Elachi v O'Shea & Jolly Jointly Trading as NRG Legal
[2020] FCCA 2706
•30 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
ELACHI v O’SHEA & JOLLY JOINTLY TRADING AS NRG LEGAL & ANOR [2020] FCCA 2706
Catchwords:
INDUSTRIAL LAW – Alleged breaches of industrial laws, industrial instruments and employment contract – minimum wage – loadings – overtime – alleged adverse action – annual leave – personal leave – long service leave – superannuation contributions – reinstatement – employment records – pay slips.INDUSTRIAL LAW – Annual leave – nature of entitlement.
INDUSTRIAL LAW – Personal leave – nature of entitlement.
INDUSTRIAL LAW – Fair Work Act 2009 – Division 2B State Award.
Legislation:
Fair Work Act 2009 (Cth), ss.13, 14, 22, 30N, 41, 42, 44, 45, 60, 61, 87, 90, 96,
97, 98, 99, 100, 101, 107, 112, 113, 114, 116, 308, 323, 340, 341, 342, 343, 345,
351, 353, 360, 361, 529, 531, 535, 536, 540, 545, 547
Superannuation Guarantee (Administration) Act 1992
Annual Holidays Act 1944 (NSW), ss.3, 4
Long Service Leave Act 1955 (NSW), ss.4, 10, 11, 12,
Industrial Relations Act 1996 (NSW), ss.8, 27, 106, 117, 118, 210, 357, 358,
365, 369
Industrial Relations (Commonwealth Powers) Act 2009 (NSW)
Fair Work Amendment (State Referrals and Other Measures) Act 2009
Industrial Relations (Commonwealth Powers) Act 2009 (NSW)
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009,
s.2A, items 3, 15, 17, 21, 37, 38 of sch.3A, item 17 of sch.4
Workplace Relations Act 1996
Superannuation Guarantee Act 1992 (Cth)
Superannuation Guarantee Charge Act 1992
Fair Work Regulations 2009, regs.3.31, 3.32, 3.33, 3.36, 3.37, 3.46
Federal Circuit Court Rules 2001 (Cth), r.26.01
Cases cited:
Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206
Annual Wage Review 2009 – 2010 [2010] FWAFB 4000
Fair Work Ombudsman v WXZ Enterprises Pty Ltd & Ors [2018] FCCA 616
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd
(1979) 144 CLR 596
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Turner v Sawdon & Co [1901] 2 KB 653
Turner v Goldsmith [1891] 1 QB 544
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia Construction, Forestry, Maritime, Mining
and Energy Union v Carter Holt Harvey Woodproducts Australia Pty Limited
[2018] FWCFB 2731
ASP15 v Commonwealth (2016) 248 FCR 372
Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2011) 244
CLR 97
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia
(1998) 195 CLR 1
McIlwain v Ramsey Food Packaging Pty Ltd (2006) 154 IR 111
Australian Workers’ Union v BHP Iron-Ore Pty Ltd (2001) 106 FCR 482
BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 102 FCR 97
Unsworth v Tristar Steering and Suspension Australia Ltd (2008) 216 FCR 122
Construction, Forestry, Mining & Energy Union v Pilbara Iron Company
(Services) Pty Ltd (No 3) [2012] FCA 697
Morton v Commonwealth Scientific and Industrial Research Organisation (No
2) [2019] FCA 1754
Rangi v Kmart Australia Ltd [2019] FCA 1778
Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463
Victoria (Office of Public Prosecutions) v Grant (2014) 246 IR 441
Board of Bendigo Regional Institute of Technical and Further Education v
Barclay (2012) 248 CLR 500
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014)
253 CLR 243
Western Union Business Solutions (Australia) Pty Ltd v Robinson (2019) 290 IR
414
Port Kembla Coal Terminal Ltd v Construction, Forestry, Mining and Energy
Union (2016) 248 FCR 18
Shea v TRUenergy Services Pty Ltd (No.6) (2014) 242 IR 1
Applicant: DANY ELACHI
First Respondent: NEIL DAVID O'SHEA
Second Respondent: GRAEME KENNETH JOLLY
File Number: SYG 615 of 2015
Judgment of: Judge Cameron
Hearing dates: 20-23 February 2017,
19-20 June 2017, 15 February 2018
Date of Last Submission: 15 February 2018
Delivered at: Sydney
Delivered on: 30 September 2020 REPRESENTATION
The applicant appeared in person
Counsel for the First Respondent: Mr B. Cross
Solicitors for the Respondents: The Workplace – Employment Lawyers DECLARATIONS
(1)On and from 2 November 1999 until 31 December 2009, the Clerical and Administrative Employees Legal Industry (State) Award (NSW) was binding on the applicant and the respondents.
(2)On and from 1 January 2010 until 31 December 2010, the Division 2B State Award derived from the Clerical and Administrative Employees Legal Industry (State) Award (NSW) applied to the applicant and the respondents to the extent that its provisions were not inconsistent with the National Employment Standards.
(3)On and from 1 January 2011 until 9 May 2017, the Legal Services Award 2010 applied to the applicant and the respondents.
(4)On and from 1 January 2011 until 31 January 2011, the terms of the Division 2B State Award derived from the Clerical and Administrative Employees Legal Industry (State) Award (NSW) continued to apply to the applicant and the respondents through the operation of cl.A.8.2 of the Legal Services Award 2010.
(5)From 2 November 1999 to 31 December 2009, the applicant was entitled to accrue paid annual leave pursuant to s.3 of the Annual Holidays Act 1944 (NSW), accruing annually at the rate of 4 weeks per year and amounting to 40.64 weeks as at 31 December 2009.
(6)On and from 1 January 2010 until 9 May 2017 the applicant was entitled to accrue paid annual leave at the rate of 20 days per year.
(7)The applicant was entitled to an annual leave loading of 17.5% on annual leave payments made to him by the respondents.
(8)On and from 2 November 1999 to 31 December 2009 the applicant was entitled to accrue an entitlement to paid sick leave at the rate of 5 days in his first year of service and 8 days for every year thereafter.
(9)On and from 1 January 2010 until 9 May 2017 the applicant was entitled to accrue paid personal leave at the rate of 10 days per year.
(10)On and from 2 November 1999 until 9 May 2017, the applicant was entitled to accrue paid long service leave pursuant to s.4 of the Long Service Leave Act 1955 (NSW).
(11)The respondents breached:
(a)s.44(1) of the Fair Work Act 2009 in respect of a contravention of s.116 of the Fair Work Act 2009 by failing to provide paid leave to the applicant on public holidays;
(b)s.45 of the Fair Work Act 2009 by failing to make superannuation contributions on the applicant’s behalf in accordance with the Legal Services Award 2010;
(c)s.323(1)(c) of the Fair Work Act 2009 by failing to pay salary or wages to the applicant at least monthly;
(d)s.535(1) of the Fair Work Act 2009 by failing to keep prescribed records for 7 years;
(e)s.535(2) of the Fair Work Act 2009 by failing to keep records with the prescribed information and in the prescribed form;
(f)s.536(1) of the Fair Work Act 2009 by failing to provide pay slips to the applicant within one day of payment; and
(g)s.536(2) of the Fair Work Act 2009 by failing to provide pay slips to the applicant with the prescribed information and in the prescribed form.
ORDERS
(1)The respondents pay the applicant compensation of $0.80 in respect of unpaid superannuation entitlements, plus interest calculated in accordance with s.547(3) of the Fair Work Act 2009 and r.26.01 of the Federal Circuit Court Rules 2001.
(2)The respondents pay the applicant compensation in respect of their failure to provide the applicant with paid leave on public holidays in the period 1 April 2009 to 13 May 2014, plus interest calculated in accordance with s.547(3) of the Fair Work Act 2009 and r.26.01 of the Federal Circuit Court Rules 2001.
(3)Within 28 days the parties bring in a draft minute of order quantifying the compensation and interest the respondents are to pay the applicant.
