ccent Services Australia and Director, Australian Defence Force Reserves Employer Support Payment Scheme
[2010] AATA 205
•24 March 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 205
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2311
GENERAL ADMINISTRATIVE DIVISION ) Re Accent Services Australia Pty Ltd Applicant
And
Director, Australian Defence Force Reserves Employer Support Payment Scheme
Respondent
DECISION
Tribunal Professor RM Creyke
Senior MemberDate24 March 2010
PlaceCanberra
Decision The decision under review is affirmed.
...............................................................
Professor RM Creyke, Senior Member
CATCHWORDS
DEFENCE – Australian Defence Force (ADF) Reserves’ Employer Support Payment (ESP) Scheme – whether employer hired employee on full-time or part-time basis for purposes of Defence (Employer Support Payment) Determination 2005 – meaning of ‘full-time’ and ‘part-time’ employment – normal pattern of work by weeks rather than days – need to take account of range of factors – decision under review is affirmed.
Bromet v Oddie (2002) 78 ALD 320
Bromet v Oddie [2003] FCAFC 213
Facchini v Bryson (1952) 1 TLR 1386
Innes v University of Adelaide (No 2) [2007] FMCA 198
Radaich v Smith (1959) 101 CLR 209
Defence Act 1903 (Cth) ss 9A, 56B(1)
Defence (Employer Support Payment) Determination 2005 (Cth)
Defence Instructions (General) PERS 05-42 Employer Support Payment Scheme – Claims for Service Commenced after 31 August 2005
24 March 2010 REASONS FOR DECISION
Professor RM Creyke
Senior Member1. The Australian Defence Force (ADF) Reserves’ Employer Support Payment (ESP) Scheme was introduced in 2001 to provide financial benefits to employers while their employees are absent on Defence Force reserve service.
2. Squadron Leader Ben George was discharged from the Royal Australian Air Force (RAAF) on 2 August 2006 to assist his wife, Ms Barbara Delevoy, with her migration agents' business. He was employed by her as an information technology and communication developer. On 2 August 2006, Mr George also enlisted in the RAAF Reserves.
3. Ms Delevoy sought payment under the Employer Support Payment Scheme (ESP scheme) for Mr George’s absences from work on reserve service. The review by the Tribunal relates to an application for payment for periods of reserve service between 26 November 2007 and 13 June 2008. A decision was made on 26 September 2008 that payment to Ms Delevoy under the ESP scheme was to be made on the basis of Mr George’s employment part-time for 13.65 hours per week, rather than full-time employment. Ms Delevoy sought a review of that decision.
4. On 18 November 2008, that decision was affirmed by Mr Doug Stedman, the Director of the ESP scheme. Ms Delevoy sought a re-examination of the decision on 10 December 2008. On 30 January 2009, the Director confirmed his earlier decision. On 17 February 2009, Ms Delevoy sought an extension of time until 29 May 2009 to lodge an application for review by the Tribunal, an application supported by Mr Stedman. On 26 May 2009, Ms Delevoy applied to the Tribunal for review. Following the hearing before the Tribunal on 29 January 2010, the Tribunal called for further evidence from Ms Delevoy as to a number of matters raised in the written evidence which had not been fully explored at the hearing itself.
Legislation
5. The ESP scheme is provided for under the Defence Act 1903 (Cth) section 58B(1). That provision provides for the making of determinations for payments to members of the Reserves. Accordingly, the Department of Defence (Defence) made the Defence (Employer Support Payments) Determination 2005 (Cth). In addition, Defence developed a policy – Defence Instructions (General) PERS 05-42 Employer Support Payment Scheme – claims for service commenced after 31 August 2005 (DI(G) PERS 05-42). Relevant clauses of the Defence Instruction relating to the ESP scheme are reproduced below. The Instruction is authorised by section 9A of the Defence Act 1903 (Cth).
Defence Act 1903 (Cth)
9A Administration of Defence Force
(1) Subject to section 8, the Secretary and the Chief of the Defence Force shall jointly have the administration of the Defence Force except with respect to:
(a) matters falling within the command of the Defence Force by the Chief of the Defence Force or the command of an arm of the Defence Force by the service chief of that arm of the Defence Force; or
(b) any other matter specified by the Minister.
(2) Instructions issued by or with the authority of the Secretary and the Chief of the Defence Force in pursuance of the powers vested in them jointly by virtue of subsection (1) shall be known as Defence Instructions (General).
