Darling v Bechtel Australia Pty Ltd

[2015] FWC 1242

[2015] FWC 1242

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Kerry Darling
v
Bechtel Australia Pty Limited
(U2014/12416)

VICE PRESIDENT HATCHER SYDNEY, 19 MARCH 2015

Application for relief from unfair dismissal.

Introduction

[1] Mr Kerry Darling has applied under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy in relation to his former employment with Bechtel Australia Pty Limited (Bechtel). The matter was listed for jurisdiction conference/hearing in Brisbane on 15 January 2015; however the hearing was adjourned due to Mr Darling’s ill-health. Bechtel made a request in those circumstances that the jurisdictional objection be determined on the papers, and with Mr Darling’s consent to this course I will proceed to determine the matter on the materials before me.

[2] Mr Darling was employed as a Security Officer on Curtis Island at Bechtel’s Queensland Curtis LNG Project. Mr Darling commenced employment with Bechtel on 18 February 2013 as a fly-in fly-out Site Access Control Officer. It was not in dispute that Mr Darling’s employment with Bechtel was terminated on 27 August 2014.

[3] Bechtel contends that Mr Darling’s application should be dismissed on the basis that he was not a person protected from unfair dismissal because his annual rate of earnings exceeded the high income threshold. Mr Darling contends that he was protected from unfair dismissal as his income did not exceed the high income threshold. He contends in the alternative that his employment was covered by a modern award. The high income threshold is currently $133,000.

Legislation

[4] Section 396(b) of the Act requires that the question of whether a person is protected from unfair dismissal is to be decided before the merits of the person’s application is considered. Section 382 provides for when a person is protected from unfair dismissal as follows:

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[5] As earlier noted, the high income threshold for the purpose of s.382(b)(iii) has been $133,000 since 1 July 2014.

[6] The term “earnings” is defined in s.332 of the Act as follows:

332 Earnings

(1) An employee’s earnings include:

(a) the employee’s wages; and

(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) However, an employee’s earnings do not include the following:

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

(b) reimbursements;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

(d) amounts prescribed by the regulations.

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

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.

Questions to be determined

[7] The primary question to be determined is whether Mr Darling’s annual rate of earnings exceeded the high income threshold. The annual rate of earnings is to be assessed as at the time of dismissal. It is not an assessment of the actual earnings in the 12 months immediately prior to dismissal. 1

[8] In the event that I find that Mr Darling’s earnings exceeded the high income threshold, it will then be necessary to determine the question of whether a modern award applied in relation to Mr Darling’s employment with Bechtel (noting that neither party contended that an enterprise agreement applied). The modern award that Mr Darling contended applied was the Security Services Industry Award 2010 2 (SSI Award).

Did Mr Darling’s earnings exceed the high income threshold?

Evidence and submissions

[9] Bechtel’s Offer of Employment set out the terms and conditions of Mr Darling’s appointment as follows:

“Position:	Security Officer (QCLNG)
Employment Status:	Full Time
Anticipated Start Date:	18th February 2013
Work Location:	Curtis Is., QLD
Grade:	23
Base Annual Salary:	$76,140AUD plus superannuation as required under the Superannuation Guarantee (Administration) Act 1992
Base Work Week:	40 Hours
Extended Work Week*:	58 Hours
Supervisor:	Andrew James Bratcher
Probation Period:	6 months
Non Local Assignment Entitlements:	Recital to be forwarded by Bechtel Global Mobility Center

* These Assignment Conditions are subject to change and are project specific.”

[10] Mr Darling signed Bechtel’s Offer of Employment and a further document headed “Recital of Assignment Status, Compensation and Relocation Conditions” on 6 February 2013. Clause 2 of the Recital of Assignment Status outlined the Compensation and Work Schedule applicable to Mr Darling as follows:

“(a) Base Work Week = 40 hours / wk
(b) Extended Work Week = 58 hours
(c) ACI = 10% of earned Base Salary
(d) APP = N/A
(e) Night Shift Allowance = 15%
(f) Overtime (pre-approved) = Hours of Work policy applies
(g) Project Allowance = 5%
(h) Averaging of hours = Applies (see Remarks)”

[11] The “Remarks” referred to in Clause 2(h) provided “Averaging of hours: Base work week is an average of 40 hours per week worked over a 5 week cycle - 4 weeks on 1 week off...”.