(4)The matter be listed for directions on 21 October 2020.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SydneySYG 615 of 2015
Dany Elachi Applicant
And
Neil David O'Shea First Respondent
Graeme Kenneth Jolly Second Respondent
REASONS FOR JUDGMENT
Introduction............................................................................................... [1]
applicant’s POINTS OF CLAIM.............................................................. [5]
Employment contract..................................................................................... [6]
Commission Arrangement............................................................................. [8]
Breach of Employment Contract................................................................ [10]
Breach of Commission Arrangement......................................................... [12]
Breach of industrial instruments................................................................. [15]
Leave of absence.......................................................................................... [17]
Adverse action.............................................................................................. [18]
False or misleading contraventions............................................................ [21]
Personal injury.............................................................................................. [22]
Statutory and award contraventions
Superannuation.................................................................................... [23]
Annual leave and annual leave loading............................................ [24]
Sick leave / Personal leave................................................................ [26]
Long service leave.............................................................................. [29]
Public holidays.................................................................................... [30]
Payment of wages............................................................................... [31]
Pay slips............................................................................................... [32]
Relief sought................................................................................................. [33]
Penalties......................................................................................................... [36]
respondents’ POINTS OF DEFENCE.................................................. [37]
Employment contract................................................................................... [38]
Commission Arrangement........................................................................... [40]
Leave of absence.......................................................................................... [43]
Adverse action.............................................................................................. [44]
Misrepresentation......................................................................................... [45]
Leave entitlements........................................................................................ [46]
reLEVANT LEGISLATION AND AWARDS............................................. [47]
Legislation
Prior to 1 January 2010 – State Award
Wages, allowances, loadings and overtime............................ [47]
Annual leave............................................................................... [50]
Freedom from victimisation..................................................... [52]
Superannuation.......................................................................... [53]
Compensation............................................................................. [54]
Limitation period....................................................................... [55]
1 January 2010 onwards – Fair Work Act....................................... [57]
Annual leave............................................................................... [60]
Personal/Carer’s leave............................................................... [62]
Public holidays........................................................................... [64]
Wages, allowances, loadings and overtime............................ [66]
Adverse action............................................................................ [67]
Records and pay slips................................................................ [71]
Superannuation.......................................................................... [75]
Contraventions, penalties and compensation......................... [76]
Long service leave.............................................................................. [80]
Awards
Prior to 1 January 2010 – State Award
Award terms................................................................................ [84]
1 January 2010 – 31 January 2011 – Division 2B State Award
Transfer from State to Federal jurisdiction............................. [85]
Accrued leave entitlements....................................................... [87]
1 February 2011 onwards – Modern Award
Award terms and commencement............................................ [88]
Accrued leave entitlements....................................................... [90]
APPLICANT’S Evidence
Dany Elachi
Employment contracts – 1999 to early 2009................................... [91]
Law degree and practising certificate............................................... [92]
Commission-only arrangement from March 2009......................... [95]
Breach of Commission Arrangement
Failure to provide work.......................................................... [101]
Failure to make payments....................................................... [103]
Effects of breach of Commission Arrangement
2009 and 2010.......................................................................... [107]
2011 and 2012.......................................................................... [108]
2013 and 2014.......................................................................... [114]
Leave of absence............................................................................... [115]
Attempts to return to work.............................................................. [126]
Events from November 2014 to January 2015............................. [133]
Generally............................................................................................ [134]
Jacqueline Guirguis.................................................................................... [137]
Emily Wiseman.......................................................................................... [139]
Cherie Baker............................................................................................... [141]
Dr Christopher Basten............................................................................... [142]
Michelle Novotny....................................................................................... [152]
respondeNTS’ Evidence
Neil O’Shea
Recruitment and initial terms of employment (2 November 1999 to 30 June 2002) [157]
Time sheets & payment summaries................................................ [160]
Renumeration history....................................................................... [162]
From March 2009 – Commencement of commission-only salary [167]
Payments for the period from 1 March 2009 to the end of employment [181]
Leave records.................................................................................... [186]
Attendance at work........................................................................... [189]
Events post-14 May 2014 (leave of absence)............................... [197]
General............................................................................................... [198]
Graeme Jolly
Recruitment and initial terms of employment (2 November 1999 to 30 June 2003) [200]
July 2003 – March 2008 (Period of full-time employment......... [201]
2009 – Commencement of commission-only salary.................... [205]
Mr Elachi’s work and attendance................................................... [213]
Requests to return to work & accrued entitlements..................... [224]
General............................................................................................... [229]
Samantha Crossie....................................................................................... [232]
Mr Elachi’s billing............................................................................ [235]
Mr Elachi’s working hours.............................................................. [237]
Dajana Malnersic....................................................................................... [242]
Mr Elachi........................................................................................... [244]
Leave entitlements............................................................................ [247]
CONSIDERATION........................................................................................ [248]
Coverage and entitlements
Award coverage
State Award and Div.2B Award............................................. [249]
Modern Award......................................................................... [253]
Entitlements....................................................................................... [262]
Breach of contract
Commission Arrangement was a breach of the Employment Contract [263]
Breach of the Commission Arrangement variationProvision of work............................................................... [267]
Commission rates............................................................... [274]
Implied terms...................................................................... [279]
“Accrual” and “recognition” of sick, personal and annual leave entitlements [285]
“Accrual” and “recognition’ of long service leave entitlements. [292]
Leave entitlements under the Commission Arrangement variation [297]
Leave provisions of the Modern Award................................ [311]
Leave of absence............................................................................... [314]
Compensation
Loss of earnings
Wages – 13 March 2009 and continuing – Employment Contract [326]
Wages – 12 March 2009 to 31 December 2010 – IR Act and the State Award [328]
13 March 2009 to June 2009........................................ [329]
1 July 2009 to 31 December 2010............................... [332]
Commissions and superannuation – from 13 March 2009 and continuing – Commission Arrangement............................................ [336]
Wages – from 1 January 2011 and continuing – Modern Award [345]
Compensation - superannuation...................................................... [349]
2 November 1999 to 31 December 2010.............................. [350]
1 January 2011 to 9 May 2017............................................... [355]Compensation – leave entitlements................................................ [359]
Compensation – breaches of the FW Act...................................... [360]
Public holiday pay................................................................... [361]
Periodicity of payment............................................................ [363]
Adverse action......................................................................... [364]
Failure to keep prescribed records for a prescribed time... [386]
Failure to provide pay slips timeously and as prescribed... [388]Compensation – general damages.................................................. [391]
Reinstatement.................................................................................... [395]
CONCLUSION............................................................................................... [398]
INTRODUCTION
1.The respondents were the proprietors of a firm of solicitors known as NRG Legal. On 2 November 1999 the applicant, Mr Elachi, started work at NRG Legal as a law clerk.
2.Mr Elachi alleged that in March 2009 the respondents unilaterally changed the terms of his employment by changing his remuneration from a salary-based arrangement to a commission-only one. He alleged that that change led to various contraventions of relevant statutes and awards, including underpayments, in respect of which he was entitled to pecuniary compensation.
3.Mr Elachi also alleged that he had been unlawfully suspended from his employment in May 2014 and that this led to other statutory breaches entitling him to compensation.
4.Mr Elachi’s employment was terminated on 9 May 2017. He sought reinstatement.
APPLICANT’S POINTS OF CLAIM
5.In summary, Mr Elachi’s amended points of claim filed on 30 March 2016 alleged as follows.
Employment Contract
6.On 2 November 1999 Mr Elachi started with NRG Legal as a paralegal, first on a part time basis and then on a full-time basis, for which he was paid salary plus superannuation.
7.Mr Elachi alleged that on 1 April 2008 his salary increased to $100,000 per annum plus superannuation (“Employment Contract”).
Commission Arrangement
8.Mr Elachi alleged that on 12 March 2009 the respondents unilaterally changed the Employment Contract to an arrangement based only on commissions (“Commission Arrangement”). He alleged that it had been a condition of the Commission Arrangement that he would not be disadvantaged by it, could expect to receive $10,000 to $20,000 of billable work per month from the respondents and to earn approximately the same income as he had been earning since 1 April 2008.
9.Mr Elachi alleged that the Commission Arrangement included implied terms to the effect that the respondents would:
a)co-operate with him in the performance of his work and in providing work to him;
b)do all things necessary to ensure that he received the benefits of the Commission Arrangement;
c)not exercise any discretion available to them in a manner which would be arbitrary, capricious, unreasonable and/or which did not conform with the bona fide objects of the Commission Arrangement;
d)provide to him such work as was necessary in order for him to continue earning an annual gross salary of $120,000 per annum; and
e)act in good faith towards him.
Breach of Employment Contract
10.Mr Elachi alleged that because of the introduction of the Commission Arrangement he received no pay from 1 March 2009 to 30 June 2009. He further alleged that because he had not consented or agreed to the Commission Arrangement, the Employment Contract had continued to operate and that the respondents’ actions in paying him in accordance with the Commission Arrangement were a breach of the Employment Contract.
11.He alleged that as a result of the respondents’ breach of the Employment Contract, as at 30 June 2015 he had suffered a loss of earnings of $549,626 and a loss of superannuation contributions of $52,214.
Breach of Commission Arrangement
12.Mr Elachi alleged in the alternative that if the Commission Arrangement had been a binding contract, the respondents breached it by failing to:
a)pay him no less than what he had earned under the Employment Contract;
b)provide him with at least $10,000 worth of billable work per month;
c)do all things necessary to enable him to secure the benefit of the agreement;
d)co-operate with him to ensure that he obtained the benefit of the agreement;
e)provide him with so much work as was necessary for him to continue earning a gross salary of $120,000 per annum; and
f)act in good faith and by exercising their discretion in an arbitrary, capricious or unreasonable manner which did not conform with the bona fide objects of the Commission Arrangement by not providing him with sufficient, and at times any, billable work.
