Mr Ang and Ms Hsueh, on their own behalf and/or on behalf of their respective companies, agreed that Mr Chou would carry out the work of the residential manager. Though Mr Chou admitted his wife helped him with the work, and though the Respondent tried to argue that Mr Chou could outsource or subcontract the work, that was not the reality of the situation. Both parties accepted that the manager had to be vetted by the body corporate committee, including through the provision of a police check, and it is not plausible to suggest that it was open to Mr Chou to arrange for someone else do the work.
[191] As stated above during cross-examination Mr Chou asked Ms Hsueh why she asked him to invoice for additional amounts when the superannuation rate changed by regulation. She said the arrangement was for Steadfast to reimburse Fresh First in payment of the amount of super for Mr Chou “or another staff member.” This seems disingenuous as though Mr Chou’s wife had provided some help, there was no suggestion that Mr Chou had engaged or could engage another staff member to undertake the residential manager work, and the arrangement was specifically for that work.
[192] The parties to the contract agreed on remuneration. Remuneration was calculated by reference to salary, bonus, and superannuation. They agreed that Fresh First would invoice Steadfast, and that Steadfast would pay Fresh First.
[193] It can be discerned from the various persons’ conduct that the parties to the contract also agreed that Steadfast would provide business cards, a credit card, work email, and access to an online drive to Mr Chou. They agreed that Mr Chou would obtain the necessary licence, would live on the premises, and would pay rent.
[194] What is not clear is who the parties to the contract were. In the District Court proceedings, the statement of claim asserted that there was an oral contract to which both of the companies and all three of the natural persons were party.69 This seems unlikely. It was not in dispute that it was Steadfast, not Ms Hsueh and Mr Ang, who had the contract with the body corporate to provide the management services. There is nothing on the material suggesting that either Ms Hsueh or Mr Ang personally provided any guarantees or would have any liability to either the body corporate or to Steadfast’s employees or contractors, or were to receive any consideration for same. The agreed terms are consistent with there being either:\
(a) a contract between Steadfast and Mr Chou, with Fresh First rendering invoices and receiving monies on Mr Chou’s behalf; or
(b) a contract between Steadfast and Fresh First, with the latter having an obligation to have Mr Chou, as the key personnel, provide the services.
[195] As I have indicated elsewhere in this decision, the Respondent submitted that the involvement of Fresh First indicated Mr Chou was not an employee of Steadfast. In Mutch v ISG Management Pty Ltd,70 Bromberg J stated:71
It will not necessarily be the case that the interposition of a corporation between a worker providing personal services and an entity receiving those services will deny the existence of a contract of employment between the worker and the recipient of the work: Ace Insurance Ltd v Trifunovski (2013) 209 FCR 146 at [150]-[153] (Buchanan J with Lander and Robertson JJ in agreement); Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 at [43] (Keane CJ, Sundberg and Kenny JJ). A relevant consideration is the function served by the corporation in the relationship created by the contract which, as the authorities just referred to show, requires an examination of a range of relevant circumstances beyond the terms of the contract in question.
[196] A different paragraph of the decision in Mutch is referred to in Personnel, as an example of a court treating earlier decisions relating to the primacy of the contract as authoritative. The judgement in Ace Insurance Ltd v Trifunovski72 (“Ace Insurance”) was criticised in Personnel for the manner of the application of the multifactorial test, but not in relation to this issue. On the other hand, paragraph 95 of the judgement in Ace Insurance, which refers to the ability to incorporate being of little weight when the corporate vehicle featured only as the recipient of fees that would otherwise have been paid to the worker, is cited in Jamsek73 as authority for the proposition that questions of scale can be important and even determinative. The judgement in Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 is not referred to in Personnel or Jamsek.
[197] Given the authorities referred to above I do not accept the Respondent’s submissions to the extent they seek to characterise the interposition of Fresh First between Mr Chou and Steadfast as being determinative.
