Damien Lee v Australian Underground Drilling Pty Ltd

[2015] FWC 3586

[2015] FWC 3586

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Damien Lee
v
Australian Underground Drilling Pty Ltd
(U2015/1681)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 26 MAY 2015

Application for relief from unfair dismissal.

[1] Mr Damien Lee was employed by Australian Underground Drilling Pty Ltd (AUD) until his employment was terminated on 24 March 2015. AUD objected to Mr Lee’s application because it said he earned more than the high income threshold.

[2] At the hearing, I granted Ms Judith Hannah a paid agent and Mr Robert Greig a legal practitioner permission to appear.

[3] Mr Lee was employed as a supervisor. His contract of employment provided that the relevant award was the Mining Industry Award 2010 (the Award). A position description was tendered and there was no dispute that it accurately described Mr Lee’s position.

[4] The fact that Mr Lee’s contract of employment referenced the Award does not mean that Mr Lee’s employment was within the scope of the Award.

[5] Section 48(1) of the Fair Work Act 2009 (the Act) makes it clear that:

“A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity.”

[6] Coverage in the Award provides as follows:

“This industry award covers employers throughout Australia who are engaged in the mining industry in respect of work by their employees in the classification in this award and their employees engaged in the classifications listed in clause 13-Classifications and minimum wage rates, of this award to the exclusion of any other modern award.”

[7] There was no dispute that the Award does not cover supervisory employees. Mr Lee’s duties, as set out in the position description, were clearly supervisory.

[8] The question then to be determined is whether Mr Lee earned more than the high income threshold of $133,000.

[9] Mr Lee’s contract of employment provided that he earned $330 per shift plus a metre bonus. It is not contested that the metre bonus is $10 per metre. It was also not contested that Mr Lee was paid $10 per metre for every metre drilled by the employees under his supervision. The bonus was paid to employees when they were on annual leave. This amount was calculated on the average metre bonus paid over the past three pay periods. It is not disputed that if these amounts are included Mr Lee would have earned more than the high income threshold.

[10] AUD submitted that despite the use of the word bonus in the contract, Mr Lee was paid, in part, by piece rates. AUD relied upon regulation 3.05(2) to support this contention that Mr Lee was paid a piece rate.

[11] Regulation 3.05 of the Fair Work Regulations 2009 provides a formula for determining whether the high income threshold applies in relation to the dismissal of a person at a particular time.

[12] Sub-regulation (2) provides as follows:

(2) Sub-regulations (3), (4) and (5) apply if part or all of the person’s income at the time of the dismissal is paid as piece rates that are:

(a) set by reference to a quantifiable output or task; and

(b) not paid as a rate set by reference to a period of time worked.

[13] Sub-regulations (3), (4) and (5) then set out the method of calculating the amount to be included.

[14] Mr Lee is not paid an amount set by reference to any quantifiable output produced by him. He does not drill. He supervises drilling. Support for a finding that this is not a piece rate is evidenced by the fact that Mr Lee is paid the bonus when he is not performing work at all as the bonus is payable on annual leave.

[15] Further evidence that Mr Lee is not paid piece rates is found in his contract of employment.

[16] Mr Lee was not offered and nor did he agree to be paid piece rates. He entered into a contract of employment which paid him a bonus based on the quantity of work performed by those he supervised. I therefore conclude that Mr Lee was not paid piece rates.

[17] Section 332 of the Act defines employee earnings and excludes certain things. Where relevant, it reads:

"332 Earnings

(1) An employee's earnings include:

(a) the employee’s wages; and
....
(2) However, an employee's earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;
... ...

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed)."

[18] I endorse the views expressed by Commissioner Cloghan in Foster v CBI Constructions Pty Ltd 1 where he said:

“Clearly, the legislative context to the meaning of earnings is that amounts which cannot be pre-determined in advance are excluded. For example, bonuses which may be dependent on the performance of the individual or group of employees are not included because of its indeterminate nature.”

[19] It is clear that the metre bonus earned by Mr Lee cannot be determined in advance and therefore must be excluded from the calculation of Mr Lee’s earnings. Mr Lee was paid $330 per shift. Even if he worked 365 shifts in a year his earnings without the metre bonus would not exceed the high income threshold.

[20]
Consequently the objection made by AUD is dismissed and Mr Lee’s unfair dismissal application will be referred to a member for determination.

DEPUTY PRESIDENT

Appearances:

J. Hannah for the Applicant.

R. Greig for the Respondent.

Hearing details:

2015.

Melbourne, Sydney and Perth, by video link:

22 May.

 1   [2013] FWC 9536 at [29]

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