13.Mr Elachi alleged that as a result of the respondents’ breach of the Commission Arrangement, as at 30 June 2015 he had suffered a loss of earnings of $549,626, and a loss of superannuation contributions of $52,214, being the earnings he would have made under the Employment Contract.
14.In the alternative, Mr Elachi alleged that under the Commission Arrangement the respondents had failed to pay him in full what he was owed and he sought payment of outstanding commission amounts.
Breach of industrial instruments
15.Mr Elachi alleged that his employment had been governed by the following instruments:
a)from 2 November 1999 to 31 December 2009, the Clerical and Administrative Employees Legal Industry (State) Award (“State Award”) as a Grade 5 Legal Clerical and Administrative Officer/Paralegal;
b)from 1 January 2010 to 31 December 2010, the Division 2B State Award derived from the State Award (“Div.2B Award”); and
c)from 1 January 2011, the Legal Services Award 2010 (“Modern Award”) as a Level 6 Law Clerk.
16.Mr Elachi did not, in terms, allege that the respondents had breached the first two of those industrial instruments by not paying him his due under them but did so implicitly by making a claim for pecuniary compensation for award underpayments during the life of the Commission Arrangement. He did, however, expressly allege a breach of the Modern Award’s minimum payment clause.
Leave of absence
17.Mr Elachi alleged that on 4 April 2014 the respondents directed him to take a six month unpaid leave of absence commencing on 13 May 2014. He alleged that they directed him to use the leave to “get counselling”, “lose weight” and work towards being admitted as a solicitor. Mr Elachi alleged that the respondents had had no right to suspend his employment without pay, contending that their suspension of his employment was a breach of the Employment Contract, the Commission Arrangement or the Modern Award.
Adverse action
18.Mr Elachi alleged that from 13 November 2014 he had sought to have his suspension lifted and in doing so sought to have his minimum pay, annual leave, personal leave and long service leave entitlements reinstated. He alleged that his conduct in seeking the reinstatement of his employment entitlements amounted to the exercise of a workplace right pursuant to s.341 of the FW Act.
19.Mr Elachi alleged that the respondents had refused to lift his suspension for reasons including that:
a)he suffered, or was assumed to suffer from, a mental disability;
b)he had not attained additional legal qualifications; and
c)he sought to have his employment entitlements reinstated.
20.Mr Elachi alleged that the respondents’ refusal to lift his suspension amounted to adverse action in that it injured him in his employment, altered his position to his prejudice and discriminated between him and other employees of the respondents. He alleged that by taking adverse action against him the respondents had contravened ss.340(1), 342(2) and 351(1) of the FW Act.
False and misleading representations
21.Mr Elachi also alleged that in the period between April and December 2014 and in contravention of s.345(1) of the FW Act, the respondents knowingly or recklessly made false or misleading representations that he was not entitled to personal/sick leave, annual leave or long service leave and was not entitled to have those entitlements reinstated. He alleged that that they also represented that he was not covered by the National Employment Standards (“NES”) of the FW Act or the Modern Award.
Personal injury
22.Mr Elachi alleged that as a result of the respondents’ conduct he had suffered pain, distress, hurt, humiliation and a psychiatric injury, namely Major Depressive Disorder (recurrent, severe).
Statutory and award contraventions
Superannuation
23.Mr Elachi alleged that from 2 November 1999 to 13 May 2014 the respondents were required by the Superannuation Guarantee (Administration) Act 1992 and related legislation, by the Employment Contract and, from 1 January 2011, by cl.23.2 of the Modern Award, to make superannuation contributions on his behalf to a complying superannuation fund to the full extent required to avoid a charge under the Superannuation Guarantee (Administration) Act. He alleged that during that entire period the respondents failed to make contributions on his behalf to the full extent required by the Superannuation Guarantee (Administration) Act.
Annual leave and annual leave loading
24.Mr Elachi alleged that:
a)between 2 November 1999 and 31 December 2009, the respondents were obliged by s.3 of the Annual Holidays Act 1944 (NSW) to accrue annual leave for his benefit;
b)between 2 November 1999 and 31 December 2009, the respondents were obliged by cl.12 of the State Award to accrue a 17.5% annual leave loading for his benefit;
c)on 1 January 2010 the respondents were obliged to “recognise” those accruals;
d)from 1 January 2010, the respondents were obliged by s.87 of the FW Act to accrue annual leave for his benefit; and
e)from 1 January 2011 the respondents were obliged by cl.35 of the Modern Award to accrue annual leave loading for his benefit.
25.Mr Elachi alleged that the respondents had breached those provisions by failing to accrue annual leave and annual leave loading on his behalf between 2 November 1999 and 30 June 2003 and from 13 March 2009 onwards.
Sick leave / Personal leave
26.Mr Elachi alleged that:
a)between 2 November 1999 and 31 December 2009 the respondents were obliged by cl.13 of the State Award to accrue sick leave for his benefit;
b)on 1 January 2010 the respondents were obliged to “recognise” that accrual; and
c)on and from 1 January 2010 the respondents were obliged by cl.36 of the Modern Award and s.96 of the FW Act to accrue personal leave for his benefit.
27.He alleged that the respondents had:
a)wholly failed to accrue for his benefit personal [sic] leave for the period 2 November 1999 to 30 June 2003;
b)partly failed to accrue for his benefit personal [sic] leave from 1 July 2003 to 12 March 2009; and
c)wholly failed to accrue for his benefit personal [sic] leave from 13 March 2009.
28.Mr Elachi alleged that the respondents had thereby breached cls.12, 13 and 17 the State Award, s.45 of the FW Act (by breaching the Modern Award) and s.96 of the FW Act.
Long service leave
29.Mr Elachi alleged that over the period 2 November 1999 to 18 June 2015, the respondents failed to accrue 13 weeks of long service leave on his behalf. He alleged that by that conduct they had contravened s.4 of the Long Service Leave Act 1955 (NSW) (“LSL Act”) and s.113 of the FW Act.
Public holidays
30.Mr Elachi alleged that the respondents had breached s.116 of the FW Act and cl.38 of the Modern Award, and thereby also contravened s.45 of the FW Act, by failing to pay him public holiday pay.
Payment of wages
31.Mr Elachi alleged that the respondents had contravened s.45 of the FW Act by breaching other clauses of the Modern Award, namely, cl.14 (failure to pay minimum rates of pay), cl.22.1 (failure to pay wages on a fortnightly basis) and cl.23.2 (failure to make superannuation contributions). He alleged that they had also contravened s.323(1)(a) and (c) of the FW Act by failing to pay him in full at least monthly the amounts payable to him in relation to the performance of work.
Pay slips
32.Mr Elachi alleged that the respondents had contravened sub-ss.535(1) and (2) of the FW Act by failing to make and keep appropriate records in respect of his employment. He alleged that they also contravened sub-ss.536(1) and (2) of that Act by failing to provide pay slips to him within one working day of making payments to him and by failing to provide him with pay slips which were in a form prescribed by the Fair Work Regulations 2009 (“FW Regulations”).
Relief sought
33.Mr Elachi sought declarations that:
a)the respondents had been bound to observe:
i)the terms of the State Award, until 31 December 2009 as a New South Wales award under the IR Act and then from 1 January 2010 to 31 December 2010 as a Division 2B State Award under the FW Act; and
ii)the Modern Award from 1 January 2011;
b)during his employment he had been entitled:
i)from 2 November 1999 to accrue annual leave;
ii)to be paid an annual leave loading of 17.5%;
iii)to accrue long service leave; and
iv)to accrue sick leave and then, from 1 January 2010, personal leave;
c)the respondents had breached their “contractual arrangements” with him; and
d)in unilaterally varying his contract of employment to the Commission Arrangement, the respondents contravened s.210(1)(e) of the IR Act in that they victimised Mr Elachi because he was a person who claimed a benefit, namely the taking of annual leave, to which he was entitled under industrial relations legislation or an industrial instrument.
34.Mr Elachi also sought pecuniary compensation for:
a)breach of the Employment Contract in the form of unpaid wages and unpaid superannuation contributions in respect of an open-ended period commencing on 13 March 2009;
b)breach of the State Award in the form of unpaid wages “and other Award entitlements” in respect of the period 12 March 2009 to 31 December 2010;
c)breach of the Commission Arrangement, or some unspecified provision of the FW Act, in the form of unpaid commission payments and superannuation contributions in respect of an open ended period “from 13 March 2009”;
d)breach of the FW Act and the Modern Award in the form of unpaid or underpaid wages and superannuation contributions in respect of an open-ended period “from 1 January 2011”;
e)failure to comply with the Employment Contract, Commonwealth superannuation legislation and the FW Act in the form of underpaid superannuation contributions in respect of an open-ended period “from 2 November 1999”;
f)breach of the FW Act and the Modern Award in the form of failure to pay wages for public holidays;
g)breach of the FW Act in the form of various compliance contraventions; and
h)pain, suffering, distress, hurt, humiliation and psychiatric injury by reason of the respondents’ breaches of the FW Act and the Modern Award.