[198] Mr Chou sought to demonstrate that Steadfast represented him as part of its business. As stated above, in his reply statement Mr Chou says that during the interview in 2021 Mr Ang introduced him as part of Steadfast with a background in management. Mr Chou also says the committee explicitly asked Mr Ang “Do you mean you are hiring Sen as an employee to manage the complex and perform the duties?” and that Mr Ang confirmed the arrangement
affirmatively.74 This claim stands out as being the only direct quote in the reply statement and seems both overly convenient and implausible given there had been no mention of this in the initial statement, despite the nature of the relationship being squarely in issue. Under cross- examination Mr Culleton also said that Mr Ang had represented Mr Chou as part of Steadfast and that he would be employed to do the onsite management role. Mr Culleton said this had been three years ago and he could not remember word for word what had been said, but that he had interpreted it to mean that Mr Chou would be an employee. He reiterated Mr Chou had been presented as an employee.
[199] Despite conceding that he could not recall the specific words used, and that it was open to Steadfast to subcontract Mr Culleton insisted the representation was capable of only one interpretation, employment, and that it was the interpretation he in fact made at the time. It is also implausible that Mr Culleton, at the time of the interview in 2021, was focused on whether Mr Chou was an employee or a contractor. There may be good reasons why a body corporate would prefer that an onsite manager be a direct employee of the firm with which it had its onsite management contract, but if so then there would have been some evidence that they sought and obtained confirmation of the manager’s status at that time. They required a resume and a police check but there was nothing on the evidence showing that they sought, or were provided with, any explicit assurance that Mr Chou would be an employee and not a subcontractor.
[200] Mr Culleton did provide, and Mr Chou tendered, a copy of an email dated 14 November 2021 from a Mr Colin Mitford, but signed by an Amy Chiang.75 Neither of those persons was called as a witness. The email includes a reference to Mr Chou as being “technically” Mr Ang’s employee. This document is hearsay twice over; it was not identified or proved by the person who made it and nor is any source cited for the assertion that Mr Chou was Mr Ang’s employee. Also, Mr Chou was clearly not, on anyone’s case, Mr Ang’s employee. And this document was tendered in the course of Mr Culleton’s evidence, to which, for the reasons above, I attach little weight.
[201] Under cross-examination, Mr Ang conceded that Mr Chou’s business cards, which Steadfast provided, would have referred either to Steadfast or another entity, Steadfast Support, not Fresh First.
[202] Whatever image might have been projected to the body corporate committee or the world at large, that does not alter the contractual terms. Displaying the principal’s branding is consistent with an independent contractor relationship, not only an employment relationship.76
[203] On the evidence, Mr Chou’s work was so subordinate to Steadfast’s business that it can be seen to have been performed as an employee of that business, rather than as part of an independent enterprise. It is not plausible to assert that Mr Chou was running his own independent enterprise, Fresh First, when that company was only providing Mr Chou’s labour as a residential manager who lived on-site and had made a full-time commitment to that job. Mr Chou was working in Steadfast’s enterprise, not his own.
[204] It can be discerned from the parties’ evidence, and particularly the messages between Mr Chou on the one hand and Ms Hsueh and Mr Ang on the other, over the years of his engagement, that all three of them took for granted that Steadfast had a contractual right to control Mr Chou’s activities (including how, where and when the work was done).
[205] The Respondent conceded it had referred to the engagement as employment from time to time but argued that this was just imprecision in language. I accept that the parties’ use of the language of employment is irrelevant or at the least not determinative.
[206] Having regard to the matters set out above and following the decisions in Personnel and Jamsek I find that Mr Chou was an employee of Steadfast at all material times, and that he completed the minimum employment period.
Small Business Fair Dismissal Code
[207] The Respondent did not raise an objection on the basis of consistency with the Code in its Employer response filed 18 September 2024. Nonetheless it is a small business and the question of consistency with the Code must be considered.77
[208] The Respondent did raise this objection in its closing written submissions. In his reply submission Mr Chou did not raise any claim of unfairness in relation to the Respondent raising this issue at a late stage, and he made submissions in relation to the Code.
[209] The Respondent relies on the summary dismissal provision of the Code.78 This involves considering whether, among other things, the employer had reasonable grounds to believe that Mr Chou engaged in misconduct serious enough to warrant summary dismissal.
