Derek Smith v Cigarette and Gift Warehouse (Franchising) Pty Ltd T/A Free Choice Stores

[2013] FWC 3300

[2013] FWC 3300

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Derek Smith
v
Cigarette and Gift Warehouse (Franchising) Pty Ltd T/A Free Choice Stores
(U2013/7510)

COMMISSIONER SPENCER BRISBANE, 10 SEPTEMBER 2013

Application for relief from unfair dismissal - jurisdictional objection - high income threshold.

Introduction

[1] This decision relates to an application made by Mr Derek Smith (the Applicant) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy on the grounds that the termination of his employment from Cigarette and Gift Warehouse (Franchising) Pty Ltd T/A Free Choice Stores (the Respondent) was harsh, unjust or unreasonable (the substantive matter).

[2] The Respondent raised two jurisdictional objections to the substantive matter. Firstly, on the basis the Applicant’s income at the time of the dismissal was above the high-income threshold and that he was not covered by a modern award or an enterprise agreement did not apply to him; and, secondly, that the termination was a genuine redundancy. The Applicant maintained the termination was not a genuine redundancy and that he was covered by a modern award. The Respondent requested that the jurisdictional objection be determined prior to conciliation of the substantive matter.

[3] The matter was listed for a directions conference on 28 May 2013. The Applicant was self-represented and the Respondent was represented by Ms Suzanne Ozioko, its Human Resources Manager. The parties agreed to have the jurisdictional issue considered on the papers.

[4] Directions were set for the filing of submissions and evidence in relation to the jurisdictional objections. Material was filed by both parties. The Respondent sought to rely upon submissions filed on 4 June 2013. The Applicant sought to rely upon submissions filed on 11 June 2013.

[5] Following the receipt of this material from the parties the Commission was unable to make a determination in the matter. Further Directions were issued on 12 July 2013 further directing the parties to provide submissions in particular, evidence as to the Applicant’s earning (ie contract of employment or payslips etc) and further submissions as to the work undertaken by the Applicant for the Respondent.

[6] It is noted that whilst not all of the evidence and submissions are referred to, in this matter, I have considered all of such, in making the decision.

Background

[7] It is not in dispute between the parties that the Applicant commenced employment with the Respondent on 16 April 2007 and was employed by the Respondent until his termination on 27 February 2013.

[8] Section 396(b) of the Act requires the Fair Work Commission (the Commission), to decide whether the person was protected from unfair dismissal before considering the merits of the application.

[9] Section 382 of the Act outlines when a person is protected from unfair dismissal:

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.

Note: High income threshold indexed to $123,300 from 1 July 2012

[10] Whether the Applicant had completed the minimum employment period was not in contest. The high income threshold, at the date the Applicant’s employment was terminated, was $123,300.

[11] The Applicant accepted that his annual salary in or about September 2011 at $125,000 per annum. The Applicant concedes that, in terms of s.382(b)(iii) he was over the high income threshold.

[12] In relation to the first limb of the jurisdictional objection the question for determination is therefore, did a modern award cover the Applicant. Neither party has raised that an enterprise agreement applied to the Applicant.

[13] In relation to the second limb of the jurisdictional objection s.385 of the Act provides:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[14] Genuine redundancy is defined by s.389 of the Act as:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[15] The second limb of the jurisdictional objection requires the Commission to consider whether the dismissal was a case of genuine redundancy.

Respondent’s submissions and evidence

[16] The Respondent submitted that no modern award covered or enterprise agreement applied to the Applicant at the time of his dismissal. The Respondent argued that the Applicant’s annual rate of earnings exceeded $125,000 at the time of his dismissal. The rate of earnings was conceded by the Applicant

[17] The Respondent submitted, and the Applicant conceded, that the Applicant was employed as a Financial Controller until 27 February 2013.

[18] In relation to the objection regarding the alleged redundancy of the Applicant the Respondent submitted that all staff were “notified” on 4 January 2013 that the Respondent would be conducting a review of each department and that as a result the Respondent would implement a reduction in force. The Respondent submitted that staff were notified that this was because of the financial position of the company.

[19] The statement of Mr Greg Colledge, Chief Financial Officer of the Respondent, stated that on 3 January 2013 a “communication” was sent to all employees of the Respondent. A copy of this “communication” was not filed at any stage in this matter.

