Edmund Payne v Scaffold Logistics Pty Ltd T/A Base Industries

[2020] FWC 5668

[2020] FWC 5668

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Edmund Payne
v
Scaffold Logistics Pty Ltd T/A Base Industries
(U2020/9879)

COMMISSIONER WILLIAMS PERTH, 28 OCTOBER 2020

Application for an unfair dismissal remedy.

[1] This decision concerns an application made by Mr Edmund Payne (Mr Payne or the Applicant) pursuant to s 394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy. The application was lodged on 20 July 2020. The respondent is Scaffold Logistics Pty Ltd T/A Base Industries (the Respondent).

[2] The Respondent from the outset raised two jurisdictional objections. Firstly, that Mr Payne earned more than the high income threshold and separately that the dismissal of Mr Payne was in any event a case of genuine redundancy. If either or both of these jurisdictional objections are upheld, Mr Payne was not able to make this application and it will be dismissed.

[3] Both parties have provided submissions and materials as directed by the Commission dealing with these jurisdictional objections.

[4] This decision deals only with the Respondent’s objections.

Factual findings

[5] The evidence is that Mr Payne was employed in the position of General Manager-Western Australia as specified in Item 3 of the Employment Contract signed by Mr Payne on 18 February 2019. 1

[6] Indeed, Mr Payne signed his form F2 – Unfair dismissal application as having the position of General Manager.

[7] There is a disagreement between the parties as to whether the dismissal took effect on 30 June 2020 or 14 July 2020.

[8] This may be pertinent to the question of whether the Applicant’s annual rate of earnings exceeded the high income threshold because the amount of the high income threshold is adjusted on 1 July every year.

[9] As will be seen it is not necessary for the Commission to decide on which of the two dates the dismissal took effect.

[10] Schedule 1 of the Employment Contract specifies at Item 7 that the base salary of Mr Payne was $180,000 per annum.

[11] On 14 July 2020 Mr Payne emailed the Respondent regarding a number of termination payment issues. The email refers to a payslip received that day and lists a number of errors.

[12] One of the errors Mr Payne complained of was:

“3. My rate for all hours is $91.0931 as per my contract of employment and applicable legislation.”

[13] Mr Payne argues that in the months preceding his dismissal his salary had been reduced to $150,000 per annum which is reflected in a payslip for the date 1 July 2020 which shows a normal pay hourly rate of $75.9109. 2

[14] Mr Payne however goes on to argue that the reduced salary entitlement was in breach of clause 22 – Variation of agreement of his Employment Contract, which in his view could result in further action in the form of a denied contractual benefits claim through the Western Australian Industrial Relations Commission.

[15] Clause 22 - Variation of agreement states that the agreement may only be varied in writing.

[16] The Respondent’s pay records 3show that for the financial year ending 30 June 2020 Mr Payne’s gross earnings were $173,076.92.

[17] This earnings amount does not include a bonus of $10,000 and does not include termination payments comprising annual leave paid out, pay in lieu of notice or redundancy pay, which were paid later.

[18] This gross earnings calculation in the pay record is made up of hours of normal pay, public holidays and sick leave. Two hourly rates of pay are used; one being $91.0931 and the other being $75.9109. Each comprising of normal pay, public holidays and sick leave include an amount in hours and separate calculations using each of the two pay rates.

[19] The hourly rate of $91.0931 equates to $180,000 per year for 38 hours a week worked over 52 weeks.

[20] The hourly rate of $75.9109 equates to $150,000 per year for 38 hours a week worked over 52 weeks.

[21] Self-evidently the pay record for the financial year ending 30 June 2020 totals the payments Mr Edmonds received, some at the salary of $180,000 per annum and some for periods at the salary of $150,000 per annum.

[22] In addition to salary Item 10 of Schedule 1 to the Employment Contract states that Mr Payne is provided with a company vehicle including running costs.

The legislation

[23] Section 382 of the Act, set out below, prescribes preconditions for a person to be 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.”

[24] Section 332 of the Act defines “earnings” 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.” (Emphasis added)

[25] No regulations have been made for the purposes of s 332(1)(d) or s 332(2)(d) of the Act. However, regulation 3.05(6) of the Fair Work Regulations 2009 (the Regulations), which has been made for the purpose of s 382(b)(iii) of the Act to ascertain whether a person is protected from unfair dismissal, requires the inclusion of particular types of non-monetary benefits.

[26] Regulation 3.05(6) provides as follows:

“If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.” (Emphasis added)

[27] The high income threshold for 2019-20 (with effect from 1 July 2019) was $148,700.

[28] The high income threshold for 2020-21 (with effect from 1 July 2020) is $153,600.

Consideration

[29] Mr Payne was a General Manager. I am satisfied there was no modern award nor an enterprise agreement that applied in relation to Mr Payne’s employment.

[30] If Mr Payne’s argument that the reduction of his salary to $150,000 was imposed contrary to his Employment Contract is correct this would mean his annual rate of earnings remained at $180,000, as specified in his contract.

[31] Whether or not this argument is correct, the facts are that his actual annual rate of earnings was the amount of $173,076.92 plus the value of the private use of the company provided vehicle.

[32] It is not necessary to calculate the value of the private use component of the vehicle given the cash amount of Mr Payne’s annual earnings exceeds both high income thresholds.

[33] I am satisfied that Mr Payne’s annual rate of earnings was more than the high income threshold for both 2019 – 2020 and 2020 – 2021. It therefore is not necessary to determine whether the dismissal took effect on 30 June 2020 or 14 July 2020.

[34] Consequently, by virtue of s 382 of the Act Mr Payne is not a person protected from unfair dismissal and so is not able to make this application.

[35] As a result of this decision it is not necessary for the Commission to determine whether or not Mr Payne’s dismissal was a genuine redundancy.

[36] This application is dismissed and an order [PR723814] to that effect will now be issued.

Final written submissions:

Applicant, 16 September 2020
Respondent, 16 October 2020

Printed by authority of the Commonwealth Government Printer

<PR723813>

 1   Statement of Mr C. Hallinan, Attachment CO-1.

 2   Statement of Mr E. Payne, Attachment A11.

 3   Statement of Mr C. Hallinan, Attachment CO-3.