[210] The Respondent’s submissions point to paragraphs 35 to 59 of Ms Hsueh’s statutory declaration as setting out the circumstances leading up to the termination of the engagement, and why she and Mr Ang believed termination was necessary in order to protect Steadfast’s legitimate business interests, and to the fact that the Respondent commenced proceedings in the District Court. The Respondent submits that it genuinely believed that Mr Chou engaged in serious misconduct that caused deliberate harm to Mr Chou’s business.79
[211] To the extent paragraphs 57 to 59 of Ms Hsueh’s statutory declaration deal with matters that came to her attention after the termination, they are not relevant to Steadfast’s genuine belief at the time of termination.80
[212] Ms Hsueh’s evidence was that around late July or August 2024 she and Mr Ang became suspicious of Mr Chou.81 She refers to the following as the basis for her suspicion.
• Mr Chou had a closer relationship with the body corporate, and residents and owners, than she and Mr Ang did, because he was the onsite manager.
• She and Mr Ang met with Mr Culleton in July 2024, and he seemed friendly but expressed disappointment that Mr Chou would not be continuing as site manager, and also said he considered Mr Chou a close personal friend.
• Soon after, the body corporate wanted to renegotiate the remuneration it paid to Steadfast. This formed part of the management rights being sold. The body corporate took a stance that it would not renew its management rights agreement with Steadfast (i.e., would not ‘top up’ the term of the agreement to twenty years, which Ms Hsueh says is generally done every few years). Ms Hsueh took this as hostility to, and an attempt to hinder, the sale of Steadfast’s business.
• Mr Culleton told her and Mr Ang that if Mr Chou were allowed to continue as onsite manager he would convince the body corporate committee not to try to renegotiate Steadfast’s remuneration.
• The body corporate committee held its interview with the prospective buyer on 8 August 2024. Ms Hsueh says the purpose of such interviews is to reassure the body corporate committee that the buyer is capable of taking on the duties of the caretaker and letting manager for the complex. She says the committee opened the meeting by saying that it had a policy of not allowing top-ups, and asking the buyer if it wanted to continue. She said the buyer took a break to consider and decided to continue the interview. She says the committee then spent most of the interview alleging that Mr Ang and she had engaged in unethical conduct including misrepresenting their financial circumstances to the body corporate and mistreating or underpaying Mr Chou. She says the committee suggested to the buyer that Steadfast was selling the management rights because she and Mr Ang had bought an expensive new home. She says that the only person at the complex who knew about their home purchase was Mr Chou. She says the committee requested a formal assessment of each of the three key personnel as to their suitability to manage the complex, and that this delayed settlement.
• The events at the buyer’s interview nearly derailed the sale, and the buyer told Ms Hsueh and Mr Ang that they had come close to terminating the sale contract because of the body corporate’s hostility.
[213] For the Code the Respondent does not have to prove that Mr Chou in fact engaged in the conduct, but it does have to prove that it had reasonable grounds on which to form a genuine belief that he had.
[214] In this case, Ms Hsueh and Mr Ang inferred from the committee’s conduct that Mr Chou had engaged in serious misconduct. To have had reasonable grounds to believe that Mr Chou engaged in the serious misconduct, they must also have had reasonable grounds to believe that the committee had engaged in the conduct from which Mr Chou’s misconduct had been inferred.
[215] Steadfast had reasonable grounds to believe that Mr Chou had a closer relationship with the committee, the owners, and the residents than Ms Hsueh and Mr Ang did, given he was the onsite manager.
[216] Mr Chou did not file any reply statement of Mr Culleton denying that at his meeting with Mr Ang and Ms Hsueh in July, he had described Mr Chou as a close personal friend. Steadfast’s materials did not directly contradict Mr Culleton’s earlier statement in his affidavit that at a meeting at Mr Culleton’s home on 20 July 2024, and again at a meeting with the body corporate committee on 29 July 2024, Ms Hsueh said they were under extreme financial pressure and were selling their home to make ends meet. However, Ms Hsueh did say that Mr Chou was the only person at the complex who knew of their purchase of a new home.
[217] Steadfast’s materials also do not contradict Mr Culleton’s affidavit in respect of the claim that at the meeting of 29 July 2024 with the committee, they attributed financial pressure to interest rates and labour costs. Similarly its materials do not contradict his claim that another
committee member asked Mr Ang and Ms Hsueh how they could possibly claim financial hardship when they received an annual increase of 5% or inflation (whichever is greater).