58B Minister may make determinations
(1) The Minister may, by instrument in writing, make determinations, not inconsistent with this Act, the Naval Defence Act 1910 or the Air Force Act 1923 , providing for and in relation to: …
(ga) payments, by way of compensation, incentives or other benefits, to:
(i) members of the Reserves; or
(ii) their dependants; or
(iii) their employers, business or professional partners or other associates;
or
(iv) other persons;
in relation to the availability of the members for defence service, or for losses incurred or inconvenience suffered because of the members' absence on defence service (including losses incurred or inconvenience suffered because of the operation of the Defence Reserve Service (Protection) Act 2001); and
(h) the meanings to be attributed to words and expressions used in existing determinations and future determinations made under this section, and the circumstances in which those meanings are to apply.
(1AA) Expressions used in paragraph (1)(ga) that are defined in the Defence Reserve Service (Protection) Act 2001 have the same meaning as in that Act.
Defence (Employer Support Payments) Determination 2005 (Cth)
3 Definitions
(1) In this Determination:
absent on defence service, in relation to a member, means that the member is:
(a)travelling, by the most direct and efficient means, to or from his or her residence to or from the place at which he or she is required to report for defence service; or
(b) rendering defence service.
Act means the Defence Act 1903. …
continuous defence service means a period of defence service of 5 or more continuous days (whether or not those days include 1 or more public holidays in the place in which the defence service is being undertaken), and includes time spent travelling, by the most direct and efficient means, to and from the place of continuous defence service. …
defence service, in relation to a member:
(a) means service (including training) in a part of the Reserves; and
(b) includes voluntary unpaid attendance or voluntary unpaid service only if the attendance or service has been authorised in writing, before it is undertaken, by:
(i) the commanding officer of the member; or
(ii) the branch head of the member. …
.
Director means the person nominated under subsection 3AA (1) to be the
Director, Australian Defence Force Reserves Employer Support Payment
Scheme.DRSP Act means the Defence Reserve Service (Protection) Act 2001. …
employer, in relation to an employee who is a member of the Reserves, includes the following:
(a) the employee’s business or professional partner;
(b) the employee’s business or professional associate;
(c) a corporation;
(d) an association;
(e) the trustee of a discretionary or unit trust;
(f) a sole trader;
(g) a professional practice.employer support payment means a payment to an employer or
self-employed member in the circumstances mentioned in section 7, 15 or
15C.employment includes the following work arrangements:
(a) full-time and part-time work; …ESP Scheme means Australian Defence Force Reserves Employer Support
Payment Scheme.full-time work means regular paid employment for:
(a) the number of hours specified in an Australian workplace agreement, award or certified agreement as the full-time hours each week for that work; or
(b) 35 hours each week. …
member has the same meaning as in section 7 of the DRSP Act. …
military leave means leave (however described) that an employer may grant
to a member to undertake defence service, other than leave mentioned in
subparagraph 7 (4) (b) (ii).part-time work means regular paid employment for less than:
(a) the number of hours specified in an Australian workplace agreement, award or certified agreement as the full-time hours each week for that work; or
(b) 35 hours each week —
and for which a person doing the part-time work receives a proportionate amount of the pay and conditions that a full-time employee receives for doing the same work.
qualifying period has the meaning given by subsection 4 (1).
Reserves has the same meaning as in section 7 of the DRSP Act.
7 Employer support payment
(1) This section applies to:
(a) an employer of a member who has been absent on defence service while employed by the employer; and
(b) a self-employed member who has been absent on defence service while self-employed. …
[The remaining part of this section defines the periods for which payments under the ESP scheme are to be granted.]
The methods of calculation of the amount of employer support payment are set out in section 12 for full-time work and section 13 for part-time work.
DI(G) PERS 05-42 Employer Support Payment Scheme – claims for service commenced after 31 August 2005
15. The ESP is payable to employers of Reservists in full-time employment. In some situations the ESP is payable to employers of Reservists in part-time employment. However, the ESP is NOT PAYABLE to employers of Reservists who are CASUAL employees unless they work on a regular and reliable basis. The following categories of employment are used in this instruction:
a Full-time employment. Full-time employment is where an employee normally works the agreed or award hours for full-time employment in their occupation and receives pay for any part of the period. If agreed or award hours do not apply, employees are regarded as full-time if they ordinarily work a minimum of 35 hours per week on a full-time basis. Employees who satisfy the requirement are to be regarded as full-time whether or not they have permanent tenure of status, are employed for a fixed or unlimited period or are terminable by their employer with or without a period of notice. The ESP is payable to employers of full-time employees.
b Part-time employment. Part-time employment is employment on a regular basis where the employee works less than full-time ordinary hours (normally a minimum of 35 hours per week). It is also where the employee receives, on a pro rata basis, equivalent pay and conditions to those specified in an award or awards for full-time employees who do the same kind of work on a full-time basis. Employees who satisfy these requirements are t o be regarded as part-time whether or not they have permanent tenure or status, are employed for a fixed or unlimited period or are terminable by their employer with or without a period of notice. Unless the Reservist is also in full-time employment, the ESP is payable to employers of part-time employees on a pro rata basis. …
ELIGIBILITY
46. An employer is eligible for the payment of the ESP when the employer and the Reservist have met all of the criteria relevant to their employment situation:
a.The Reservist is a bona fide employee of the employer.