[12] It was not in contest that on 31 March 2014 the “base annual salary” referred to in the Offer of Employment was increased to $78,048.

[13] Bechtel submitted that the calculation of Mr Darling’s annual rate of earnings involved a consideration of his base annual salary, base work week, rostered hours and rotations. The witness statement of Sarah Therese Lyons dated 3 November 2014 provided some background to Mr Darling’s roster and set out Bechtel’s approach to determining Mr Darling’s annual rate of earnings as follows:

● Mr Darling commenced work on a continuous cyclic roster of 12 hour shifts. In or around April or May 2013 the roster changed from a rotational roster to a permanent 12 hour day shift, or permanent 12 hour night shift.

● A supervisor sat down with Mr Darling and asked whether he wanted to work day shift or night shift and Mr Darling chose to work night shift which incurred a 15% allowance for each hour worked.

● Mr Darling’s roster pattern was 13 x 12 hour shifts consecutively, followed by one day off, then another 13 x 12 hour shifts consecutively, followed by 8 days off. There was therefore a total of 26 shifts over each 5 week rotation. A copy of Mr Darling’s roster from 12 May 2014 to 3 August 2014 was attached to the witness statement.

● There were approximately 10.4 cycles of 5 week rotations over each year. As each rotation comprised 26 shifts and each shift was 12 hours long, the total hours worked in each 5 week rotation was 312 (being, 26 shifts x 12 hours). Assuming that an entire year is worked and no annual leave was taken, 3244.80 hours were worked annually.

● Mr Darling’s annual salary was $78,048 or $37.52 per hour (based on his 40 hour base work week). Mr Darling would earn $121,744.89 per year (3244.80 hours x $37.52) if he worked the entire year and took no annual leave.

● The 15% night shift allowance is calculated on hours worked. If Mr Darling worked 3244.80 hours his 15% night shift allowance would amount to $18,261.73 bringing the annual amount of earnings to $140,006.62.

● Mr Darling was also entitled to a 5% project allowance calculated on base salary only. Mr Darling’s project allowance equates to $3,902.40 (5% of $78,048), bringing the annual amount of earnings to $143,909.02.

● Mr Darling earned $136,579 in the 2013-2014 financial year which was made up of Mr Darling’s salary, night shift allowance, project allowance and a $1400 bonus.

[14] In a statement provided to the Commission on 9 October 2014 Mr Darling outlined his assessment of his annual earnings. Mr Darling submitted that Bechtel’s letter of offer indicated an extended work week of 58 hours per week (or 116 hours per fortnight), that this was the only document he agreed to and signed, that he had not agreed to work 156 hours per fortnight and that he had “voiced [his] disapproval to no avail”. On Mr Darling’s calculations his “total annual salary with agreeable overtime” was $111,138.50.

[15] Mr Darling also provided a spreadsheet of his gross payments from 28 August 2013 to 27 August 2014 which totalled $135,517. Mr Darling submitted that this figure did not take into account sick leave and annual leave entitlements which meant his “true annual salary” was $6,812 less than his gross salary.

Consideration

[16] Mr Darling was stood down from duties on 22 August 2014 while Bechtel investigated an incident which occurred on 9 August 2014. Arising from that investigation, Mr Darling was dismissed on 27 August 2014. It is clear that at the time of these events, Mr Darling’s work duties required him to work a roster pattern which, over a five-week cycle, involved 13 x 12 hour shifts consecutively, followed by one day off, then another 13 x 12 hour shifts consecutively, followed by 8 days off. The material attached to Mr Darling’s unfair dismissal remedy application confirms that this was the case. There likewise does not appear to be any dispute that at this time Mr Darling’s base annual salary for a 40 hour working week was $78,048, which produced an hourly rate of $37.52. It was likewise not in dispute that when Mr Darling worked a night shift, he was entitled to a 15% shift loading, and that he received a project allowance of 5% on his base annual salary. Due to the established nature of the roster, these were earnings which could be determined in advance 3.

[17] I accept Bechtel’s submission that this working pattern would, extended over a year, produce an annual rate of earnings of $143,909 (rounded to the dollar). Even if the annualised rate is calculated on the basis that Mr Darling would have taken four weeks of annual leave, ten days of personal/carer’s leave, and ten public holidays, paid at the base annual salary rate only, the annual rate of earnings would be $134,376. 4 I have excluded from these calculations any right to a bonus which might exist.