[218] As stated there was no reply statement of Mr Culleton filed with Mr Chou’s reply materials, so there was no reply statement contradicting Ms Hsueh’s assertion that Mr Culleton had told her and Mr Ang that if Mr Chou were allowed to continue as onsite manager he would convince the body corporate committee not to try to renegotiate Steadfast’s remuneration.
[219] It seems clear that the buyer’s interview was the catalyst for the termination of Mr Chou’s engagement. Ms Hsueh’s statutory declaration says:
After the buyer’s interview, John and I had a discussion about what happened and what we needed to do to protect Steadfast’s interests. We decide that we had to terminate our business relationship with Fresh First and remove Sen’s access to things that could potentially be used to jeopardise the business sale.
[220] She goes on to refer to then seeking legal advice as to termination, and removing Mr Chou’s access to his business phone and email. The latter occurred on 9 August, the day after the buyer interview.
[221] What were the reasonable grounds to believe that at the buyers interview the committee had been hostile, had accused Steadfast of misrepresenting its financial situation, had raised with the buyer Ms Hsueh and Mr Ang’s purchase of a house, and/or had accused Steadfast of mistreating and/or underpaying Mr Chou?
[222] Ms Hsueh and Mr Ang were not at the buyer interview on 8 August 2024, and nor was Mr Chou. The Respondent did not call any witness who was present at the buyer’s interview on 8 August 2024, or seek an order for any such witness to attend.
[223] The Respondent did not deal explicitly state the source of its knowledge and the basis for its belief about what had happened at the buyer interview. But Ms Hsueh’s statutory declaration says that it was the buyer who told her that they had come close to terminating the contract because of the body corporate’s hostility. Read in context in the statutory declaration it appears this was conveyed after the buyer interview but before Mr Chou’s online access was revoked the following day.
[224] Mr Chou asked Ms Hsueh whether there was any evidence of him expressing anything to anyone in the complex about their financial hardship or house purchase. Mr Ang objected to the question and Mr Chou did not respond to the objection or press the question.
[225] Mr Culleton’s affidavit relevantly stated:82
I have reviewed the statement of claim in relation to paragraph 23, where it is knowingly and falsely claimed that Yi-Hsien Chou, on behalf of Fresh First, made the following misrepresentations to members of the complex, including myself:
• (a) Steadfast, or Ang and Hsueh, or both, were mistreating Chou;
• (b) Steadfast had been dishonest and lied about its financial position, and its financial trouble was due to its directors purchasing an expensive house;
• (c) Chou was being underpaid;
• (d) Steadfast was refusing to pay Chou any redundancy or exit payments.
Steadfast claim that on a date unknown, but before 8th August, Mr Chou allegedly made statements to members of the complex regarding certain matters. However, this claim itself is bizarre. How can they assert that a statement was made without knowing the date, but still be certain that it was before 8th August? This makes no sense.
[226] And later it stated:83
I can confirm that at no point during this meeting of 8th August 2024 did anyone in the committee express hostility toward to the buyers who were present to be assessed by us. It begs the question as why would we destroy the business relationship that we hoped to foster with the buyer. Within 2 minutes or so Fiona and her business partners became extremely upset and angry. Fiona told me that they had not been informed of the body corporate’s strong decision to refuse all future increases in that contract duration. This was quite odd. The committee instructed our body corporate manager, Aleksandra to instruct (on our behalf) our solicitor, Mark Merlick, to write to Steadfast’s legal representative to ensure that they notify the buyer of the committee’s intention not to increase the duration of the contract. I was stunned.
[227] The reference to “Fiona” is a reference to a representative of the buyer. Notably this affidavit does not deny that the issues of the house purchase, claims of mistreatment or underpayment of Mr Chou, or claims that Ms Hsueh or Mr Ang had mispresented their financial situation, were discussed at the buyer interview.
[228] The Respondent did not cross-examine Mr Culleton in relation to what happened in the buyer interview. But Ms Hsueh’s statutory declaration, filed after the Applicant had filed Mr Culleton’s affidavit, had made assertions about the events of the buyer interview. This means Mr Chou was on notice of her evidence before filing his reply materials. He could have filed a statement in reply from Mr Culleton addressing the assertions in the Respondent’s material, when he filed his other reply materials on 13 November 2024.