b.The employer and the Reservist have completed a qualifying period of two weeks of continuous Defence service followed by a subsequent period of continuous Defence service. Each period of continuous Defence service must be of five consecutive days’ duration or longer and each period is considered discretely.
c.The employer has released the employee for Reserve service on military leave or leave without pay. When an employee has been released for Defence service, the ESP is paid regardless of whether or not the employer continues to pay their employee during the member’s absence. …
Background
6. Following his discharge from the RAAF, Mr George was employed by a company, Accent Services Australia Pty Ltd (Accent/company), which provided migration agency services. The company, which was run by Ms Delevoy, was set up on 1 February 2003. Ms Delevoy is the Director of the company and, since 10 December 2007, the sole shareholder. Between 10 January 2006 and 9 December 2007, Ms Delevoy and Mr George each had ten shares in the company as Trustees for The George Family Trust. However, on 10 December 2007, Mr George relinquished them.
7. On 4 August 2006, Ms Delevoy signed a contract with Mr George to begin work as an ‘information technology and communication developer’ for the company. Clause 3 of the contract stated:
You will be employed as a full-time permanent employee, for a minimum of 37.5 hours of work per week. You will be entitled to a meal break and morning/afternoon break to the total amount of one hour per day. Your hours of work will be 9.00am to 5.30pm, Mondays to Thursdays, and 8.00am to 4.30pm on Fridays. In some instances, you will be required to work outside of these hours and time in lieu will be given to you in compensation.
Clause 7 of the contract provided for 4 weeks’ annual leave up to 150 hours, two weeks or 75 hours for sick and carers’ leave, and bereavement leave for up to two days. Mr George was entitled to 10 public holidays each year. In other words, the contract provided for the standard leave terms for a full-time employee.
8. The contract also provided for Mr George’s gross salary to be $30,000 per annum, with the addition of the standard superannuation contribution. Mr George was to report to ‘Ms Barbara Delevoy, Director of Accent Services Pty Ltd’. The contract also provided that the main duties of the information technology and communication developer were:
· Preparing and setting up an IT strategy for the company;
· Design of the company’s websites;
· Updating the company’s websites;
·Assisting with the marketing and business development planning for the company;
·Undertaking any other activity assisting with the smooth running and development of the company with a view to becoming the premier French speaking Australian migration service and a reference model in the industry.
9. On 3 August 2007, Ms Delevoy and Mr George signed an ‘Addition to contract dated 3 [sic] August 2006’, revising some terms of the original employment contract. The new clause 4 provided:
4 – Australian Defence Force Reserve Service
Accent Services Australian is committed to supporting staff that are members of the Australian Defence Force (ADF) and recognises that ADF Reserve Service [is] of National importance. Accent Services Australia also recognises that ADF Reserve Service involves a significant commitment of your time and your employment will be protected whilst conducting approved ADF Reserve work.
This addition to the contract was made prior to Ms Delevoy receiving a decision on her first application for payment under the ESP scheme.
10. The revised contract continued Mr George’s gross salary at $30,000 per annum but the amount was expressly stated to be ‘calculated taking into account the time you will spend undertaking ADF Reserve commitment.’ Clause 7 was also changed to note that the 20 days’ annual leave was to be ‘separate to the leave you will take to complete ADF Reserve work.’ An additional paragraph to clause 7 provided:
You are required to establish at the beginning of each year what your anticipated ADF Reserve commitment will be over the subsequent six to twelve months. This will provide the company with as much advance notice as possible so that steps can be taken to accommodate your expected absence. Even where specific dates are not yet known, you are expected to forecast to the best of your ability your likely Defence commitment. You will not be required to lodge any application for Defence Reserve leave and your annual salary will continue to be deposited in your account on a fortnightly basis.
11. Mr George’s employment with Accent officially commenced on 7 August 2006. He remained with the company for the next fortnight. On 18 August 2006 he commenced reserve service.
12. Immediately following his discharge from the RAAF, Squadron Leader George had become an officer in the RAAF Reserves. The Commanding Officer, Number 79 Squadron, Wing Commander O'Halloran, explained in a letter to Mr Stedman of 5 December 2008, that he expedited Mr George's application to be a member of the Reserves because of a staffing shortage in Number 79 Squadron.