[18] Whether Mr Darling would have preferred to work less hours than he was required to and did, and what working pattern he might have performed if he had not been dismissed and subsequently returned to work, are beside the point. They are not relevant to ascertaining his annual rate of earnings at the date of his dismissal. I find that Mr Darling’s annual rate of earnings was above the high income threshold.

Was Mr Darling’s employment covered by a modern award?

[19] Section 382(b)(i) of the Act provides that a person is protected from unfair dismissal if the person is covered by a modern award. The issue of whether a modern award applied to his former employment was not initially addressed by Mr Darling. On 15 January 2015 I directed both parties to make further submissions in relation to the question of whether Mr Darling’s employment was covered by the SSI Award or any other modern award. As earlier stated, Mr Darling now contends that he was covered by the SSI Award.

[20] Clause 4 of the SSI Award, which sets out the coverage of that award, relevantly provides as follows:

“4. Coverage

4.1 This industry award covers employers throughout Australia in the security services industry and their employees in the classifications listed in Schedule C—Classifications to the exclusion of any other modern award.

4.2 To avoid doubt, the security services industry includes:

(a) patrolling, protecting, screening, watching or guarding any people and/or property, including cash or other valuables, by physical means (which may involve the use of patrol dogs or the possession or use of a firearm) or by electronic means;

(b) crowd, event or venue control whether through physical or electronic means;

(c) body guarding or close personal protection;

(d) the operation of a security control room or monitoring centre;

(e) loss prevention; and

(f) traffic control when it is incidental to, or associated with, the activities referred to in clauses 4.2(a), (b) or (c).

4.3 To avoid doubt, this award does not apply to an employer merely because that employer, as an incidental part of a business that is covered by another modern award, has employees who perform functions referred to in clause 4.2....”

Submissions

[21] Mr Darling contends that his employment with Bechtel was covered by the SSI Award for the following reasons: he was hired in the position of “Security Officer”, he was required to produce a Security Licence and a Maritime Security Identification Card, and the majority of his duties required him to undertake work which fell within clause 4.2 of the SSI Award, namely patrolling the site, monitoring areas with the aid of CCTV, guarding camp residents and submitting security incident reports.

[22] Bechtel submitted that Mr Darling’s employment was not covered by the SSI Award and that his employment was not covered by any other modern award. Bechtel is the Engineering, Procurement and Construction Contractor for three liquefied natural gas processing plant projects on Curtis Island. Bechtel contends that it operates in the building, engineering and construction industry, not the security services industry, and that Mr Darling was engaged to provide security services as an incidental part of Bechtel’s business. In this regard Bechtel relied upon the distinction between an industry award and an occupation award and maintained that the SSI Award does not cover “employers of employees or employees who have a security-based occupation or calling, but do not work in the security services industry”.

[23] Bechtel further submitted that its employees are covered by a number of other modern awards including the Clerks - Private Sector Award 2010 5, the Professional Employees Award 20106, the Surveying Award 20107and the Building and Construction General On-site Award 20108. Bechtel submitted that Mr Darling did not fall within any of the classifications in these modern awards.

Consideration

[24] Clause 4.1 of the SSI Award is drafted by reference to the industry of the employer rather than in occupational terms. Clause 4.2 does not define the industry referred to, namely the “security services industry”, as such, but defines a number of activities which fall within that industry. Clause 4.3 makes it clear that the mere performance of any of the functions set out in clause 4.2 by an employee is not sufficient to bring the employee within the coverage of the SSI Award if those functions are performed as an incidental part of a business that is covered by another award.

[25] Mr Darling’s work duties were undoubtedly substantially if not wholly functions of the types described in clause 4.2 of the SSI Award. However, as stated, the coverage of the SSI Award is not drawn by reference to occupations. That the SSI Award was not intended, when it was made in the course of the award modernisation process, to have occupational coverage is clear from a number of Full Bench decisions dealing with the development of the SSI Award as a modern award. The history of the development of the SSI Award in that respect in 2008-9 was discussed in the recent Full Bench decision in Security Services Industry Award 2010 9 as follows:

“[12] When issuing the exposure draft of the Award the Full Bench said: 10

‘[94] A number of parties, including in particular the main employer party, argued in favour of an occupational award for security services. We remain to be persuaded that it is appropriate to make an occupational award covering security services. We are mindful of the desirability of minimising the number of awards applying to employers and are concerned at the impact of an occupational award on a large number of employers in unrelated industries who employ a small number of security staff. The exposure draft is for an industry award.’