35.Mr Elachi further sought,
a)to the extent that he became a contractor to the respondents on or about 12 March 2009, an order under s.106 of the IR Act varying the contract for services such that he not be disadvantaged as compared with his position under the Employment Contract; and
b)further or in the alternative, reinstatement in accordance with the terms of the Employment Contract on a $100,000 p.a. salary increased in accordance with movements in Average Weekly Earnings since 1 April 2008, as published by the Australian Bureau of Statistics.
Penalties
36.Mr Elachi also sought the imposition of pecuniary penalties on the respondents for their contraventions of the civil penalty or civil remedy provisions of the IR Act, the Annual Holidays Act, the LSL Act and the FW Act.
RESPONDENTS’ POINTS OF DEFENCE
37.The respondents denied the substantive allegations made against them.
Employment contract
38.The respondents alleged that Mr Elachi commenced work as a part-time Grade 3 Legal Clerical Officer and progressed over time to Grade 5 Legal and Clerical Officer/Paralegal. They alleged that on 1 July 2003 he was employed as a full-time employee.
39.The respondents alleged that on 1 May 2008 Mr Elachi’s Employment Contract was varied to increase his pay to total remuneration of $109,000 being a gross wage of $100,000 p.a. and superannuation of $9,000 p.a.
Commission Arrangement
40.The respondents denied that they had unilaterally imposed the Commission Arrangement on Mr Elachi and denied that the arrangement was on the terms he alleged. They alleged that on 2 March 2009 they told Mr Elachi that because of the firm’s financial position they could not continue to employ him but, as an alternative to redundancy, could do so on a commission-only basis, which Mr Elachi accepted on 12 March 2009. The respondents alleged that Mr Elachi had also agreed to obtain a practising certificate as soon as possible and to attend work during normal business hours.
41.The respondents alleged that they had refused Mr Elachi’s request to guarantee to provide him a minimum of $10,000 worth of billable work per month. They also denied that it had been an implied term of the contract that they would continue to provide Mr Elachi with such work as to enable him to continue receiving the salary he had been earning immediately prior to the commencement of the Commission Arrangement.
42.The respondents denied that they had breached the Commission Arrangement, had acted in an arbitrary, capricious or unreasonable manner or had failed to act in good faith.
Leave of absence
43.The respondents denied that they had unlawfully suspended Mr Elachi from work, saying that they offered Mr Elachi six months’ leave to enable him to complete his law studies and to attempt to resolve undisclosed personal issues. They alleged that Mr Elachi agreed to take leave and that they had told him that a condition of his return to work was that he be admitted to practice and attend work during normal working hours. They denied promising to give him a reasonable amount of billable work on his return.
Adverse action
44.The respondents denied having taken adverse action against Mr Elachi by refusing to allow him to return to work, alleging that the sole reason he had not returned to work was that he had failed to fulfil the conditions for that return.
Misrepresentation
45.The respondents denied having misrepresented Mr Elachi’s leave entitlements or coverage by the NES and the Modern Award.
Leave entitlements
46.The respondents denied having failed to accrue annual leave, personal leave or long service leave on behalf of Mr Elachi.
RELEVANT LEGISLATION AND AWARDS
47.Mr Elachi’s claims covered three distinct periods of industrial law:
a)the period prior to 1 January 2010 when his employment was governed by the IR Act and the State Award;
b)on and from 1 January 2010 to 31 December 2010, when his employment was governed by the FW Act and the Div.2B Award; and
c)on and from 1 January 2011, when his employment was governed by the FW Act and the Modern Award, which included January 2011 when the Modern Award continued the operation of the Div.2B Award.
Legislation
Prior to 1 January 2020 – Industrial Relations Act 1996 (NSW)
Wages, allowances, loadings and overtime
48.Section 117(1) of the IR Act provides that an employee’s remuneration is, if demanded, to be paid “at least once each fortnight” and s.118 provides that it is to be paid in full.
49.Section 365 of the IR Act provides:
365 Order for recovery of remuneration and other amounts payable under industrial instrument
An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable.
Section 8 of that Act defines “industrial instrument” as including an award. Although this Court is not amongst the courts defined in the IR Act as an “industrial court”, that is no impediment to the Court having accrued jurisdiction in this case: Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206 at 210.
Annual leave
50.The Annual Holidays Act 1944 (NSW) relevantly provides:
3Annual holidays with pay
(1)Except as otherwise provided in this Act, every worker shall at the end of each year of the worker’s employment by an employer become entitled to an annual holiday on ordinary pay.
Such annual holiday shall:
…
(b)where any such year of employment ends after 30 November 1974, be of four weeks.
...
51.Section 4 of the Annual Holidays Act relates to payments of accrued entitlements on termination of employment and relevantly provides:
4Holiday pay where holiday is not taken
(1)Where the employment of a worker who has become entitled to one or more annual holidays provided by this Act is terminated, the employer shall be deemed to have given the holiday or holidays (except so much, if any, as has already been taken) to the worker as from the date of termination of the employment, and shall forthwith pay to the worker, in addition to all other amounts due to the worker, the worker’s ordinary pay for the period of the holiday or holidays.
…
Freedom from victimisation
52.Section 210 of the IR Act relevantly provides:
210Freedom from victimisation
(1)An employer or industrial organisation must not victimise an employee or prospective employee because the person:
…
(e)claims a benefit to which the person is entitled under the industrial relations legislation or an industrial instrument, or
Superannuation
53.The IR Act does not itself provide for an entitlement to superannuation contributions although a State award may.
Compensation
54.Section 358 of the IR Act relevantly provides:
358Related proceedings for recovery of remuneration and other money
(1)An industrial court dealing with proceedings for a civil penalty under this Part that relate to the failure of the defendant to pay any money that may be recovered under Part 2 [ss.364-380] may, in the same proceedings, also make under that Part any order for the payment of money that it is authorised to make in proceedings under that Part.
Limitation period
55.Section 357 of the IR Act relevantly provides:
(3)Proceedings for a civil penalty may be instituted within 6 years after the contravention.
56.Section 369 of the IR Act relevantly provides:
369 Application for order
(1)An application for an order under this Part for the payment of money may be made:
(a)by the person to whom the money is payable …
(3)An application for an order may only be made if the money became due within the period of 6 years immediately before the application was made.
1 January 2010 onwards – Fair Work Act
57.The provisions of the FW Act relevant to this matter generally apply only to “national system employees” and “national system employers”: ss.42, 60, 308, 529, FW Act. The definition of “national system employee” in s.13 of the FW Act depends on the definition of “national system employer” in s.14 which relevantly does not include a natural person in New South Wales unless that person
… in connection with constitutional trade or commerce, employs, or usually employs, an individual as:
(i) a flight crew officer; or
(ii) a maritime employee; or
(iii) a waterside worker …
58.On 1 January 2010, by force of the Industrial Relations (Commonwealth Powers) Act 2009 (NSW), the State of New South Wales referred to the Commonwealth its industrial relations powers in relation to employers who were neither constitutional corporations nor State public sector or local government sector employers. On that day the definition of national system employer was extended by s.30N of the FW Act to include, relevantly, natural person private sector employers in New South Wales such as the respondents: Fair Work Amendment (State Referrals and Other Measures) Act 2009; Industrial Relations (Commonwealth Powers) Act 2009 (NSW). From that point the respondents became “national system employers” within the meaning of s.30N(1) of the FW Act and “Division 2B State reference employers” within the meaning of item 2A(4A) of sch.3 to the Fair Work Transitional Provisions and Consequential Amendments) Act 2009 (“FW(TPCA) Act”) and the FW Act became the statute relevant to the present parties.
59.Mr Elachi alleged the contravention of numerous provisions of the FW Act. The following are the more important provisions relevant to those allegations.
Annual leave
60.Section 87 of the FW Act relevantly provides:
87 Entitlement to annual leave
Amount of leave
(1)For each year of service with his or her employer, an employee is entitled to:
(a)4 weeks of paid annual leave
…
Accrual of leave
(2)An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
…
90Payment for annual leave
(1)If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
(2)If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
61.By virtue of s.61(3) of the FW Act, ss.87 and 90 are provisions of the NES.
Personal/carer’s leave.
62.Section 96 of the FW Act provides:
96 Entitlement to paid personal/carer’s leave
Amount of leave
(1)For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.
Accrual of leave
(2)An employee’s entitlement to paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
63.Section 96 is a provision of the NES.
Public holidays
64.An employee is entitled to be absent from work on a prescribed public holiday: s.114 of the FW Act. If an employee is absent from work on a public holiday the employer must pay the employee at the latter’s base rate of pay for his or her ordinary hours of work on that day: s.116 of the FW Act.
65.Sections 114 and 116 are provisions of the NES.
