1
Fair Work Act 2009
s.394—Unfair dismissal
Aaron Pottenger
v
Department of Caffeine T/A Two Feet First
(U2018/3359)
DEPUTY PRESIDENT COLMAN MELBOURNE, 20 JUNE 2018
Application for an unfair dismissal remedy – whether applicant was an employee – whether
application filed within 21 days – extension of time – no exceptional circumstances –
application dismissed
[1] This decision concerns an application made by Mr Aaron Pottenger for an unfair
dismissal remedy under s.394 of the Fair Work Act 2009 (Act). The respondent, Department
of Caffeine Pty Ltd (company), objects to the application on two jurisdictional grounds. First,
it contends that Mr Pottenger was not an employee of the company. Secondly, it says that,
even if he was an employee, his unfair dismissal application was filed outside the 21 day
period prescribed by s.394(2).
[2] The company’s jurisdictional objections were listed before me on 8 June 2018. I
conducted the proceeding by way of determinative conference. The company was represented
by Mr K. Vencatachellum and Mr H. Pham, each of whom is a director of the company. Mr
Pottenger, who is also a director of the company, appeared for himself. All three gave
evidence and made submissions.
[3] Section 396 of the Act provides that the Commission must decide four matters before
considering the merits of an unfair dismissal application. One of these is the question of
whether the applicant was a person protected from unfair dismissal. A person can only be
protected from unfair dismissal if she or he is an employee who has completed a minimum
period of employment (see s.382). An unfair dismissal application cannot proceed if the
applicant was not an employee. Another of the four preliminary matters that the Commission
must decide before considering the merits of an application is whether the application was
made within 21 days after the dismissal took effect. The other two preliminary matters are not
presently relevant.
Background
[4] Department of Caffeine is a small private company that operates a café in Chelsea in
Victoria. Until March 2018, Mr Pottenger performed the role of front of house manager at the
café, and worked approximately 40 hours per week.
[2018] FWC 3403
DECISION
E AUSTRALIA FairWork Commission
[2018] FWC 3403
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[5] In late 2017, Mr Vencatachellum and Mr Pham developed concerns about Mr
Pottenger’s performance in his role as front of house manager. They decided to offer Mr
Pottenger a contract of employment. They thought this would make Mr Pottenger more
responsible for performing the front of house manager role. Mr Pottenger did not sign the
contract, but continued to work as front of house manager on a full-time basis.
[6] The concerns about Mr Pottenger’s performance persisted. Mr Vencatachellum sent
Mr Pottenger a warning letter dated 1 December 2017, advising that his performance was
unsatisfactory. It referred to problems associated with managerial skills, timeliness, and the
impact of this on the company’s financial position and goodwill. The letter stated that if his
performance did not improve, Mr Pottenger’s employment may be terminated.
[7] Mr Vencatachellum sent Mr Pottenger a second warning letter dated 21 February
2018, raising further issues of concern about Mr Pottenger’s performance, including that he
had allegedly left the café unsupervised for two days, and that he was not able to manage staff
turnover and rostering.
[8] On 2 March 2018, a board meeting was held, at which Mr Pottenger’s role as front of
house manager was discussed. The meeting was attended by Mr Pottenger, Mr
Vencatachellum, Mr Pham and Ms Aurelie Ducasse, the company secretary and back of house
manager. The company contends that, at this meeting, Mr Pottenger’s role as front of house
manager was terminated with immediate effect. Mr Pottenger denies this and says that his
employment was not terminated until a subsequent board meeting on 10 March 2018. Mr
Vencatachellum and Mr Pham said that during the meeting on 2 March 2018, they told Mr
Pottenger that he would have an opportunity to address other employees at a staff meeting on
7 March 2018 and let them know that he would no longer be front of house manager. Mr
Pottenger says that he was given until 7 March 2018 to decide whether he wished to resign,
but that he did not do so. Mr Pottenger did not attend the staff meeting on 7 March 2018.