[20] As a result of the review mentioned in the January communication the Applicant completed an APAT report (Activity, Process, Accesses and Timing) which was used to review his position in terms of the restructure.

[21] The Respondent submitted that following this review the position of Financial Controller, held at that time by the Applicant, was no longer required and the Applicant was dismissed. The Respondent submitted that the Applicant was paid a redundancy entitlement pursuant to the National Employment Standards and his contract of employment. The contract of employment was not in evidence in these proceedings.

[22] The Respondent submitted that the tasks undertaken by the Applicant were redistributed amongst other employees of the Respondent. Mr Colledge stated that this exercise included the “downgrading” of some tasks undertaken by the Applicant to lower level employees. Mr Colledge further stated that in notifying the Applicant of his dismissal on 27 February 2013 Mr Colledge stated to the Applicant “the functions performed by [the Applicant] as Financial Controller were at one level whereas his position within the company was at a higher level”.

[23] Mr Colledge further stated that at the time of his termination the Applicant had been a “strong leader” in an ad hoc project which required the Applicant to undertake work outside of his ordinary duties.

[24] The Respondent submitted that the position of Financial Controller, held by the Applicant, was a major function within the Finance team. The Respondent submitted that the Finance Assistance continued to report to the Applicant in this role.

[25] The Respondent submitted that any work undertaken by the Applicant did not need further approval as was the case with the more junior financial staff.

[26] The Respondent submitted that in January 2012 the Applicant was offered a new employment contract as this was around the time the Respondent commenced having a HR function. The Respondent stated that it was the Applicant who chose not to keep this contract, although it is noted that the Respondent did not at any time file a copy of the contract in this matter despite being directed to do so and it being common sense to file it given the nature of their objection.

[27] As to the Applicant’s contentions regarding his work relating to commissions the Respondent stated that the Applicant, when undertaking this function, did not require authorisation as is now the case. This is evidence, in the Respondent’s submission, of the seniority of the position held by the Applicant. The Respondent in response also submitted that the Applicant drew company cheques without further approval.

[28] In relation to the commissions role the Respondent submitted that a part of this was providing monthly commission reports to major clients of the Respondent which made the Applicant responsible for “maintaining function relationship”. This is a duty which the Respondent submitted was not within the relevant clerical award.

[29] The Respondent also submitted that the Applicant was the only person with authority, at the time, to transfer funds between accounts and that he managed the daily cash flow of the Respondent.

Applicant’s submissions and evidence

[30] The Applicant, in his final submissions, conceded that he earnt above the high income threshold.

[31] The Applicant’s submitted that at the time of his dismissal he was covered by the Clerks-Private Sector Award 2010.

[32] In regards to his role, the Applicant submitted his position was that of “Financial Controller”, in which he had a purely functional role reporting to the Respondent’s Chief Financial Officer. The Applicant argued his role was a high-level clerical role.

[33] The Applicant submitted that his level of remuneration has no “bearing” on award coverage. In this regard the Applicant submitted that given the high level of functional tasks undertaken as well as his responsibilities and with many years of experience and knowledge it would be expected that the Applicant would earn above award wages.

The Applicant submitted that with the appointment of the new Chief Financial Officer, the Applicant was no longer management and no longer had staff directly reporting to him.

[34] In relation to the genuine redundancy objection the Applicant submitted that the business “may” have implemented a reduction in its workforce but that the Respondent was in a sound financial position and that the title “Financial Controller” was merely a title given to the Applicant when a new Chief Financial officer was appointed.

[35] The Applicant submitted that in late October 2012 another Chief Financial Officer was appointed, a position that the Applicant held at that time. With the introduction of the new CFO the Applicant submitted that his function changed from managerial to high-level administration. The Applicant submitted that, despite seeking one, he was not provided with a position description in relation to this new role as Financial Controller. No job description was filed in these proceedings.

[36] The Applicant submitted that he was employed to undertake “high level clerical” duties and that these duties still remain to be done by “employee/s”. The Applicant stated that he had no executive or managerial responsibilities in his position as Financial Controller.