13. Number 79 Squadron is the only squadron training aircrew for F/A-18 and F1-11 jets, and shortly, the Super Hornet. The squadron is responsible for providing instructions for students in the introductory fighter jet course. Since Mr George was the only member of the squadron qualified to perform and instruct in all the roles (training and operational) of the squadron, his skills were in demand. Wing Commander O'Halloran had deployed Mr George for between 130 and 150 days a year since August 2006, which is in excess of the minimum of 90 days a year required of members of the Reserves. He was able to do so because Accent was one of only two employers of Reservists assigned to the Squadron who was prepared to permit an employee to spend a significant amount of time on reserve service. Indeed, Wing Commander O’Halloran noted that early in 2008 he had offered Mr George a period of ‘continuous full-time service’ as Operations Flight Commander. Mr George declined because he said would not be able to provide adequate service to Accent if he spent more time working for the Reserves.
14. A spreadsheet of Mr George’s working hours was provided by Ms Delevoy on 15 September 2009 and it lists his employment with the Reserves and with Accent between August 2006 and June 2008. Mr George’s reserve service followed a pattern of either two weeks reserve service, followed by two weeks work for Accent, or three weeks reserve service followed by one week for the company. A calculation by the representative for the Director of the ESP scheme, which the Tribunal accepts accurately reflects the position if the calculations are made on a day-by-day basis for a five-day working week, shows Mr George’s reserve service averaged 61 per cent of his employment time, leaving 39 per cent of his working days for his employment by Accent.
15. There is ample evidence that Mr George’s salary was set at a level commensurate with the amount of his Defence reserve service, even apart from the statement in the revised contract of employment. For example, an email from Ms Delevoy to the Assistant Director of the ESP scheme on 8 August 2007 stated: ‘I offered him a low annual wage to compensate for frequent leave periods from my company to undertake Reserve duty.’ Another email from Ms Delevoy to Mr Stedman of 7 November 2007 noted: ‘[Squadron Leader George’s] wage with Accent Migration is far lower than … he would normally command for full time work as it was understood that he would continue to provide quite a bit of service to the RAAF’.
16. Pay details for Mr George indicate that between the period 7 August 2006 – 21 November 2006 he was paid $7,452.32 by Accent and that the pay slips were the same each fortnight even though he may have been undertaking reserve service during some fortnights. If repeated for the remaining three quarters of that year, the figure would have amounted roughly to his annual salary of $30,000 per annum.
17. Ms Delevoy first submitted an application for an ESP payment for the period 18 August 2006 to 23 November 2007. In December 2007, the claim was assessed on the basis that Mr George was working part-time, not full-time. Ms Delevoy sought review by the AAT of that decision but then withdrew the application. On 11 June 2008, she lodged a further application for an ESP payment for the period 26 November 2007 to 13 June 2008. It is that claim, as reviewed, which is before the Tribunal.
18. On 6 December 2007, Mr George replied to Mr Stedman’s request for further information as to whether his employment with the company was full-time or part-time. That request was based on an opinion obtained by Mr Stedman suggesting Mr George’s employment was only part-time. Mr George strongly disagreed with that opinion. He referred to the contract, which noted he was employed full-time, explained that his starting salary was low on the ground of his inexperience, and said that part of the misunderstanding was that the title for his position was somewhat ‘grandiose’ for a company with three computers, a website and a printer. He pointed out that he performed basic clerical work given the limited ability of the company to employ staff for such work, as well as providing IT support. A more suitable title for his position, he suggested, might be ‘computing support technician / Admin’, a position with a market salary of $43,000 per annum for someone with 3 years’ experience. Mr George also pointed out that his salary was increased from 2 January 2008 to $40,500.00 per annum.
Issues
19. The following issues were identified:
- Is Mr George a full-time or a part-time employee of Accent Services Australia Pty Ltd for the purposes of the Determination?
- Subject to the answer to question 1, at what rate is Employer Support Payment payable to Accent Services Australia Pty Ltd?
Consideration
Is Squadron Leader George a full-time or a part-time employee of Accent Services Australia Pty Ltd for the purposes of the Determination – (Issue 1)?
20. The decision of the ESP scheme Director Mr Stedman on 18 December 2007 was that he did not accept that Mr George’s employment was full time ‘based on the amount of time FLTLT George was available to perform work for the business and the heavy volume of Reserve service undertaken by him’.
21. The Determination defines full-time work and part-time work in section 3:
full-time work means regular paid employment for:
(a) the number of hours specified in an Australian workplace agreement, award or certified agreement as the full-time hours each week for that work; or
(b)35 hours each week. …
part-time work means regular paid employment for less than:
(a) the number of hours specified in an Australian workplace agreement, award or certified agreement as the full-time hours each week for that work; or
(b) 35 hours each week —
and for which a person doing the part-time work receives a proportionate amount of the pay and conditions that a full-time employee receives for doing the same work.