[9] On 8 March 2018, Mr Vencatachellum sent a text to Mr Pottenger, asking him to
return the keys to the café. Mr Pottenger replied that he had not resigned and that he was
expecting to be rostered for work the following week. Mr Vencatachellum replied ‘what do
you mean not resigned from your position?’ to which Mr Pottenger responded: ‘I was given
the opportunity to resign but I have chosen not to.’ The exchange of texts was submitted to
the Commission as part of the applicant’s materials.
[10] On 10 March 2018, a further board meeting was held. Mr Pottenger says that it was
not until this meeting that he was told that he was dismissed from his position as front of
house manager. He contended that the minutes of this meeting support his position.
Was Mr Pottenger an employee?
[11] The company submitted that Mr Pottenger was not an employee of the company. It
contended that Mr Pottenger is a director and part owner of the business, with a shareholding
of 15%. It said that the directors and shareholders perform work for the company without
entering into any employment relationships, and that they work together to try and make their
business a success and share the profits. Such arrangements are certainly common in small
private companies. However, the fact that someone is a part owner or a director of a business
does not mean that they cannot also be an employee of that business.
[2018] FWC 3403
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[12] The company paid Mr Pottenger $1,250.00 gross per week. The company deducted
PAYG tax and made superannuation contributions to his preferred fund. It provided him with
fortnightly payslips recording his employment details, and noted his ‘employment basis’ as
‘full-time employment’. These factors point clearly to Mr Pottenger being an employee of the
company.
[13] Furthermore, the two warning letters issued to Mr Pottenger about his performance
both clearly describe him as an employee of the company. The company also produced to the
Commission a letter it wrote to Mr Pottenger on 2 March 2018, in which it states that his
employment with the company was terminated. Mr Pottenger says he did not receive this
letter, and I return to this below.
[14] At the hearing, Mr Vencatachellum and Mr Pham explained that Mr Pottenger had
simply performed the role of front of house manager as a co-owner of the business. They
believed that, by offering Mr Pottenger a formal contract to do this work, they would make
him more responsible for the effective performance of his duties. It seems that the company
believed that, because Mr Pottenger did not sign the contract of employment, he had not
become an employee. As I explained at the hearing however, many employees have no
written contract of employment, and the question of whether a person is at law an employee is
to be assessed by reference to all of the relevant circumstances.
[15] In the present case, it is quite clear that Mr Pottenger was an employee of the
company. He was paid and described as such. I note Mr Pottenger was also paid out his
accrued leave entitlements on termination. As Mr Pottenger was an employee of the company,
he is able to bring an unfair dismissal claim against his former employer, subject to the other
jurisdictional requirements being met.
Was the application filed within 21 days?
[16] The company’s second jurisdictional objection to the application is that it was not
lodged within the 21 day period prescribed by s.394(2). It contends that Mr Pottenger’s
dismissal took effect on 2 March 2018. This would put his application for an unfair dismissal
remedy, which was lodged on 31 March 2018, out of time. Mr Pottenger says that his
dismissal took effect on 10 March 2018, such that his application was filed within the 21 day
period.
[17] There is a conflict on the evidence as to what occurred at the board meeting of 2
March 2018. Mr Pham gave evidence to the Commission that he told Mr Pottenger that his
role as front of house manager was terminated, effective immediately. Mr Vencatachellum
gave evidence that he heard Mr Pham say this to Mr Pottenger. Mr Pham said that he told Mr
Pottenger that he would have the chance to tell the staff of the café about the termination of
his role, and that if he wished, he could say that he had resigned. Mr Pham said that he also
offered Mr Pottenger a role as a waiter at the café.
[18] Mr Pottenger’s evidence of the meeting on 2 March 2018 was Mr Pham and Mr
Vencatachellum gave him until 7 March 2018 to decide whether to resign, but that he did not
resign. Mr Pottenger said that he could not recall Mr Pham telling him that his position as
front of house manager had terminated on that day.