[37] The Applicant stated that 60% of his time was spent on “commissions”. This included the following:

“Extract monthly commission reports from FreeVend (program used to capture cigarette sales data for vending machines). (FCVA)

Calculate monthly commissions to all customers around Australia for sale of cigarettes through the Company’s vending machines. (Some 2,500 – 3,000 machines).

Post commission calculations back to FreeVend to enable upload to the Company’s website.

Pay commissions either through updating ANZ Transactive online banking templates or drawing of cheques. (approximately 600 -700 EFT payments and 30 – 40 cheques)

Maintain spreadsheets, for each State by customer, of unpaid commissions and reconcile with the Company’s financial records.

Draw cheques and pay customers or their clientele for refunds as a result of malfunctioning cigarette machines. (approximately 40 – 50 per month)

Deal with any an (sic) all queries received.

Provide monthly commission report to certain major customers.”

[38] In so far as consultation requirements are concerned the Applicant’s argument hinges upon his success in his award coverage argument. If the Applicant succeeds in that argument the Applicant submitted that the “generic” letter sent in January 2013 by the Respondent regarding the review was insufficient to discharge consultation obligations under the Award.

[39] The Applicant submitted that he has never had a contract of employment and that this is further evidenced by the fact that the Respondent has not filed a copy of any contract, even after being directed to do so.

Consideration

[40] In matters such as these, where a Respondent raises a jurisdictional objection to the Applicant’s application, it is the Respondent who bears the evidentiary onus to support its objection that the Applicant was not protected from unfair dismissal. 1

[41] Each limb of the jurisdictional objection will be considered below.

Award coverage

[42] The Applicant was originally employed with the Respondent as an Accountant. Throughout his time he has progressed within the Respondent but the Applicant’s evidence is that he is not a degree qualified Accountant.

[43] It is important to identify that the calling of Accountant has traditionally been award free as acknowledged by the terms of the Miscellaneous Award 2010 which states:

“4. Coverage

4.2 The award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.”

[44] This inclusion in the modern award is an acknowledgment that the modern awards are not intended to apply to those employees who traditionally have not been covered by an award unless expressly covered.

[45] The Applicant contends that at the time of his dismissal he was covered by the Clerks - Private Sector Award 2010 (the Clerks Award).

[46] Clause 4.1 of the Clerks Award states:

“4. Coverage

4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees. However, the award does not cover:

(a) an employer bound by a modern award that contains clerical classifications; or

(b) an employee excluded from award coverage by the Act.” (emphasis added)

[47] The Applicant specifically relied on Schedule B - Classifications clause B.6 which provides:

“B.6 Level 5

B.6.1 Characteristics

Employees at this level are subject to broad guidance or direction and would report to more senior staff as required.

Such employees will typically have worked or studied in a relevant field and will have achieved a standard of relevant and/or specialist knowledge and experience sufficient to enable them to advise on a range of activities and features and contribute, as required, to the determination of objectives, within the relevant field(s) of their expertise.

They are responsible and accountable for their own work and may have delegated responsibility for the work under their control or supervision, including, scheduling workloads, resolving operations problems, monitoring the quality of work produced and counselling staff for performance and work related matters.

They would also be able to train and to supervise employees in lower levels by means of personal instruction and demonstration. They would also be able to assist in the delivery of training courses. They would often exercise initiative, discretion and judgment in the performance of their duties.

The possession of relevant post secondary qualifications may be appropriate but are not essential.

B.6.2 Typical duties/skills

Indicative typical duties and skills at this level may include:

(i) Apply knowledge of organisation’s objectives, performance, projected areas of growth, product trends and general industry conditions.

(ii) Application of computer software packages within either a micro personal computer or a central computer resource including the integration of complex word processing/desktop publishing, text and data documents.

(iii) Provide reports for management in any or all of the following areas:

account/financial;

staffing;

legislative requirements; and

other company activities.

(iv) Administer individual executive salary packages, travel expenses, allowances and company transport; administer salary and payroll requirements of the organisation.

(v) Call centre principal customer contact leader is employed to:

apply a significant range of fundamental principles and complex techniques across a wide and unpredictable variety of contexts in either varied or highly specialised functions;

co-ordinate the work of a number of teams within a call centre environment; and

have a number of specialists/supervisors reporting to them.

An employee who holds a Diploma—Front Line Management or equivalent is to be classified at this level when employed to perform the functions defined.”