22. The Defence Instruction (General) PERS 05-42 – Employer Support Payment Scheme – claims for service commenced after 31 August 2005 provides:
a. Full-time employment. Full-time employment is where an employee normally works the agreed or award hours for full-time employment in their occupation and receives pay for any part of the period. If agreed or award hours do not apply, employees are regarded as full-time if they ordinarily work a minimum of 35 hours per week on a full-time basis. Employees who satisfy the requirement are to be regarded as full-time whether or not they have permanent tenure or status, are employed for a fixed or unlimited period or are terminable by their employer with or without a period of notice. The ESP is payable to employers of full-time employees.
b. Part-time employment. Part-time employment is employment on a regular basis where the employee works less than full-time ordinary hours (normally a minimum of 35 hours per week). It is also where the employee receives, on a pro rata basis, equivalent pay and conditions to those specified in an award or awards for full-time employees who do the same kind of work on a full-time basis. Employees who satisfy these requirements are to be regarded as part-time whether or not they have permanent tenure or status, are employed for a fixed or unlimited period or are terminable by their employer with or without a period of notice. Unless the Reservist is also in full-time employment, the ESP is payable to employers of part-time employees on a pro rata basis.
23. The Determination has legislative status since it is authorised by section 58B(ga) of the Defence Act 1903 (Cth). The legislative status of a Defence Instruction is more problematic. The Instruction is authorised under section 9A of the Defence Act 1903 (Cth). However, its nature depends on its content. As Finn J pointed out at first instance in Bromet v Oddie,[1] Defence Instructions ‘may be expressed as doctrinal, policy, strategic, operational, administrative, implementation or procedural statements’. The Full Court, by majority, endorsed this observation of Finn J and said:
Whether or not a service member has failed to comply with a Defence Instruction applicable to him or her may depend upon the way in which the instruction is framed. If it is framed as a statement of doctrine or policy, or as guidance or information, it may be incapable of application so as to prescribe or proscribe particular conduct, particularly if it deals with outcomes rather than methods. In some cases, members may only be obliged to take into account such an instruction. …In the course of argument counsel for the appellant suggested that the Squadron commander may have committed an offence by not complying with one or other Defence Instructions. I doubt the correctness of that assertion.[2]
[1] Bromet v Oddie (2002) 78 ALD 320.
[2] Bromet v Oddie [2003] FCAFC 213 at [94].
24. The Defence Instruction relating to the ESP scheme stated in clause 4: ‘The aim of this Instruction is to detail the policy and procedures applicable to the operation of ESP Scheme.’ In that regard it is akin to an Explanatory Memorandum or internal policy document. It is not expressed in prescriptive form and hence is not legislative in nature. Nonetheless, it is intended to be relied on by those seeking the benefits of the scheme and can be taken into account.
Determination
25. The Determination lists only three factors for distinguishing between full-time and part-time work: hours per week of work, conditions of employment, and amount of pay. Applying the descriptions of full-time work and part-time work, the contract of employment states Mr George is employed ‘as a full-time permanent employee, for a minimum of 37.5 hours of work each week.’ Although Mr George was not covered by an Australian workplace agreement, award or certified agreement he was employed under an individual contract of employment which required him to work standard hours, that is, 37.5 hours per week. In addition, the conditions of employment included usual leave provisions for a full-time employee. His leave and other conditions were not pro rata. On these two criteria, the contract is indicative of Mr George being a full-time employee.
26. The issue is whether the Tribunal is entitled to take into account the fact that Mr George’s starting salary for the nominated position was below market rates. Ms Delevoy, in her letter to her solicitor dated 15 September 2009 and in her submission at the hearing, denied that salary was a relevant consideration. The Director, in the Statement of Facts, Issues and Contentions, indicated: ‘Salary on its own is not a powerful indicium of the true nature of the employment relationship. Subject to the national employment standard … the parties to a contract of employment may set remuneration for an employer as they please.’[3]
[3] Respondent’s Statement of Facts, Issues and Contentions, 10.
27. The terms of the Determination in its definition of ‘part-time work’, however, do make salary an indicator of whether employment is full-time or part–time. The Determination under the definition of ‘part-time work’ refers to receipt of ‘a proportionate amount of the pay’ of a full-time employee. In addition, the Tribunal notes that the scheme principally concerns payments intended to be salary-related to compensate an employer for having to employ someone to substitute for the absence of an employee on defence reserve service. Accordingly, the Tribunal is authorised to consider the level of salary offered to Mr George as the third indicator in the contract of whether he is a full-time or part-time employee.