[229] Though various of these matters were not put to the relevant witness in cross- examination, the parties had been on notice of them because of the exchange of witness statements in advance of the hearing and therefore had an opportunity to put on evidence to the contrary.
[230] Though I have expressed caution about relying on Mr Culleton’s evidence and have determined to give his evidence little weight, it is nonetheless relevant to consider matters that he has raised in his affidavit which Steadfast could have contradicted in its filed materials, but did not.
[231] What conclusions can be drawn from the witnesses’ testimony, and from the various incidences in which they did not contradict each other’s accounts?
[232] As stated above Ms Hsueh did not give the source of her knowledge as to the other matters she says were discussed at the meeting – the allegations that they had misrepresented their finances, had mistreated or underpaid Mr Chou, or that they were selling the business because they had purchased an expensive home. On one view it could be inferred that she was implicitly indicating that the buyer was also the source of this information; on the other hand, may venture beyond inference into speculation. There was no reason why the Respondent could
not have put into evidence the source of its knowledge about the events it says occurred at the meeting, and given direct evidence of the means by which it says it obtained this information. In those circumstances I do not consider the Respondent has established it had reasonable grounds to believe that these matters were discussed at the buyer interview.
[233] On the other hand, at the least it can be accepted that:
(a) Mr Chou and Mr Culleton were close and that Mr Chou had a closer relationship with the committee, owners and residents than Mr Ang and Ms Hsueh did;
(b) Mr Culleton told Ms Hsueh and Mr Ang that he considered Mr Chou a close personal friend, and that he was disappointed that Mr Chou would not be continuing as site manager;
(c) the body corporate sought to renegotiate the remuneration payable to Steadfast and told Steadfast it would not top up the management contract;
(d) Ms Hsueh and/or Mr Ang told Mr Culleton and/or the committee that they were under financial pressure and were selling their home;
(e) after the buyer interview of 8 August 2024, but before the termination date of 13 August, the buyer conveyed to Ms Hsueh and/or Mr Ang that the committee had been hostile, and that the hostility had come close to terminating the sale contract as a consequence.
[234] I need not consider the truth of any of these assertions, just whether they provided reasonable grounds for Steadfast to form a genuine belief as to serious misconduct on Mr Chou’s part.
[235] Deliberately attempting to sabotage the sale of the business would be serious misconduct for the purposes of the Code and also having regard to regulation 1.07 of the Fair Work Regulations.
[236] I accept that Mr Hsueh and Mr Ang’s selling agent had previously warned them that their onsite manager may be uncooperative or event attempt to sabotage the sale process.84 This would have primed them to be suspicious, even though there is no suggestion that this agent had any direct knowledge of Mr Chou or his attitude to the sale.
[237] Ms Hsueh and Mr Ang inferred from the events described above that it was likely that Mr Chou was seeking to influence the body corporate committee to sabotage the sale. They say they moved quickly to terminate the engagement so he would not have an opportunity for further foul play or sabotage.
[238] Steadfast does not suggest that Ms Hsueh and Mr Ang confronted Mr Chou about their apprehensions. It does not suggest that they considered any other explanations, such as commercial considerations, for the committee’s conduct in refusing to top up the contract and trying to renegotiate the remuneration requirements.
[239] In the circumstances I am satisfied that Ms Hsueh and Mr Ang, and therefore Steadfast, genuinely believed that Mr Chou may have been or was likely to have been trying to sabotage
the sale. Whether or not this falls short of a genuine belief that he had (definitely, as opposed to likely) engaged in serious misconduct, Steadfast has not established that it had reasonable grounds on which to form this genuine belief.
[240] It follows that the requirements of the summary dismissal part of the Code are not met.
[241] It is not in dispute that no warning, or opportunity to respond, was given. It follows that the dismissal was not consistent with the Code.
[242] In light of those findings, I dismiss the Respondent’s objection that the dismissal was consistent with the Small Business Fair Dismissal Code.
[243] The next question that arises is whether the dismissal was harsh, unjust, or unreasonable. However, for the reasons below I have decided to adjourn this application, before deciding that question, to deal with a discrete issue that the Respondent raised in its closing submissions.