[2018] FWC 3403
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[19] I accept Mr Pham’s evidence that he told Mr Pottenger at the meeting on 2 March
2018 that his role as front of house manager was terminated with immediate effect. Mr
Pham’s evidence was clear and convincing. It was corroborated by Mr Vencatachellum. By
contrast, Mr Pottenger said only that he could not recall Mr Pham saying these words. He did
not deny it.
[20] What of the events of the second board meeting on 10 March 2018? The meeting
minutes were produced to the Commission. The document contains printed text together with
hand-written annotations. The minutes record the first agenda item as being to discuss and
resolve managing emergencies at the company, and in particular ‘to discuss Aaron Pottenger’s
position as FOH managing director’. In the hand-written annotations, the minutes record that,
by two votes to one, Mr Pottenger ‘is removed as FOH manager effective immediately
10.03.2018.’ This conflicts with the evidence of Mr Pham and Mr Vencatachellum as to the
effective date of termination.
[21] However, Mr Pham said that the minutes were hand-written by the company secretary,
Ms Ducasse. He gave evidence that the reference to ‘FOH manager’ was a mistake made by
Ms Ducasse, and that she should have written ‘FOH managing director’. That is, at the second
meeting, Mr Pottenger was removed as the director who was responsible for the front of
house. His role as front of house manager was not terminated on this date. And he was not
removed as a director. I note that ASIC documents filed by the company in support of their
jurisdictional objections show that as of 24 April 2018, Mr Pottenger remained a director the
company. Mr Pham contrasted the handwritten note of Ms Ducasse referred to above with the
printed text of the meeting minute, which refers under the first agenda item to a discussion of
Mr Pottenger’s ‘position as FOH managing director’ (emphasis added). This, he says, is
evidence of the fact that the board meeting was concerned with Mr Pottenger’s ongoing duties
as a director, not his role as front of house manager, as that had been resolved at the meeting
on 2 March 2018. I accept this explanation.
[22] The board meeting of 10 March 2018 arose following the exchange of text messages
between Mr Pottenger and Mr Vencatachellum, during which Mr Pottenger disputed that his
role as front of house manager had come to an end. Mr Vencatachellum’s surprise is evident
from his text message (‘what do you mean you have not resigned?’). It was necessary for the
directors to meet to discuss this issue. Although Mr Pham had told Mr Pottenger on 2 March
2018 that his position as front of house manager was terminated, Mr Pottenger remained a
director and might seek to continue to perform work running the front of house, in his
capacity as a co-owner of the business. This is what the board of meeting of 10 March 2018
resolved; Mr Pottenger was removed from his assignment as the director responsible for the
front of house. But his employment as front of house manager had ended on 2 March 2018.
[23] I have considered how the company’s position that Mr Pottenger was not an employee
might relate to the question of whether he was dismissed on 2 March 2018. How could the
company terminate employment which it considered did not exist? However, the company
clearly did treat Mr Pottenger as an employee. Its contention before the Commission that he
was not an employee is simply a legal argument in defence of the claim brought against it.
[24] After the meeting on 2 March 2018, which occurred on a Friday, Mr Pottenger did not
attend for work. He was scheduled to work over the weekend and on the following Monday.
He did not perform any further work, and did not attend the meeting with staff on 7 March
2018. This conduct is compatible with my finding that Mr Pham told Mr Pottenger on 2
[2018] FWC 3403
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March 2018 that his position as front of house manager was terminated with immediate effect.
I also note that the company filed two brief unsworn statements from employees who work at
the café, Mr Robbie Quessy and Mr Olivier Descumbes, who said that Mr Pottenger told them
on 3 March 2018 that he was not coming back to the business. Their statements are consistent
with the company’s position.