28. Evidence was provided that the salary for an ‘information technology and communication developer’ was in the range of $55,000 to $75,000 per annum. Mr George was only paid $30,000, increased to $40,500 per annum from 2 January 2008. Ms Delevoy explained that the level of salary took into account Mr George’s time on reserve service, as well as his initial lack of experience and her budget as a small business. Mr George confirmed his lack of experience in his letter of 6 December 2007 saying ‘this is my FIRST job that involves anything other than flying aircraft’ and ‘[m]y role is presently equivalent to that of a trainee and my pay rate reflects that.’ He also indicated that the title for his position should have been described as ‘Computing Support Technician/Admin’, a role which then commanded an average salary of $43,000 per annum for someone with three years’ experience. As Mr George also said in evidence, his title in the contract was somewhat ‘grandiose’ for a company with three computers, a website and a printer.
29. The Tribunal accepts that the description ‘Information technology and communication developer’ was an overstatement of the role and that the higher salaries identified for such a position were not appropriate for the actual functions Mr George performed in the small business. Ms Delevoy, in correspondence dated 15 September 2009, pointed out that figures from the Australian Bureau of Statistics indicated that the annual salary for an office support worker was $41,288. The Tribunal accepts that Ms Delevoy genuinely researched the salary for a clerical support position and that the salary of $40,500 offered Mr George on 2 January 2008 is at market rate for an employee performing clerical and IT support functions.
30. The Tribunal has greater difficulty accepting that Mr George’s starting salary of only $30,000 reflected market rates for a full-time employee, even given Mr George’s need to develop his skills, and the size of the business. Since the business had been going since 2003 and was presumably reasonably well-established by mid-2006, the Tribunal finds that the initial salary offered to Mr George for the period August 2006 to 1 January 2008 was so proportionately low that it could be seen as the salary of a part-time employee. From 2 January 2008 until 13 June 2008, however, Mr George’s salary was set at a rate commensurate with the full-time rates of someone filling his role in the company.
31. These findings mean that according to the terms of the contract, Mr George’s contract met all three indicators in the Determination for full-time employment from 2 January 2008 until 13 June 2008. However, between 3 August 2007 and 1 January 2008, the salary element in his contract indicated he was not a full-time employee. However, it is necessary to examine other factors before reaching a final conclusion. The contract and its terms are not the sole determinant of an employee’s full-time or part-time status.
32. Ms Delevoy, in a submission dated 29 January 2010 tendered at the hearing, referred to the principle in contract law that the meaning of a contract is to be assessed objectively. That principle is undoubtedly a starting point. Nonetheless, the courts have consistently reserved the right to examine the substance and effect of a contract, even if that contradicts the text of the document. For example, as McTiernan J said in Radaich v Smith,[4] ‘the parties cannot by the mere words of their contact turn it into something else. Their relationship is determined by the law and not by the label they chose to put on it.’ As Windeyer J noted of the deed in that case, the terms must ‘be read in relation to the relevant surrounding circumstances’.[5] The Tribunal must turn its mind to these other circumstances.
Defence Instruction
[4] Radaich v Smith (1959) 101 CLR 209 at 214, citing Denning LJ in Facchini v Bryson (1952) 1 TLR 1386 at 1389, 1390. McTiernan J’s findings were agreed with by Dixon CJ, Menzies, Taylor and Windeyer JJ.
[5] Id at 223. See also Innes v University of Adelaide (No 2) [2007] FMCA 1988 (per Raphael FM).
33. The surrounding circumstances include the terms of the Defence Instruction. The Instruction states: ‘Full-time employment is where an employee normally works the agreed or award hours for full-time employment in their occupation and receives pay for any part of the period.’[6] Mr George had agreed to working 37.5 hours a week, a rate commensurate with full-time employment. The issue is whether Mr George, in his work for Accent, ‘normally works the agreed … hours for full-time employment in [his] occupation.’
[6] Defence Instructions (General) PERS 05-42 Employer Support Payment Scheme – Claims for Service Commenced after 31 August 2005, cl 15.
34. As a preliminary issue, the Tribunal notes that Mr George had not established a ‘normal’ or usual pattern of working for Accent prior to commencing his reserve service. That was because his skills as an RAAF trainer were in such demand that, in effect, he started work on reserve service immediately after his discharge. Ms Delevoy’s application should not be disadvantaged by this aspect of his employment on reserve service.
35. The second edition of the Macquarie Dictionary states that ‘normally’ means ‘as a rule; regularly; according to rule, general custom, etc.’ Mr George had a pattern of working week-by-week. That pattern was to work one or two weeks per month for Accent, with the remainder of the month spent rendering reserve service. He was, in effect, working ‘regularly’, as a matter of ‘custom’, or ‘normally’, one or two weeks a month, on a full-time basis, for Accent.