Wages, allowances, loadings and overtime
66.Section 323(1) of the FW Act provides that employees are to be paid at least monthly and in full.
Adverse action
67.Section 340(1) of the FW Act relevantly provides that an employer must not take adverse action against an employee because the employee has a workplace right which they have exercised. Section 341 relevantly defines workplace right as follows:
341 Meaning of workplace right
Meaning of workplace right
(1)A person has a workplace right if the person:
(a)is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
…
(c)is able to make a complaint or inquiry:
i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
ii) if the person is an employee—in relation to his or her employment.
68.Section 351 provides:
351 Discrimination
(1)An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person’s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
…
69.Section 342(1) relevantly provides that an employer takes adverse action if:
the employer:
(a)dismisses the employee; or
(b)injures the employee in his or her employment; or
(c)alters the position of the employee to the employee’s prejudice; or
(d)discriminates between the employee and other employees of the employer.
70.Section 361 provides that unless the employer proves otherwise, the reason for the adverse action will be presumed to have been a prohibited reason. Section 360 provides that a person takes an action for a particular reason if the reasons for the action include that reason.
Records and pay slips
71.Sections 535 and 536 of the FW Act relevantly provide:
535 Employer obligations in relation to employee records
(1)An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.
(2) The records must:
(a) if a form is prescribed by the regulations—be in that form; and
(b) include any information prescribed by the regulations.
…
536 Employer obligations in relation to pay slips
(1)An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work.
(2)The pay slip must:
(a)if a form is prescribed by the regulations—be in that form;
i) and
(b)include any information prescribed by the regulations.
72.Subdivision 1 of div.3 of pt.3-6 of the FW Regulations sets out the information which is to be contained in employee records. Relevantly, the FW Regulations require such records to contain information concerning:
a)whether an employee was employed on a permanent, temporary or casual basis (reg.3.32(d));
b)the employee’s rate of remuneration including the gross and net amounts paid and the deductions made from that remuneration (reg.3.33(1));
c)what, if any, loadings, penalty rates, monetary allowances or other separately identifiable entitlements the employee was entitled to (reg.3.33(3));
d)details of leave taken and leave balances (reg.3.36(1)); and
e)details of superannuation contributions made (reg.3.37).
73.Regulation 3.31 requires that such records be legible and in a form “that is readily accessible to an inspector”.
74.Subdivision 2 of div.3 of pt.3-6 of the FW Regulations sets out the information that is to be contained in pay slips. Regulation 3.46 relevantly requires that pay slips contain details of an employee’s rate of pay, details of any superannuation payment in the period covered by the payslip and:
(1)For paragraph 536(2)(b) of the Act, a pay slip must specify:
(a)the employer’s name; and
(b)the employee’s name; and
(c)the period to which the pay slip relates; and
(d)the date on which the payment to which the pay slip relates was made; and
(e)the gross amount of the payment; and
(f)the net amount of the payment; and
(g)any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlement; …
Superannuation
75.The FW Act does not itself provide for an entitlement to superannuation contributions although a modern award may.
Contraventions, penalties and compensation
76.Section 44(1) of the FW Act provides that an employer must not contravene a provision of the NES.
77.Section 45 of the FW Act provides that a person must not contravene a provision of a modern award.
78.Section 539 of the FW Act provides that ss.44(1), 45, 323(1), 340(1), 351(1), 535(1), 535(2), 536(1) and 536(2) are civil remedy provisions.
79.Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of a civil remedy provision and may order that a person be reinstated to their position.
Long service leave
80.The LSL Act applied to Mr Elachi’s employment throughout.
81.On 9 May 2017, when Mr Elachi’s employment was terminated, the LSL Act relevantly provided:
4Long service leave
(1)Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer. Service with the employer before the commencement of this Act as well as service with the employer after such commencement shall be taken into account for the purposes of this section.
(2)
(a)Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall:
i) in the case of a worker who has completed at least 10 years service with an employer be:
(A)in respect of 10 years service so completed, 2 months, and
(B)in respect of each 5 years service with the employer completed since the worker last became entitled to long service leave, 1 month, and
(C)on the termination of the worker’s services after the completion of 15 years service, in respect of the number of years service with the employer completed since the worker last became entitled to an amount of long service leave, a proportionate amount on the basis of 2 months for 10 years service, and
...
(5)
(a)Where the services of a worker are terminated otherwise than by the worker’s death and any long service leave:
i) to which the worker was entitled has not been taken, or
ii) accrues to the worker upon such termination and has not been taken,
the worker shall, subject to subsection (13), be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker’s ordinary pay for the leave less any amount already paid to the worker in respect of that leave.
…
(11) For the purposes of this section:
(a)service of a worker with an employer means continuous service, whether on a permanent, casual, part-time or any other basis, under one or more contracts of employment.
(a1)the service of a worker with an employer shall be deemed to be continuous notwithstanding that the service has been broken by reason only of an interruption or determination thereof:
i) caused by the absence of the worker under the terms of the worker’s employment,
…
vi) arising from the absence of the worker for any cause by leave of the employer, or
…
but the period during which the service is so interrupted or determined shall not in the circumstances referred to in subparagraphs (iii)–(vii), by reason only of this paragraph, be taken into account in calculating the period of service,
…
82.Section 10 of the LSL relevantly provided:
10Penalties and offences
(1)Every person who contravenes or fails to comply in any respect with any provision of this Act shall be liable to a penalty not exceeding 20 penalty units.
83.Section 11 of the LSL Act relevantly provided:
11Recovery of penalties
(1)Proceedings for the recovery of a penalty under this Act are to be taken before the Local Court and may be taken by:
…
(c)a person whose rights are impaired.
(2) In any such proceedings the Local Court may, in addition to the imposition of any penalty, make such an order with respect to any payment due to a worker under this Act as might have been made in proceedings taken under section 12. Such order may be made without motion and shall be a bar to further proceedings under section 12 in respect of such payment.
Awards
Prior to 1 January 2010 - State Award
Award terms
84.The terms of the State Award as it stood from time to time were not adduced into evidence although Mr Elachi handed up a copy of an unofficial version of the award published by the Australian Federation of Employers and Industries, with pay rates with effect from 14 August 2009. The Court’s researches indicate that at all relevant times:
a)cl.10 of the State Award provided that salaries were to be paid weekly except in circumstances not relevant to this proceeding;
b)cl.12 of the State Award provided for a 17½% loading on annual leave payments;
c)cls.13 and 17 provided for sick leave and carer’s leave of 5 days in total in the first year of employment and 8 days in total each year in subsequent years; and
d)the State Award made no provision for the payment of superannuation contributions, referring instead in cl.26(vii) to Federal legislation on the subject.
1 January 2010 to 31 January 2011 – Division 2B State Award
Transfer from State to Federal jurisdiction
85.If an employment relationship between an employee and an employer who entered the national system by a State referral on 1 January 2010 had until then been governed by a State award, the terms of that award, to the extent that they were not inconsistent with the NES, continued to apply as a “Division 2B State Award” until 31 December 2010: items 3, 21 and 37 of sch.3A to the FW(TPCA) Act. In this case the Div.2B Award referred to earlier was the applicable Division 2B State Award.
86.Clause 8 of sch.A to the Modern Award provides that the terms of the Div.2B Award continued to apply to the parties until the end of the (last) full pay period commencing before 1 February 2011. For reasons given below at [254] I find that the terms of the Div.2B Award applied to Mr Elachi until 31 January 2011.
Accrued leave entitlements
87.Annual and sick or carer’s leave accrued in the period before 1 January 2010 by a person whose employment came to be governed by a Division 2B State Award is taken to have been accrued under that Division 2B State Award: item 15 of sch.3A to the FW(TPCA) Act.
1 February 2011 onwards - Modern Award
Award terms and commencement
88.The Modern Award’s terms as they stood from time to time were also not adduced into evidence although Mr Elachi handed up what appears to be a copy of the original version of the award that entered into operation on 1 January 2010. The Court’s researches indicate that at all relevant times:
a)cl.22.1 has provided that wages are to be paid fortnightly unless the employer and employee otherwise agree;
b)cl.23.2 has provided for the making of employer-funded superannuation contributions at the rate prescribed from time to time by the superannuation guarantee legislation; and
c)cl.35.3 has provided for a 17.5% loading on annual leave payments.
89.The Modern Award applied to the parties on and from 1 January 2011. However, because it provided for what was, in effect, the continuation of the Div.2B Award until the end of the last full pay period commencing before 1 February 2011, its principal provisions concerning terms and conditions of employment did not apply to the parties until a point in early February 2011. For reasons given later at [254] I find that the substantive terms of the Modern Award applied to Mr Elachi on and from 1 February 2011.
Accrued leave entitlements
90.An employee does not lose accrued rights to annual and sick or carer’s leave when a Division 2B State Award terminates or ceases to apply to the employee: item 17 of sch.3A to the FW(TPCA) Act. Those rights are to be treated as if they accrued under the NES: item 17 of sch.4 to the FW(TPCA) Act.