[25] Finally, I accept Mr Pottenger’s evidence that he never received the termination letter
dated 2 March 2018. The company says that it posted the letter to Mr Pottenger, but cannot
establish that he received it. I noted in the hearing that the letter contains an anomaly in that it
refers to a meeting on 3 March 2018; Mr Pham and Mr Vencatachellum said that this was an
error, and that the meeting in question was clearly the board meeting of 2 March 2018. As I
have found that Mr Pham dismissed Mr Pottenger in the meeting of 2 March 2018, the fact
that he did not receive the termination letter is of no significance.
Should the 21 day period be extended?
[26] I must now consider whether to extend the 21 day period within which Mr Pottenger’s
unfair dismissal application was to be brought.
[27] Before I deal with the specific matters that the Act requires me to take into account, I
will make some brief observations about the principles that are to be applied in considering
whether I should exercise my discretion to extend time. The Act allows the Commission to
extend the period within which an unfair dismissal application must be made, but only if it is
satisfied that there are ‘exceptional circumstances’.
[28] The test of ‘exceptional circumstances’ establishes a high hurdle for an applicant.1
The meaning of ‘exceptional circumstances’ was considered by a Full Bench of what was
then Fair Work Australia in Nulty v Blue Star Group Pty Ltd (Nulty),2 where it was noted that,
in order to be exceptional, the circumstances must be out of the ordinary course, or unusual,
or special, or uncommon, although they need not be unique or unprecedented. The Full Bench
also noted that exceptional circumstances can include a single exceptional matter, a
combination of exceptional factors, or a combination of ordinary factors which, although
individually of no particular significance, when taken together can be considered exceptional.3
Although Nulty concerned the expression ‘exceptional circumstances’ in the context of s.365
of the Act, its reasoning is applicable also to s.394(3).
[29] In order for Mr Pottenger’s unfair dismissal application to proceed, it is necessary for
him to obtain an extension of time to make the application, under s.394(3). This section
provides that the Commission may allow a further period for the application to be made if it is
satisfied that there are exceptional circumstances, taking into account the following:
(a) the reason for the delay; and
(b) whether the person first became aware of the dismissal after it had taken effect; and
(c) any action taken by the person to dispute the dismissal; and
1 Stogiannidis v Victorian Frozen Foods Distributors Pty Ltd [2018] FWCFB 901 at [14]
2 [2011] FWAFB 975
3 At [13]
[2018] FWC 3403
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(d) prejudice to the employer (including prejudice caused by the delay); and
(e) the merits of the application; and
(f) fairness as between the person and other persons in a similar position.
[30] Mindful that the parties were unrepresented, I read out these considerations during the
hearing, and invited the parties to make any further submissions in relation to the question of
whether there were exceptional circumstances.
Reason for the delay
[31] The Act does not specify what reason for delay might tell in favour of granting an
extension however decisions of the Commission have referred to a credible,4 acceptable5 or a
reasonable explanation.6
[32] Mr Pottenger’s primary case was that he filed his unfair dismissal application within
time and that there was no delay. However, I have found this not to be the case. Mr Pottenger
acknowledged at the hearing that he did not have any particular reason to explain some or all
of the delay, other than that he maintained that the dismissal took effect on 10 March 2018.
[33] The lack of a credible, acceptable or reasonable explanation for the delay in Mr
Pottenger lodging his unfair dismissal application weighs against the granting of an extension
of time.
Whether the person first became aware of the dismissal after it had taken effect
[34] As I have explained above, there was disagreement as to when the dismissal took
effect. On Mr Pottenger’s argument, it might be contended that he became aware of the
dismissal after it had taken effect. However, I have found that Mr Pham told Mr Pottenger
that he was dismissed immediately on 2 March 2018. Even if Mr Pottenger does not now
recall this, I am satisfied that he was told that he was dismissed on 2 March 2018.
Accordingly, this is not one of those rare cases where a dismissal took effect unbeknown to
the applicant, who therefore did not have the full benefit of the 21 day period for lodging an
unfair dismissal claim. This consideration therefore does not weigh in favour of an extension
of time.