[13] In a subsequent decision the Full Bench said: 11

‘[289] We are still not persuaded that the award should have an occupational operation. We recognise that a number of the priority awards we have made contain classifications for security work and that a number of those classifications have wage rates lower than equivalent classifications in the award we have made for the security services industry. This disparity has existed in a number of states and territories for a long period. We note the submissions of the Minister, which other parties have supported, that where the Commission includes the same occupation in more than one industry award, it is desirable that, so far as practicable, the terms and conditions for that occupation are consistent across the relevant industry awards. We agree that this is desirable. On the other hand, we also think it undesirable to disturb established relativities within particular industries. On balance we are satisfied at this stage that the wage rates in the Security Services Industry Award 2010 (the Security industry award) and for the security classifications in other priority awards are appropriate.

[290] We will revisit the issue of whether the Security industry awardshould be given an occupational operation for employees performing jobs for which a security licence is required during Stage 4 at which time we will be in a better position to assess the nature and extent of classifications for security work across the modern award system.’

[14] In December 2009 the Full Bench said: 12

‘Coverage (Clause 4)

[17] ASIAL has consistently argued that any modern award for the security services industry should have an occupational operation. ASIAL makes the assertion that rates set in that award “will mean that private security contractors will be at a significant commercial disadvantage competing with those industries engaging security officers as direct employees.” That assertion is not supported by any analysis or evidence. We rejected ASIAL’s arguments for an occupational operation when we made the Security Services Awardand we are not persuaded on the basis of ASIAL’s present assertion that we should take a different view. However, this is a matter that can be revisited at the first review, or earlier, if a case can be made that the rates attaching to security classifications in other modern awards are being utilised in a way that is diminishing the use of security contractors.’”

[26] Therefore the fact that Mr Darling was engaged in the occupation of providing security services is not sufficient to bring his former employment within the coverage of the SSI Award. What would be necessary is for the evidence to permit the conclusion that his former employer, Bechtel, was itself in the security services industry in that its business, or one of its businesses, was to perform activities of the type described in clause 4.2.

[27] The material before me does not support that conclusion. I accept that Bechtel is a business engaged in the building, engineering and construction industry. The specific workplace at which Mr Darling was engaged was concerned with the construction of LNG processing plants on Curtis Island in Queensland. Security services were clearly required to be performed as an ancillary feature of those construction projects, but there is no material before me to support the proposition that Bechtel engages in the business of providing those services. Therefore Bechtel is not an employer within the security services industry, and Mr Darling’s employment does not fall within the coverage of the SSI Award as set out in clause 4.1. Clause 4.3 tends to confirm that conclusion, although it is not necessary for it. The discharge of security functions by Mr Darling as an employee of Bechtel occurred as an incidental part of Bechtel’s building, engineering and construction business - a business which (in Australia) is substantially covered by other modern awards, principally the Building and Construction General On-site Award 2010.

[28] It might be considered anomalous that an employee performing security functions for a security business is covered by a modern award, but an employee performing the same work for a building and construction business is not covered by a modern award. Be that as it may, I find that the SSI Award did not apply to Mr Darling’s former employment with Bechtel. It was not suggested by either party that any other modern award applied to that employment, nor can I identify any other applicable modern award.

Conclusion

[29] Mr Darling was not a person protected from unfair dismissal at the time of the termination of his employment with Bechtel. Therefore his unfair dismissal application must be dismissed. I so order.

VICE PRESIDENT

Final written submissions:

20 January 2015 - Kerry Darling.

28 January 2015 - Bechtel Australia Pty Limited.

 1   Zappia v Universal Music Australia Pty Limited t/a Universal Music Australia[2012] FWAFB 6108 at [9]

 2   MA000016

 3   See s.332(2)(a)

 4   8 weeks base salary (8 x $78,048/52 = $12,007.38) + 8.8 (44/5) roster cycles on permanent night shift (($37.52 + 15%) x 12 x 13 x 2 x 8.8 = $118,467.15) + project allowance (5% of $78,048 = $3,902.40) = $134,376.93.

 5   MA000002

 6   MA000065

 7   MA000066

 8   MA000020

 9   [2015] FWCFB 620

 10   [2008] AIRCFB 717

 11   [2008] AIRCFB 1000

 12   [2009] AIRCFB 963

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