36. It is legitimate to take account of this monthly pattern since in both the Determination and the Defence Instruction, full-time or part-time work is measured according to hours per week. The Determination refers in its definition of ‘full-time work’ in section 3 to ‘number of hours specified … as the full-time hours each week for that work’ and ‘part-time work’ as ‘less than the number of hours specified … as the full-time hours each week for that work’ (emphasis added).
37. Clause 46 of the Defence Instructions (General) also includes in its eligibility criteria the fact that the Reservist has ‘completed a qualifying period of two weeks of continuous Defence service’ and ‘[e]ach period of continuous Defence service must be of five consecutive days’ duration or longer’ (emphasis added). The reference to ’two weeks’ and to ‘5 days’ continuous service’ – five days being the normal working week – reinforces the emphasis on hours of work completed in the week as the indicator of full or part-time status.
38. The Defence Instruction (General) says of ‘Full-time employment’ that it is ‘the agreed … hours for full-time employment in [the employee’s] occupation’ or ‘35 hours per week on a full-time basis’, and ‘Part-time employment’ as ‘less than full-time ordinary hours (normally a minimum of 35 hours per week)’ (emphasis added).
39. In other words, the working week is made the measure of employment status. If that conclusion is accepted, Mr George’s normal pattern of work should be assessed on the basis of the number of weeks he worked with Accent as compared with the number of weeks spent on reserve service, rather than the number of days working for each employer.
40. The Director had argued that Mr George’s employment with Accent was only part-time, based on the time he was available to work for Accent as compared with ‘the heavy volume of Reserve service’ he regularly undertook. The figures underpinning that assessment were based on the number of days in the period in question Mr George worked for Accent as compared with those on reserve service. The proportion was 39 per cent for Accent as compared with 61 per cent in the Reserves.
41. If the Tribunal’s view of the provisions in the Determination as supported by the Defence Instruction is correct and the measure should be working weeks, not working days, the proportion is markedly different. In the period 26 November 2007 to 13 June 2008, it is estimated Mr George worked 13 full weeks for Accent as compared with only 16 full weeks (Monday to Friday) for the Reserves, that is, 45 per cent of his time was spent with Accent as compared with 55 per cent of his time on reserve service. This period includes three weeks during which Mr George worked only four of the five working days with the reserve service or the company. Of those, three weeks, Mr George spent two weeks working for four out of five days for the reserve service and the remaining day at the company, and one week working for four out of five days for the company and one day with the reserve service. This pattern does not indicate a predominant or ‘heavy’ volume of Reserve service. However, before reaching a conclusion, other contextual indicators also need to be explored.
42. The Tribunal notes that Mr George described his employment status in his tax file number declaration of 7 August 2006 as a ‘full-time employee’.
43. There are, however, indications that Mr George’s position with the company may not, in reality, have been a full-time position. Ms Delevoy noted in her email to Mr Stedman of 7 November 2007 that ‘His wage with Accent Migration is far lower that [sic] what he would normally command for full time work as it was understood that he would continue to provide quite a bit of service to the RAAF’. This statement suggests that the $30,000 per annum which was Mr George’s starting salary was seen from the beginning as reflective of the fact that he would only be performing work for the company for part of the time. The result is that the salary chosen does not reflect the fact that his position was ostensibly full-time.
44. Further, although Ms Delevoy said in her letter of application for an ESP payment for the period 21 January 2008 to 13 June 2008 that during Mr George’s absences she had to ‘outsource some of the company’s work’, she affirmed this was translation work, which was not work undertaken by Mr George. In further evidence, Ms Delevoy also said she had not taken on extra staff to substitute for the work Mr George would have been doing in his absences. Rather, she said that she and her only other employee, a trainee migration agent, had simply worked longer hours, on average about 2 hours a day each, and that she had also arranged to take on less demanding business visa applications during these times. She said she did contemplate hiring another person but her resources did not permit her to do so. In addition, no evidence was provided that Mr George worked overtime for Accent to complete tasks he needed to do for the company, extra effort the Tribunal assumes would have been required if he was filling a full-time position.
45. The Tribunal finds that even if Ms Delevoy and her trainee migration agent between them undertook an extra 4 hours a day to cover for Mr George’s absences and took on less demanding work during those periods, the extra workload they undertook did not amount to the standard working day of 7 hours.
46. The doubt about the amount of work which Mr George could have provided to the company, that is, whether it was in fact necessary for him to take a full-time or a part-time position is indicated by another facet of the business arrangements for Accent. Earlier, in November 2007, Ms Delevoy also said in her email to Mr Stedman of 7 November 2007 that ‘the business has taken a new larger office in order to better accommodate all my staff and with it significantly increased costs in rent and infrastructure.’ She also noted that her business plan ‘included ESP support in order to expand into new premises.’ In her supplementary evidence, Ms George noted that apart from Mr George, she and her trainee migration agent were the only staff. In other words, the move of premises was not to take account of an increased number of staff. Rather the ESP payments were apparently being used to pay for upgraded premises for the company rather than substitute staff.