[48] The important phrase in the coverage of the Clerks award is that it is clerical work including “administrative duties” of a clerical nature. Administrative duties is not a reference to work that is professional in nature, such as Accountancy.

[49] The Full Bench of the Australian Industrial Relations Commission stated in Layton v North Goonyella Coal Mines Pty Ltd:

“It is clear from both passages and the definition of "clerk" in the Queensland Clerical NAPSA, that the task of interpretation is not a quantitative one based upon time spent performing certain types of duties. Rather, the task involves a qualitative assessment of the primary purpose of the position. Professional and managerial employees are clearly not clerks. Where the primary purpose of the role is the exercise of skills of a professional or quasi professional nature, the role will not be regarded as clerical - notwithstanding that the role involves various recording and ordinary administrative office functions.” 2 (emphasis added)

[50] In this, on the material, it cannot be concluded that the work undertaken by the Applicant was clerical administrative work within the definition of the Clerks Award. While some of the work is clerical in nature the Applicant was still an Accountant performing functions beyond that which would ordinarily be expected of a strictly administrative clerical officer.

[51] The Applicant focussed some of his attention on the lack of managerial functions in his position after the appointment of the new CFO. While this is helpful in a contextual way it doesn’t focus on the difference in his role between administrative clerical functions and professional clerical functions. It is acknowledged that the Applicant is not degree qualified.

[52] The important juncture in this matter in October 2012 when the Respondent appointed a new CFO to replace the Applicant and he was, it seems, appointed into this newly created position. The Respondent has not, on the material before the Commission, ever provided the Applicant with a position description or discussed with the Applicant what was required of him in this new position.

[53] However the evidence is that the Applicant had almost complete autonomy in the work he undertook and was responsible, in a very significant way.

Genuine redundancy

[54] Given the Commission’s findings in this matter in relation to award coverage it is strictly unnecessary to consider the genuine redundancy ground.

[55] However the Applicant accepts, somewhat implicitly, that the position of Financial Controller is no longer with the Respondent but that the work is continuing and is continuing to be done by other employees. The Applicant seems to accept that a single person has not replaced his job role entirely.

[56] The Applicant submitted job advertisements for “Part-time Accounts Officer” and an Assistant Account as evidence that the work is still being undertaken. However in terms of s.389 of the Act the fact, based upon the evidence, is that the Applicant’s full-time position has not been replaced. It is well accepted in the authorities and in the Act that this is the operation of the clause. It is clear from this, that the work has been divided into a part-time position, and paid at a lesser rate of remuneration.

[57] This concession and the evidence of the Respondent is that the Applicant’s role was made redundant. The Respondent’s evidence is, and it is accepted, that the work undertaken by the Applicant is continuing, but has been divided amongst existing staff and departments with the Respondent. The Commission does not find, and there is no evidence, that the Applicant’s job has been replaced by another single employee. The Commission is satisfied, in terms of s.389(1)(a) of the Act that the Respondent no longer required the Applicant’s job to be done by anyone, but rather divided the work up amongst existing staff and departments, and that this restructuring was undertaken due to a change in the operational requirements of the Respondent.

[58] If the Commission had come to a different conclusion regarding award coverage the jurisdictional objection in relation to a genuine redundancy would still have barred the Applicant’s application. While the Applicant has submitted that the “generic letter” to all staff was not proper consultation for the purposes of the Award consultation obligations the evidence is nonetheless that the Applicant was aware of the Respondent reviewing it’s operations, that that review would likely lead to a reduction in staff and that he participated in that review.

Conclusion

[59] Based on the aforementioned reasons, the Applicant’s application is jurisdictionally barred pursuant to s.382 of the Act. The Applicant earnt above the high income threshold and was not covered by a modern award or enterprise agreement.

[60] Further on the material before the Commission the Applicant’s dismissal was as a result of a genuine redundancy as a result of a restructure of the Respondent.

[61] The jurisdictional objections are both upheld and the Applicant, filed pursuant to s.394 of the Act, must therefore be dismissed.

[62] I Order accordingly.

COMMISSIONER

 1   Lynn Chang v Ntscorp Ltd [2010] FWA 1952 (9 March 2010) per Senior Deputy President Hamberger at [5].

 2   [2007] AIRCFB 713 at [29].

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