APPLICANT’S EVIDENCE
Dany Elachi
Employment contracts – 1999 to early 2009
91.Mr Elachi deposed that he started work with NRG Legal on 2 November 1999 as a part-time paralegal. His employment subsequently became full-time and his pay increased over time. He was not provided with a written contract of employment. In 2008, under the Employment Contract, his salary was increased to $100,000 p.a. plus superannuation together with a 30% commission on any work he introduced.
Law degree and practising certificate
92.Mr Elachi deposed that when he started with NRG Legal he was still studying for his law degree. He deposed that in mid-2000, after another paralegal (Dajana Malnersic) completed her degree and was admitted to practice, Mr Jolly asked him if he had finished his degree and he told him that he had not. In 2002, when he was left with five subjects and the practical legal training component of his course, Mr Elachi suspended his studies in order to concentrate on his work.
93.Mr Elachi deposed that a number of times during the course of his employment Mr Jolly asked him if he planned to be admitted and he always said he did but did not know when. He said that he had replied, something along the lines of:
“I will do it in the next intake. I will do it as soon as I can”.
or
“Well, soon. Hopefully this year. Hopefully next year”.
94.Mr Elachi deposed that at no time subsequent to his conversation with Mr Jolly in 2000 did he ever tell the respondents that he had finished his law degree and said in cross-examination that although he could not recall a specific conversation, he thought that he “must have” told the respondents that he had not. He further said that in the event that he had not advised the respondents it would have been “obvious” to them that he had stalled his studies.
Commission-only arrangement from March 2009
95.Mr Elachi deposed that in a meeting with the respondents on 25 February 2009 Mr O’Shea told him that NRG Legal was facing financial difficulties because of the global financial crisis and wanted to change his pay structure to one based solely on commission. He was offered a commission of 50% of what he billed. Mr Elachi deposed that when he expressed strong reservations about a commission-only pay structure, Mr O’Shea had said that it was “pretty much” a “take it or leave it” situation.
96.Mr Elachi deposed that the following discussion took place at a subsequent meeting with Mr O’Shea and Mr Jolly on 2 March 2009:
Mr Elachi:How will you calculate my annual leave? Or what happens when I’m sick? How do you calculate what I’m entitled to then?
Mr O’Shea:Under the new system, all you’ll get is your 50% share of the bills when they get paid. If you take leave, there won’t be any additional payments to you. You know, it’s the same boat Graeme and I are in. You’ll just have to factor that stuff in from now on, like we do.
…
Mr O’Shea:Well, just before we get up, let me just add that if the clients are ours, then you get 50% of your WIP on those files without regard to the WIP for any of the paralegal casuals, but Graeme’s WIP and my WIP are separate. If the clients are yours however, you will get 50% of the bill, period, even if Graeme or I do all of the work.
Mr Elachi:And how do I know that you and Graeme will continue to give me work?
Mr JollyDon’t worry, we will continue to give you work. You've got to rely on your own clients too. The more work you bring in, the more you will earn
97.Mr Elachi deposed that after considering the proposed Commission Arrangement, he met again with Mr O’Shea and Mr Jolly on 11 March 2009 and asked them to, amongst other things, pay him a minimum monthly salary of $6,500 as a safety net, which they refused to do. During that conversation words to the following effect were said:
Mr Elachi:But Neil, this is really unfair. Without a safety net, what assurances do I have that you and Graeme will continue to give me work?
Mr O’Shea:We aren't planning on changing the amount of work we give you, so don't worry about that.
Mr Elachi:That's reassuing [sic] to hear, and if that's the case, it just doesn't make sense why a minimum monthly wage is such an issue. For my own peace of mind, I need to be able to know that at least "x dollars" is coming into the household budget each month.
Mr Jolly:Dany, [the] bottom line is you'll still get paid a very good salary and about the same as you're getting now.
…
98.Mr Elachi deposed that he had a further meeting with Mr O’Shea and Mr Jolly on 12 March 2009 at which he was told that the respondents would not agree to pay him a base salary but would give him “60% of billings for your own clients”. He deposed that after further discussion Mr O’Shea said:
… You can take 80% of billings of your own clients until the end of June if they are new clients. When I say new, I mean from new sources, as well. If they are existing clients, or from existing sources, 60%. Then at the start of the new financial year, it’s back to just 60% for all your clients, whether they are new or existing or whatever.
Mr O’Shea handed him a three page document and went through some calculations which he said indicated that Mr Elachi could potentially earn more that he was already earning. Mr Elachi deposed that they then had the following conversation:
Mr Jolly:Look, even on a bad month, we won’t be giving you any less than $10,000 worth of billings. But things will even themselves out over time. And I’m going to try to get you more involved in some of the bigger matters, the cream matters.
Mr O’Shea:Anyway, we have made a final decision and we can’t agree to a base salary. Pays are due in a couple of days and we need to lock this in today. If what we’re offering is not acceptable to you, then you are entitled to consider employment elsewhere. …
Mr Elachi:Does this mean you’re not going to be paying me holiday pay?
Mr JollyThat’s right. As we discussed before, you’ll have to cover all your own leave entitlements.
Mr Elachi:I don’t know what to say. I am not happy about this at all.
Mr Jolly:Look Dany, you need to stop focussing on the negatives. We’re going to continue to give you sufficient work so that you can still earn a similar salary to what you have been earning. This won’t be detrimental to your salary. …
99.Mr Elachi deposed that one of the respondents also said in that meeting that:
The new payment structure will not be detrimental to your salary. We will continue to give you sufficient work so as to allow you to maintain a similar overall annual salary as before. Even on a worst month you can expect that we will give you at least $10,000.00 worth of billed work.
Although in cross-examination Mr Elachi conceded that the respondents did not offer him a “dollar safety net”, he said that Mr O’Shea told him not to worry because “… overall, even though on any given month it will be between 10 and $20,000, overall you won’t be any worse off”. He said that from what he was told and from the figures in the table in the three page document he was shown, he understood that he would be given approximately $10,000 to $20,000 worth of billable work per month, equating to a salary of approximately $5,000 to $10,000 per month.
100.Mr Elachi conceded that he “walked away at the 12 March meeting understanding quite clearly what the new structure was”. However, he said he did not enter the commission structure “happily or freely” and only did so because, otherwise, he would have had to leave the firm.
Breach of Commission Arrangement
Failure to provide work
101.Mr Elachi deposed that Mr O’Shea stopped giving him work as soon as the new commission structure was implemented and that Mr Jolly had also drastically reduced the amount of work he gave him, often only giving him work for his friends or family or work that was heavily discounted for other reasons. He provided a number of examples of bills which Mr Jolly had discounted. Mr Elachi deposed that the respondents kept well-paying clients to themselves and, instead of providing him with paid work, required him to spend time doing non-billable work such as training casual staff and attending CLE seminars.
102.Mr Elachi said that he did not receive $10,000 worth of billable work per month and was paid less than he had earned under the Employment Contract. Nonetheless, in cross examination he conceded that in the 2011-2012 financial year he earned approximately $107,000 which was similar to his 2009 salary of $109,000. He also agreed that, having regard to the billable hours he had worked that year, he could “quite possibly” achieve $107,000 on a “moderate or standard level of work”.
Failure to make payments
103.Mr Elachi deposed that prior to February 2009 he had been paid on a monthly basis but from February 2009 his payments became irregular and he did not receive his first commission-only payment until 9 December 2009. He deposed that there were also periods during which he received no wages for months at a time, including two periods when he was not paid for eight months. He deposed that he often had to make a number of requests before he was paid.
104.Mr Elachi conceded that he failed to bill clients regularly or in a timely manner, saying that that billing took “a back seat” because he was giving priority to urgent and substantive matters. He agreed that his pay was entirely dependent on his bills being paid but that sometimes he would not bill for “months”. On one occasion he had not submitted timesheets for five months and by the time he did Mr O’Shea told him not to bother because they were too late. Another time Mr O’Shea asked him how the firm could bill time a year after the work in question had been done.Mr Elachi said although there might have been other reasons for Mr O’Shea “wiping bills”, he accepted that often it was because he had been “so slack” at doing his job. He said that his irregular billing was due to depression.
105.Mr Elachi deposed that sometime between 20 and 24 September 2010 Mr O’Shea gave him the first breakdown of his pay under Commission Arrangement. The document related to the 2009-2010 year and indicated that his “Total Employment Cost” (“TEC”) was $57,280 (being 50% of his billed fees) being his superannuation contributions $4,730 and his gross salary of $52,550 (comprising his net pay of $42,350 and tax of $10,200). In emails sent to Mr O’Shea on 27 and 28 September 2010 Mr Elachi complained that the commission for his own clients had been calculated at 50% instead of 60%, and that superannuation was being deducted from his salary instead of being paid in addition to it. Mr Elachi deposed that on 1 October 2010 he spoke to Mr O’Shea who acknowledged that there were errors in the calculation said that he would fix them soon.