Whether findings of fact should be made about Chou’s conduct
[244] In addition to submitting that the dismissal was consistent with the Code, the Respondent also submitted that given there is an ongoing District Court proceeding, this unfair dismissal proceeding is not the appropriate forum to determine the issue of whether or not Mr Chou in fact engaged in the conduct alleged in the court proceeding. In addition, it submitted that the parties have not been provided with a proper opportunity to fully address the alleged conduct in their evidence.
[245] I do not accept the latter submission. As indicated above, and as the Respondent points out, the question, under this part of the Code, is whether it genuinely believed on reasonable grounds that Mr Chou had engaged in serious misconduct. The objective part of this question is whether the employer had reasonable grounds. The question of consistency with the Code does not turn on whether Mr Chou in fact engaged in the serious misconduct. However, the Respondent has not been successful in this objection and I have found that the dismissal was not consistent with the Code. Accordingly, the next question is whether the dismissal was harsh, unjust, or unreasonable.85 Findings as to Mr Chou’s actual conduct will be relevant to considering whether there was a valid reason for the dismissal.86 The question of whether there was a valid reason is a consideration informing whether the dismissal was harsh, unjust, or unreasonable.87
[246] The parties were squarely on notice of the provisions that they needed to consider in producing witness statements and submissions in preparation for the hearing. The Directions issued on 9 October 2024 referred to the substantive application and the Respondent’s objection that Mr Chou was not an employee. The notes appended to the directions drew the parties’ attention to sections 385 and 387 of the Fair Work Act. The Directions also explicitly reminded the Applicant to deal with loss and mitigation in his materials. The parties knew that the hearing would deal with the objection, the merits, and remedy. The parties also attended a case management conference on 16 October 2024, at which I took them through the directions that had been issued on 9 December. Both parties filed witness statements, some in the form of statutory declarations, and one in the form of an affidavit, going not only to the question of whether Mr Chou was an employee but to the events leading up to the end of his engagement, and beyond. Ms Hsueh provided an account of the Respondent’s reasons for terminating the engagement, dealing with the events leading to the termination, and her and Mr Ang’ssuspicions that Mr Chou was sabotaging the sale of its business.88 So, the materials filed are consistent with the parties understanding that Mr Chou’s conduct would be in issue in these proceedings. They had every opportunity to prepare witness statements and submissions, and seek orders for production and attendance, in advance of the hearing. I do not accept there was no proper opportunity to fully address the alleged conduct.
[247] As to the former submission, that findings of fact regarding Mr Chou’s actual conduct should not be made while the District Court proceedings are underway, I would first observe that the Respondent has not applied for an order in the nature of a stay pending the determination of those District Court proceedings. However, though the Respondent has had that assistance of lawyers in relation to that other proceeding, it is unrepresented in this proceeding.
[248] I would next observe that this specific issue, as to whether this tribunal should make such findings while other civil proceedings are on foot elsewhere, was not raised prior to the Respondent raising it in their closing submissions. Mr Chou’s closing submissions in reply did not deal with it. Mr Chou is also unrepresented.
[249] In the circumstances I do not consider this issue to have been fully ventilated. I will allow time for the Respondent to make an application for an order in the nature of a stay, and, if such an application is made, for the Applicant to respond to it. In that case the Commission can be properly assisted by the parties’ submissions on this issue. If no application is made in the time allowed I will proceed to decide the overall merits of this matter, and, if necessary, the question of remedy.
[250] In the meantime, if parties wish to avail themselves of a further opportunity for conciliation, they should advise my chambers so that inquiries can be made as to the availability of another Member of this Commission for that purpose.
Conclusion
[251] I have found that the application was made in time, that Mr Chou was an employee, and had completed the minimum employment period. I have found that he was protected from unfair dismissal within the meaning of that term for the purposes of the Fair Work Act.
[252] I have found that Mr Chou was dismissed. I have found that the dismissal was not consistent with the Small Business Fair Dismissal Code, and was not because of genuine redundancy.
[253] The Respondent’s objections that the applicant was not an employee, and that if he was, the dismissal was consistent with the Small Business Fair Dismissal Code, are dismissed.
[254] The matter is adjourned to allow time for any application for an order in the nature of a stay, by reference to the District Court proceedings, to be made, and, if made, determined. Directions will be issued for that purpose.
Chou v Steadfast Shareholding Pty Ltd [2025] FWC 769 delivered 18 March 2025 per Butler DP