The importance of keeping accurate employment records

In order to make a claim for unfair dismissal, one of the pre-conditions to be satisfied is that the employee must have served the statutory minimum employment period – for those engaged by a “small business employer”, the minimum period is 12 months.  For others, it is 6 months.

A small business employer is defined as having less than 15 employees, based on headcount regardless of whether they are full-time, part-time or regular and systematic casuals.

PAWAN PUNIA V UBM CORP PTY LTD [2019] FWC 7361 (15 NOVEMBER 2019)

The Fair Work Commission recently considered an unfair dismissal application made by a former employee who contended that his employer was not a small business employer (arguing that there were 15 or more employees) and therefore that he had served the statutory minimum 6 month period of employment. He argued that in any event, he had been employed for at least 12 months. Due to deficiencies in the evidence of the number of employees, the Commission considered the period of employment issue first.

Pursuant to sections 22 and 383 of the Fair Work Act, the relevant period to be taken into account in determining the minimum employment period is the period of continuous service – certain absences or breaks may affect continuity of service.

The employer referred to the decision of Troy Harris v Laing O’Rourke Australia Construction Pty Ltd [2017] FWC 1204 which noted that:

• an employee’s period of employment is the period of continuous service with the employer;
• the period of service does not include certain “excluded” periods”;
• the ordinary meaning of continuous service is the unbroken period of employment;
• an excluded period does not break the employee’s “continuous service”, but does not count towards the length of period of service;
• excluded periods not affecting continuity of employment but not counting as service include periods of unauthorised absences, periods of unpaid leave or unpaid authorised leave.

In this particular case, the employee submitted that he commenced part-time employment in January 2015 (because of visa restrictions) and worked full-time from January 2016.

The employer submitted that he worked casually from February 2015, however the employment agreement tendered as evidence made no reference to either casual or part-time employment.

The Commission found that the period of employment from 2015 to June 2016 was continuous and counted towards the period of service, and therefore the period of employment from early 2015 to June 2015 was in excess of 12 months.  It was also accepted that he was employed for a 12 month period for the financial year of 2016-2017.

In relation to the 2017-2018 financial year, the employer submitted that the employee was terminated in September 2017 and then re-employed in June 2018, and that payments made to him during that period were for annual leave and not payments for hours worked.  The Commission found that the employer’s evidence was “conflicting and unconvincing”, and often did not support the statements made by the employer as to the circumstances of the employee’s termination.  The Commission was concerned that the employer admitted it had fabricated documentation to support the employee’s application for a rental property rather than rely on wage records.

It was accepted that there was a period of time when the employee travelled overseas, and that this was a crucial period of interruption to employment from approximately August 2018 to February 2019.  The employee argued that it was a period of authorised absence.  Based on the evidence produced, the Commission was not confident that it was or was not a period of unauthorised leave.  Even so, it held that the overall period of service exceeded a period of 12 months.

The Commission then considered the employment records for the subject employer, as well as 3 other companies that may be associated with the employer.  The Commission noted that there was a sharing of resources, material interest and control and influence between the 4 entities.  There were difficulties determining the actual number of employees because of insufficient and inconsistent paperwork, and consistency in the use of employee names.  Nevertheless, the Commission stated:

“I am not persuaded from the evidence of [the employer] that [the employer] employed solely the six employees referred to in their materials, which goes to the question of size of business.”

The Commission noted that there was “potentially” 15 employees employed by the business entity, not including any other painters engaged to work on site and does not consider any other related entities that the employer may have.  The Commission could not “confidently conclude that [the employer] has satisfied [it] that it is a small employer”.

The employer’s downfall was its unreliable evidence and inability to satisfy the Commission regarding the period of employment and/or the number of employees.  It was critical of the employer:

“It appears that the relationship between the parties was self-serving, the informal arrangements were convenient to both parties; [the employer] required painters and [the employee] required an employer sponsor to gain permanent residency. There were times when business was quiet and painters not required; [the employee] needed time to visit his family in India and time to concentrate on passing his English exam for permanent residency. Consequently I find this is most likely the reason the evidence and lack of it provided little assistance to [the employer] to advance their jurisdictional arguments.”

The Commission dismissed the employer’s jurisdictional argument and noted that the parties would be sent to arbitration at a future date.

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As an employer, it is a legal requirement to keep accurate and comprehensive employment records.  Not only are employers at risk of penalties for poor employment records, but as the above matter highlights, they are also at risk of not being able to satisfy the Commission of the true situation regarding any employees.