106.Mr Elachi deposed that Mr O’Shea did not rectify the errors he had identified in his September 2010 emails. Instead, on 18 March 2011 Mr O’Shea sent him an email attaching his group certificates and the master bills list for the three previous financial years and asked him to work out the amount he believed he was owed for commissions. Mr Elachi deposed that it would have been impossible for him to do those calculations because he needed to have access to his timesheets. He deposed that he had also felt that it would have been more appropriate for Mr O’Shea to do the calculations first and then ask him to check them. He deposed that he expressed those sentiments to Mr O’Shea but Mr O’Shea never made those calculations.
Effects of breach of Commission Arrangement
2009 and 2010
107.Mr Elachi deposed that in 2009 his attendance at work was regular. However, the respondents’ failure to pay him or to provide him with work started to overwhelm his mood and caused him to worry constantly. He deposed that he became concerned that he was becoming depressed and, as a result, in mid-2010 he started consulting a psychologist.
2011 and 2012
108.Mr Elachi deposed that in mid-February 2011 Mr Jolly promised to give him two matters to work on. He deposed that he had received nothing from Mr Jolly by 2 March 2011 at which point he sent him an email complaining that the respondents had hardly given him any work that year. He also said:
… I do believe, especially since it was yours/Neil’s idea to put me on 100% commission, that hand in hand with that you have an obligation to give me enough work to continue to earn a wage. I don’t think it’s fair to be put on a commission and then have the source of that commission disappear. … I think I have earned the right to be frank with you. I think it is okay to let you know that morale is low and it has been quite low for a long time now. I think you sense this.
109.Mr Elachi deposed that he had used the term “low morale” instead of referring to the fact that he was depressed because he had been trying to be non-confrontational. Although he had not, at that time, told the respondents he was depressed about his work situation he said that it would have been obvious to them.He also deposed that to avoid confrontation, he did not directly allege that the respondents had broken their promise to give him work.
110.Mr Elachi deposed that on 15 March 2012 he had a conversation with Mr Jolly during which he said that he was “extremely unhappy”, that his morale was “rock bottom” and that he was “not in a good place mentally”. He deposed that Mr Jolly told him that he could not promise him any work but could give him some time to finish his degree. Mr Elachi deposed that in another conversation on 9 May 2012 Mr Jolly said:
Dany, I can see that you’re depressed. I’ve spoken to some of the others around the office and everyone agrees you’re a bit flat.
…
… you can’t be counting on any more work from me or Neil. You have to assume that the level of work we’re giving you now is all the work we are ever going to give you. Then you need to make a decision about whether you wish to stay or not.
111.Mr Elachi deposed that on 1 June 2012 he had a conversation with Mr Jolly during which he cried and said that he had not been attending work because he did not “feel well mentally” and that work was a big contributory factor to his feelings. Mr Elachi said that when he told Mr Jolly that his depression was related to work Mr Jolly “hurried that conversation along” although from that point that it was understood between him and Mr Jolly that he was depressed and that his work was a factor.
112.Mr Elachi deposed that on 4 June 2012 Mr Jolly told him that he would be required to attend work each day between 10am and 2pm and then use the time after he left work each day to “get help and think”. He deposed that, after that, Mr Jolly started giving him work and he was arriving at work on time and working full, regular days.
113.Mr Elachi deposed that his progress suffered a set-back when, on 21 August 2012, Mr O’Shea gave him a bundle of documents concerning his pay in the 2011/2012 financial year. Mr Elachi deposed that Mr O’Shea had miscalculated his pay by applying a flat 50% commission instead of identifying his clients and applying a 60% commission to their bills. He deposed that he also noticed that superannuation was still being taken out of his pay. Mr Elachi deposed that although he was concerned about the miscalculations and felt that the respondents had deliberately not paid him correctly, he was unable to raise the issue with them because he had not wanted to upset them at a time when Mr Jolly had started giving him work again. The injustice of the situation continued to disturb him and the improvements made since June 2012 began to dissipate and he fell back into deep depression.
2013 and 2014
114.Mr Elachi deposed that throughout late 2013 and early 2014 his psychological state was extremely “tenuous”, which made it difficult for him to attend work and frequently led him to be absent for days at a time.
Leave of absence
115.Mr Elachi deposed that on 15 January 2014 he had a meeting with Mr Jolly during which they had the following conversation:
Mr Elachi:… I have made a decision over the holidays to start taking anti-depressant medication. I would like you to keep that strictly confidential by the way.
Mr Jolly:Why don’t you take six months off work to sort through your depression, and come back when you feel better?
Mr Elachi:When I come back, would you give me work and put me back on salary? That has to be part of it.
Mr Jolly:No. Ladan … has come back to work for us and she is keen to build a migration law practice. And that’s where I see you too, building a practice of your own.
…
Mr Elachi:I’m going away for a family holiday soon. Can I spend the few weeks after I return, say until the end of February, to sort out my files, close old files, bill any files that need to be billed etcetera, and just clear any crap that has accumulated over the past few years? At the end of that period, maybe we can sit down in early March and work out certain days and hours that I can commit to. But even then, I have to tell you, it really would need to involve you giving me some work again, something to come to work for. You don’t need to fill my day initially, but just something to get me re-connected with the firm.
Mr Jolly:Okay, close your files, and we will revisit things in March. But I don’t want you taking on any more work if you can avoid it. Just concentrate on closing the files.
…
Mr Jolly:I also want you to look into finishing your degree and getting admitted as soon as possible.
116.Mr Elachi deposed that he and Mr Jolly had another conversation in February 2014:
Mr Jolly:You should take six months off work to sort out your issues and then come back refreshed. You’re hardly earning anything anyway. You’d make more money cutting grass. I found another … file where the lease was not yet registered. I can’t give you work because I can’t trust you with it.
Mr Elachi:But Graeme, I need some work to chew on so when I commit to certain days and times, I am able to follow through mentally. I have been finding it extremely difficult to come in knowing that there is no work for me.
Mr Jolly:Oh really? But you’re just telling me you have a bunch of bills to complete. How long has the … matter been sitting around for again?
117.Mr Elachi deposed that at that stage he knew that he was not fit for work. He deposed that he thought about taking leave and making a worker’s compensation claim but was afraid that formally blaming his stress and depression on the respondents would anger them and lose him his job.
118.Although he had agreed with Mr Jolly that he would have his outstanding bills completed by the end of February 2014, he had not been able to get them done. On 4 April 2014 Mr Elachi had a meeting with Mr Jolly which Mr Jolly opened by saying:
… One day you’re in, then we don’t see you for a week. I have no idea when I can expect you in the office. Something needs to happen. This can’t continue.
He deposed that after Mr Jolly alleged that he had failed to complete certain work on certain files, their conversation continued:
…
Mr Jolly:You haven’t finished off the bills and closing the files have you?
Mr Elachi:No, I haven’t.
Mr Jolly:I didn’t think so. You’ve had plenty of opportunity. I want you now to take six months off work.
Mr Elachi:I’m not sure that that is the solution to the problem, Graeme.
Mr Jolly:No, I really can’t cut you any more slack. You have to take this time off.
Mr Elachi:But Graeme, just going away and not having any structure might be counterproductive. And besides, there’s no point taking time off, getting better, then coming back to work to the same set of conditions that led us to this point. You giving me work again and treating me as a regular employee is key to this whole thing. I need you to acknowledge that.
Mr Jolly:I promise, when you come back, I will give you work again. And the more I trust you with work, the more work I will give you. Use the six months to get counselling. Go to the gym, lose some weight. Work on getting yourself admitted.
Mr Elachi:Actually, I’m meeting with the head of the university law school next Monday. I am hoping that he will agree to give me advanced standing for the subjects I completed years back. That should leave me with just five subjects plus my PLT.
Mr Jolly:That sounds good.
Mr Elachi deposed that they also agreed that he would come in for a few hours, three to four times a week for a month to close his files. The only note of that conversation introduced into evidence was an email Mr Elachi sent to himself that day, but which was not completely reproduced in ex.A1. Amongst other things, it stated:
Just met with Graeme from around 5.50pm to 6.20pm
338.On 25 November 2014, Mr Elachi responded to an email from Mr Jolly sent the previous day and relevantly said:
Unfortunately, no, I am NOT “aware that in 1999 when we first set an annual amount to be paid to you the amount agreed on was the TEP [sic] amount.” I don't even know what “TEP” stands for!
…
You say the “same situation occurred in each of the later 10 increases in your annual payments up to the last one in May 2008”. There were not that many pay increases, Neil. And in relation to the last one (i.e. the last one before the pure commission structure), we negotiated on a super exclusive basis. In other words, I asked for a salary of $100,000 plus super. This is how employees think, Neil. We don't think in terms of TEC's or TEP's. If you wish to make super part of a salary figure, it is incumbent on you to spell that out. You did not spell that out when we were discussing the commission percentages back in 2009. I was well within my rights to assume that the 50% / 60% / 80% figures being discussed were my gross salary only (and that super was payable in addition to it).
