Beverley Homan v NSW Leather Co. Pty Ltd

[2013] FWC 8633

[2013] FWC 8633

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Beverley Homan
v
NSW Leather Co. Pty Ltd
(C2013/5765)

COMMISSIONER RYAN MELBOURNE, 1 NOVEMBER 2013

Alleged dispute concerning entitlements.

[1] The Applicant was employed by the Respondent as its Victorian Sales Manager from 11 April 2005 until 21 December 2012. The Applicant is in dispute with the Respondent in relation to the amounts paid to the Applicant on termination.

[2] The Applicant claims that she was entitled to an amount of annual leave loading on leave accrued up until 30 March 2009 ($1346.16), an amount of unpaid Car Allowance on the period of long service leave paid to the Applicant on termination ($1545.60) and an amount of unpaid Car Allowance on the period of annual leave paid to the Applicant on termination ($3091.20).

[3] The Respondent contended that the Applicant had been paid correctly in accordance with both the terms of the contract of employment and the National Employment Standards. The Respondent also contended that no modern award applied to or covered the Applicant.

[4] The Applicant made an application on 27 August 2013 under s.739 of the Fair Work Act 2009 (the Act) for the Commission to deal with a dispute in accordance with the dispute procedure of the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing Award).

[5] Conferences were convened by the Commission on 16 September 2013, 7 October 2013 and 8 October 2013 for the purposes of conciliating the matter in dispute. Conciliation was unsuccessful. Both parties consent to the Commission arbitrating the dispute. Directions were issued on 8 October 2013 setting the timetable for the parties to file and serve their respective outline of case and evidence. The matter was listed for further conference on 31 October 2013 to permit the parties to talk to their submissions and to permit the Commission to clarify points with the parties.

[6] At the conference on the 31 October 2013 both parties advised they were happy to have the Commission decide the matter on the basis of the materials filed and the discussion at that conference.

Does a Modern Award Apply to and Cover the Applicant and if so which Award?

[7] The application in this matter sought to rely on the dispute resolution procedure of the Manufacturing Award.

[8] It became apparent at the first conference in this matter that if a modern award did apply to and cover the Applicant and the Respondent then there was a dispute between the parties as to which award applied. The Applicant contended that the Manufacturing Award was the appropriate award. The Respondent contended that, if a modern award applied, then, it was the Commercial Sales Award 2010.

[9] The Applicant was employed as the Victorian Sales Manager for the Respondent and her contract of employment defined her duties as:

● Sales and marketing of all upholstery and related furniture leather to the marketplace. This includes Retailers, Specifiers, Manufacturers, Interior Designers and Architects
● Creating Sales strategies to stimulate growth
● Working towards and improving Sales Projections and Targets. A Target of $100,000 per month for the Victorian market has been suggested.
● Maintaining line of communication with Company Directors
● Servicing and increasing current Tasmanian Client base.

[10] The Applicant spent 80% of her work time away from the Respondent’s place of business in order to carry out her duties.

[11] The Commercial Sales Award 2010 has coverage clause which includes the following:

“4.1 This occupational award covers employers throughout Australia with respect to Commercial Travellers, Merchandisers and Advertising Sales Representatives and those employees unless any other modern award contains classifications that apply to such persons, in which case the other modern award prevails.”

[12] A Commercial Traveller is defined in clause 3 of the Commercial Sales Award 2010 as follows:

“Commercial Traveller means a person employed, substantially away from the employer’s place of business, for the purpose of soliciting orders for, or selling articles, goods, wares or merchandise or material for wholesale sale, for resale, or for use in or in connection with the production and/or preparation and/or distribution of commodities for sale by the customer”

[13] In Victoria, the Commercial Sales Award 2010 replaced the Commercial Sales (Victoria) Award 1999 which had a coverage clause that included the following:

“6. COVERAGE OF AWARD

This award shall apply in the State of Victoria in respect of the employment of any person or persons or classes of persons, whether members of the Union or not, employed in the process, trade, business or occupation of:

6.1 Soliciting orders, obtaining sales leads or appointments or otherwise promoting sales for articles, wares, merchandise or materials:

6.1.1 In quantity for re-sale; or

6.1.2 To be used by the purchaser in the manufacture, production, preparing, or distribution of commodities for sale; or

6.1.3 To be used by the purchaser or by the person from whom the order was solicited in this business, trade or occupation, or (in the case of a public or semi-public body) for the purpose of its undertaking:

where the employee is employed away or substantially away from the employer’s place of business or where the employee conducts such duties via telephone or other electronic means or any combination thereof;”

[14] The Manufacturing Awardrelevantly has the following coverage:

“4. Coverage

4.1 This award covers employers throughout Australia of employees in the Manufacturing and Associated Industries and Occupations who are covered by the classifications in this award and those employees.

4.2 The award does not cover:

(a) an employer who is outside the scope of clause 4.9(a) or (b) unless such employer employs an employee covered by clause 4.9(c) and the employer is not covered by another modern award containing a classification which is more appropriate to the work performed by the employee; or

(b) an employee excluded from award coverage by the Act; or

(c) exempt employers and employees, as set out in clause 4.11.

4.9 Manufacturing and Associated Industries and Occupations means:

(a) the following industries and parts of industries:

(i) the manufacture, making, assembly, processing, treatment, fabrication and preparation of:

• the products, structures, articles, parts or components set out in clause 4.10; or



• the materials or substances set out in clause 4.10; or



• any products, structures, articles, parts or components made from, or containing, the materials or substances set out in clause 4.10.

...

(ix) every operation, process, duty and function carried on or performed in or in connection with or incidental to any of the foregoing industries, parts of industries or occupations.

(x) handling, sorting, packing, despatching, distribution and transport in connection with any of the foregoing industries or parts of industries.

4.10 For the purposes of clause 4.9(a)(i), the products, structures, articles, parts, components, materials and substances include:

...

(ee) skins, pelts, leather, canvas, fibre, vulcanised fibre, webbing, bark and other tanning extracts and all substitutes and all products made therefrom, including but not limited to saddles, harnesses, whips, machine belting, sporting goods, travel goods, handbags, wallets, belts, gloves, hats, sails, tents, tarpaulins, umbrellas, parachutes, car seats, gaskets, beach shelters, deck chairs, cargo nets, shipsgear and life jackets.”

[15] Whilst leather is included in the list of “the products, structures, articles, parts, components, materials and substances” to which the Manufacturing Award refers this is not enough. The Manufacturing Award only covers leather where the industry of the employer is “the manufacture, making, assembly, processing, treatment, fabrication and preparation of” leather or where the work is covered by clause 4.9(a)(ix) or (x).

[16] On the limited information before me it would appear that the Respondent is not engaged in the industry of “the manufacture, making, assembly, processing, treatment, fabrication and preparation of” leather nor is the Respondent engaged in work which falls within either clause 4.9(a)(ix) or (x) of the Manufacturing Award.

[17] The general description of the nature of the Respondent’s business and the description of both the duties of the Applicant and the amount of time she spent away from the Respondent’s place of business clearly lead to a conclusion that the Applicant was covered by the Commercial Sales (Victoria) Award 1999 until 30 December 2009 and by the Commercial Sales Award 2010 as from 1 January 2010.

Does Annual Leave Loading apply to leave accrued before 30 March 2009?

[18] Up until March 2009 the Respondent had been paying to the Applicant and other employees an amount of annual leave loading whenever the employee took a period of annual leave. On 30 March 2009 the Respondent wrote to the Applicant advising her that:

“...we wish to advise you that a decision has been made to annualize your entitlement to receive annual leave loading and any other allowances that might otherwise be applicable to your employment pursuant to the award.

This means that you will no longer receive the 17.5 percent annual leave loading and or any other allowances under the award in addition to your usual remuneration as those amounts are already included.

Accordingly this letter gives you notice that effective from 20th March 2009 your total remuneration will include the annualised leave loading and any allowances due to you under the award.”