Action taken to dispute the dismissal
[35] Mr Pottenger evidently contested his dismissal, in the sense that he told Mr
Vencatachellum that he had not resigned and expected to be rostered for work the following
week. He took at least some action to dispute his dismissal. This is a factor that weighs in
favour of an extension of time.
4 Stogiannidis, op. cit., for example at [39]
5 Blake v Menzies Aviation (Ground Services) Pty Ltd [2016] FWC 1974, per Gostencnik DP at [9]
6 Roberts v Greystanes Disability Services; Community Living [2018] FWC 64, per Hatcher VP, at [16]
[2018] FWC 3403
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Prejudice to the employer
[36] I cannot identify any particular prejudice that would accrue to the company if an
extension of time were to be granted. However, the mere absence of prejudice is not itself a
factor that would warrant the grant of extension of time. I consider this to be a neutral factor
in the present case.
Merits of the application
[37] An application to extend time is essentially an interlocutory matter that does not allow
for the merits to be fully tested. There is insufficient material before me to make any detailed
assessment of the merits. However, in my view, the application is not without difficulties.
[38] The company objects to the application on jurisdictional grounds, contending that the
dismissal was consistent with the Small Business Fair Dismissal Code. Pursuant to s.385, a
person can only be unfairly dismissed if the Commission is satisfied that, among other things,
the dismissal was not consistent with the Code.
[39] The company appears to be a small business to which the Code applies. As required
by the Code, the company gave Mr Pottenger a reason why he was at risk of being dismissed,
which appears to have been a valid reason or reasons, based on his conduct or performance.
He was warned in writing about the company’s concerns and had an opportunity to respond to
the warnings. Of course, these matters have not been tested, and Mr Pottenger has a different
perspective on various matters, contests certain facts asserted by the company, and considers
that his dismissal was unfair in all the circumstances.
[40] The factual contentions and the merits of the application more generally would need
to be scrutinised, including under cross-examination, if an extension of time were granted and
the matter proceeded. However, there appears to me to be a reasonable prima facie case that
Mr Pottenger’s dismissal was consistent with the Small Business Fair Dismissal Code.
[41] Accordingly, while Mr Pottenger has an arguable case, the merits of his application
are in my view not strong. However, given the interlocutory nature of an application to extend
time, and mindful that the material has not been fully explored, I do not consider the merits of
the case to tell against an extension of time.
[42] In the circumstances I consider the merits of the case to be a neutral consideration.
Fairness as between the applicant and other persons in a similar position
[43] Applications to extend time generally turn on their own facts. The parties did not draw
my attention to any relevant persons or cases that would be relevant in relation to the question
of fairness as between Mr Pottenger and other persons in a similar position. I consider this to
be a neutral consideration in the present matter.
Conclusion
[44] The time limit that applies to the exercise of a person’s right to bring an unfair
dismissal application reflects the Parliament’s intention that this right be exercised promptly.
[2018] FWC 3403
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The Act recognises that there are some cases where a late application should be accepted,
namely where there are exceptional circumstances.
[45] Having regard to all of the matters that I am required to take into account under
s.394(3), I am not satisfied that the requisite exceptional circumstances exist. There is no
credible, acceptable or reasonable explanation for the delay in filing the application. The
merits of the case are arguable but weak. Apart from some action taken by Mr Pottenger to
dispute the dismissal, the other factors do not weigh in favour of granting an extension. In my
view, the circumstances of this case are not exceptional, either individually or when
considered together.
[46] I decline to grant an extension of time under s.394(3). Accordingly, Mr Pottenger’s
application for an unfair dismissal remedy is dismissed.
DEPUTY PRESIDENT
Appearances:
Mr A Pottenger for himself
Mr K Vencatachellum and Mr H Pham for Department of Caffeine
Hearing details:
2018
Melbourne
8 June
Printed by authority of the Commonwealth Government Printer
PR608002
WORK COMMISSION THE SEAL OF THE