47. Apart from the definitions in the Determination and the Defence Instruction, there is little guidance about the indicia for full-time or part-time work. The Australian Bureau of Statistics’ Labour Statistics: Concepts, Sources and Methods paper[7] says:
4.27 In the absence of any internationally accepted definition of part-time work, two approaches have been taken in various countries. The first is objective and is based on the number of hours worked. The second is more subjective and involves classifying workers as full-time or part-time based on the self-assessment of the person concerned irrespective of the number of hours actually worked. The former approach is relatively simple to apply without requiring the respondent to know details about their contractual arrangements or hours worked, but provides no flexibility to accommodate variations in ‘normal’ hours of work in different industries and occupations. The self-assessment approach does accommodate such differences but is subjective, and its accuracy is dependent on respondents’ knowledge of whether they work full-time or part-time in their activity. Both approaches are used in ABS surveys. …
ABS HOUSEHOLD SURVEYS
4.29 The approach used in the Labour Force Survey and adopted in many other ABS household surveys is to define full-time and part-time status in terms of hours worked. The definition used designates full-time workers as persons who (a) usually work 35 hours or more per week in all jobs, or (b) although usually working less than 35 hours a week, actually worked 35 hours or more during the reference week. Part-time workers are those who usually work less than 35 hours per week, and either did so during the reference week, or were not at work in the reference week. Under this definition, persons with more than one job are defined as full-time if they work more than 35 hours across all of their jobs.
[7] Australian Bureau of Statistics, Labour Statistics: Concepts, Sources and Methods (April 2007), Chapter 4.
48. Applying these two approaches: the first, based on the hours actually worked by Mr George for Accent would result in a finding that as Mr George only worked for about 45 per cent of a working week for Accent, he was a part-time employee. The second, given his tax declaration, and his working for the company full-time when he was not on reserve service, would presumably mean Mr George would affirm that he was a full-time employee. The result does not greatly assist the Tribunal.
Summary for Issue 1
49. The findings of the Tribunal in cases such as these turn largely on individual questions of fact and require an examination of a range of factors. The Tribunal notes that had it considered only the terms of Mr George’s contract as the indicator of whether his position was full-time or part-time, it would have found, given the level of salary he was offered, that Mr George’s work with Accent was part-time for the period 4 August 2006 to 1 January 2008 and full-time for 2 January 2008 to 13 June 2008.
50. However, taking into account other factors including the percentage of Mr George’s time spent with the company as compared with his time on reserve service, the absence of the need for the company to take on another employee full-time to cover for Mr George’s absences, the fact that Ms Delevoy and her assistant only worked a total of 4 hours extra a day when Mr George was absent and Mr George did not work extra hours when he was working for Accent, and that the move of premises was not to accommodate extra staff, the Tribunal finds that throughout the period under review Mr George’s position with the company was in fact only part-time. The Tribunal, therefore, affirms this aspect of the decision under review.
At what rate is Employer Support Payment payable to Accent Services Pty Ltd – (Issue 2)?
51. The amount of employer support payment for someone working part-time with one employer is set out in section 13 of the Determination. The calculation is based on a formula. That formula takes into account the Average Weekly Ordinary Time Earnings (AWOTE), using the Trend Estimates for the relevant period as published by the Australian Bureau of Statistics,[8] the number of hours worked by the employee each week, and the number of days worked by the employee. The calculations relied on by the Director are based on the calendar of days for which work was undertaken by Mr George for Accent as compared with those on reserve service.
.52. The Tribunal has relied on this calendar for the purposes of this decision and has no reason to doubt its accuracy. For that reason, the Tribunal affirms the original decision that Mr George’s employment was part-time for 13.65 hours per week.
[8] Determination s 3(1).
Conclusion
53. The Tribunal finds that for the purpose of deciding whether a member of the reserves is working full-time or part-time, a range of factors must be considered including the number of weeks the person was on reserve service as compared with the number of weeks of work for an employer or employers.
54. For a part-time employee the calculation of the amount of employer support payment is fixed according to a formula set out in the Determination. That calculation is not affected by the factors which relate to the first issue.
I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Professor RM Creyke
Senior MemberSigned: .....................................................................................
C. Kocak, AssociateDate/s of Hearing 29 January 2010
Date of Decision 24 March 2010
Solicitor for the Applicant Self Represented
Solicitor for the Respondent DLA Phillips Fox
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