[19] The Applicant conceded at the conference on 31 October 2013 that, whilst she and other employees initially opposed the unilateral change introduced by the Respondent in March 2009, she acquiesced and accepted the change made by the Respondent. Nevertheless the Applicant contends that annual leave accrued prior to 20 March 2009 should as at the date of termination be paid on the basis of a separate and additional 17.5% annual leave loading.

[20] I do not agree with the Applicant’s contention.

[21] It is clear that the unilateral change made by the Respondent in its letter dated 30 March 2009 was to completely stop the payment of annual leave loading as an additional payment. The letter didn’t provide for separate treatment of leave already accrued as against leave accrued after 20 March 2009. The unilateral action of the Respondent was to remove a separate annual leave loading payment from any and all annual leave.

[22] The Applicant accepted the change made by the Respondent and cannot now claim that a separate payment of annual leave loading should be made on leave accrued prior to 20 March 2009.

Does the Car Allowance apply to periods of leave paid out on termination?

[23] The Applicant commenced employment pursuant to a contract of employment which contained the following provision:

“4. Remuneration - your remuneration package is $50,000 per year plus 1.0% commission on Ex-stock Sales and 0.5% on Indent Sales plus Car Allowance of $230 per week plus Tolls and Petrol.”

[24] The Respondent conceded that during her employment the Applicant had been paid the Car Allowance even when the Applicant was on leave. However, the Respondent contended that this was in fact an error on the part of the payroll person and that the Applicant should only have been paid the Car Allowance while using the car for work purposes.

[25] The Applicant contended that when she was negotiating the contract with the Respondent it was on the basis of a Car Allowance of $12,000 per year. The Applicant conceded that she did not insist on having the Car Allowance expressed as an annual amount in the contract.

[26] The plain words of clause 4 of the contract do not qualify the payment of the Car Allowance to be paid only when the Applicant was using the car for work purposes.

[27] The practice adopted by the payroll person in paying the Applicant the Car Allowance each week including weeks when the Applicant was on leave accords with the plain wording of clause 4.

[28] The Applicant is seeking two payments.

[29] The first is a payment of $1,545.60 which relates to the non payment of the Car Allowance for the period of long service leave paid out on termination. The Respondent has properly conceded that this payment should be made given the specific language of the Long Service Leave Act 1992 (Vic).

[30] The second is a payment of $3,091.20 which relates to the non payment of the Car Allowance for the period of accrued annual leave paid out on termination.

[31] The Applicant sought to rely on previous conduct of the Respondent to support her contention that she was entitled to be paid the Car Allowance on accrued annual leave paid out on termination. The past conduct related to a contention that two previous employees had been their car allowance on leave paid out on termination. The Respondent challenged the relevance of this conduct given that it may have occurred between 2007 and 2009.

[32] I do not need to consider whether past employees were paid their car allowance on accrued leave entitlements paid out on termination.

[33] The claim made by the Applicant can be resolved by having regard to the requirements of s.90(2) of the Fair Work Act 2009 which provides as follows:

“90(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”

[34] Both the plain words of clause 4 of the contract of employment as well as the practice of the Respondent make clear that when the Applicant took a period of annual leave the Applicant was entitled to and was paid both the normal salary and the Car Allowance.

[35] Therefore, when the Applicant’s employment ended the Respondent was required by s.90(2) to pay to the Applicant her accrued annual leave on the same basis as if the Applicant had taken that leave. When the Applicant’s employment ended the Applicant had 13.44 weeks accrued annual leave. The payment to the Applicant should have been 13.44 weeks of normal salary plus 13.44 weeks of Car Allowance. It is this latter amount which was not paid by the Respondent to the Applicant and is still owing to the Applicant.

Conclusion

[36] I determine that the amounts of car allowance which should have been paid to the Applicant and which have not been paid are the amounts of $1,545.60 and $3,091.20.

[37] These amounts should be paid to the Applicant as soon as practicable given that the Applicant’s employment ended over 10 months ago.

COMMISSIONER

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