339.However, in his account of the parties’ meeting on 12 March 2009 set out in his affidavit of 9 September 2016, Mr Elachi records his then-salary being discussed in TEC terms. At the time, Mr Elachi’s salary was $100,000 p.a. plus a $9,000 superannuation contribution:
Mr O'Shea then handed to me a three-page document. … Our conversation continued to the following effect:
Mr O'Shea:I want you to go to the last page. You're currently on $110,000 per annum, right? That's the equivalent of $9,166 per month. For you to maintain that under the new structure, Graeme and I need to give you $18,333 worth of billings each month. Are you following me? …
…
340.The page in question, as reproduced in ex.A1 the annexure to Mr Elachi’s affidavit, said:
341.That document roughly reflected the latter’s remuneration in terms of an annual TEC of $110,000 and a monthly TEC of $9,166. This is in the context of all of Mr Elachi’s NRG Legal Payment Summary Forms reproduced in the exhibit to his affidavit, ex.A1, referring to TEC.
342.The conversation on 12 March 2009 is recorded by Mr Elachi as continuing to the following effect:
…
Mr O'Shea:The table shows what you'll earn from us based on the fees we give you. If we give you $18,333, you'll earn the same as you're earning now. Then on top of that, if you turn to the second page, I've done a further table for your own clients. On top of that, if you can bring in an additional $2,000 per month yourself, you'll get another $1,200. Or if you bring in $10,000, then that's an extra $6,000 for you. So that's based on 60% which we've now agreed to. You could end up earning more under this structure than previously.
343.The further table referred to Mr Elachi’s potential future earnings from work for his clients in TEC terms and read:
344.Mr Elachi’s evidence of the discussion and the contents of the documents Mr O’Shea gave him make it clear enough that the respondents were proposing commission payments on a TEC basis even if Mr Elachi did not appreciate that, which seems to have been the case. Importantly, the offer to continue Mr Elachi’s employment on a TEC basis was made and accepted. For that reason, as well as because of the finding in relation to the first part of this prayer, the claim to superannuation contributions in addition to commission payments at the agreed percentages is not made out.
Wages – from 1 January 2011 and continuing – Modern Award
345.The fourth prayer for pecuniary compensation sought an amount for wages and entitlements under the Modern Award in respect of an open-ended period commencing on 1 January 2011. Earlier in his amended points of claim Mr Elachi claimed:
… the quantum of all unpaid or underpaid wages due to him on a month to month basis … as a Level 6 Law Clerk pursuant to the Modern Award from 1 January 2011 to date and continuing.
346.As with the earlier claim for award-based wages, no evidence was adduced of when Mr Elachi performed work for NRG Legal during the period 1 January 2011 to 13 May 2014, at which point his leave of absence commenced. It can be accepted that he did no work for NRG Legal between 13 May 2014 and the termination of his employment on 9 May 2017. As previously, without being taken to substantive and particular evidence, I cannot confidently conclude that Mr Elachi’s attendance in the period 1 January 2011 to 13 May 2014 was such that he has proved he was entitled through the entirety of that period to award-based wages at the full weekly ordinary time rate. This is particularly so as the evidence is clear that Mr Elachi’s health was not strong in this period. Being unable to reach that conclusion, I find that the claim to a quantifiable entitlement to award-based wages in that period has not been made out.
347.Again, compensation in respect of sick leave will not be ordered.
348.In the period 14 May 2014 to 9 May 2017, Mr Elachi was absent pursuant to the agreement reached in April 2014. Because he performed no work in that period he was not entitled to be paid award wages that were based on the performance of work. After that point he was no longer employed by the respondents.
Compensation – superannuation.
349.The fifth prayer for pecuniary compensation sought an amount for unpaid superannuation contributions in respect of an open-ended period commencing on 2 November 1999. Given the termination of Mr Elachi’s employment effective 9 May 2017, I take the period of claim to end on 9 May 2017.
2 November 1999 to 31 December 2010
350.Mr Elachi alleged an entitlement to compensation in relation to unpaid or underpaid superannuation contributions for the period 2 November 1999 to 31 December 2010 relying on “an express term” of the Employment Contract and on “the Superannuation Guarantee Act 1992 (Cth) and related legislation”.
351.Presumably, the alleged express term is to be found in the conversation between Mr Elachi and Mr O’Shea a few days after Mr Elachi started work on 2 November 1999. Mr Elachi deposed in his affidavit of 9 September 2016 that the relevant effect of the conversation was:
Mr O’SheaDany, we’re going to be paying you a flat hourly rate of $15.38.
Mr Elachi Okay. Does that include superannuation?
Mr O’SheaNo. Superannuation will be paid in addition to that.
Mr Elachi Okay.
Accepting for present purposes that Mr O’Shea said what is quoted, his statement that superannuation was paid in addition to salary is not clearly a contractual promise, particularly as it post-dates the commencement of employment, rather than simply an acknowledgement of how NRG Legal implemented the compulsory superannuation system in its business. The quoted passage does not persuade me that, perforce of it, the Employment Contract contained an express term to the effect that the respondents would make superannuation contributions for Mr Elachi’s benefit.
352.Further, the Commonwealth’s superannuation guarantee legislation does not impose obligations on employers that may be enforced in a proceeding such as this. The Superannuation Guarantee Charge Act 1992, in combination with the Superannuation Guarantee (Administration) Act, does not, in terms, impose an obligation to pay superannuation, although that is its practical effect. Relevantly, unless an employer makes superannuation contributions on behalf of an employee, the employer becomes liable to pay the superannuation guarantee charge to the Commonwealth which then receives it for the ultimate benefit of the employee in question. In broad terms, a charge will accrue unless superannuation contributions are paid: see Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2011) 244 CLR 97 at 101-103 [3]-[9], 114 [54].
353.Consequently, there is no “breach” that can be compensated for in this proceeding by an order for the payment of a sum to Mr Elachi. In short, there is no relevant cause of action.
354.For completeness, it should be observed that the State Award and the Div.2B Award made no provision for the payment of superannuation contributions and so no claim lies in that quarter either. Further, if the claim had otherwise been maintainable, by virtue of the operation of ss.357 and 369 of the IR Act that part of it which concerned payments that had not been made prior to 13 March 2009 would not be.
1 January 2011 to 9 May 2017
355.Mr Elachi also alleged that in the period 1 January 2011 to 13 May 2014, in breach of their obligations under the superannuation legislation, the Modern Award and the alleged term of the Employment Contract, the respondents failed to make superannuation contributions on his behalf. He particularised that allegation in respect of the 2010/2011 financial year as follows, referring to a superannuation contribution of $4,730 as an underpayment:
(iii)
30 June 2011
$4,730 representing an underpayment of $2,060.14 by reference to the Applicant’s gross annual income.
356.Mr Elachi did not identify where the $4,730 figure for 2010/2011 came from. It was not the contribution paid in respect of that year but, rather, the contribution paid in respect of the 2009/2010 year, as his superannuation payment history and what Mr O’Shea described as his “NRG Legal Payment Summary Form”recorded. It is also not apparent how Mr Elachi arrived at the alleged underpayment of $2,060.14. The sum of $4,730 and $2,060.14 is $6790.14 which is 9% of $75,446. $75,446 was Mr Elachi’s salary in 2010/2011 in respect of which a superannuation contribution was $7,326 was paid, according to the relevant NRG Legal Payment Summary Form and Mr Elachi’s superannuation payment history. The alleged underpayment of $2,060.14 appears to be a mistake.
357.The respondents took the Court to documents reproduced in the exhibit to Mr O’Shea’s affidavit, ex.R8, which recorded that superannuation contributions of 9% or about 9% of earnings were paid for Mr Elachi’s benefit in the financial years 2010/2011 (9.71%), 2011/2012 (8.99%), 2012/2013 (8.99%) and 2013/2014 (9%). The underpayments in 2011/2012 and 2012/2013 were, in each case, the sum of $0.40 and appear to arise out of rounding.
358.As Mr Elachi performed no work for NRG Legal after the 2013/2014 financial year, no question of superannuation arises in respect of the period from 1 July 2014 to the end of his employment on 9 May 2017.
Compensation – leave entitlements
359.As part of a catch-all prayer for relief in the form of pecuniary compensation, a claim was made in para.20 of the amended points of claim for compensation for accrued but unpaid NES and/or Modern Award entitlements to annual leave, sick and carer’s leave and long service leave. Those issues were addressed earlier in these reasons.
Compensation – breaches of the FW Act
360.Mr Elachi alleged that the respondents had breached various and numerous provisions of the FW Act and of the Modern Award and, in the catch-all prayer for relief just referred to, sought compensation for those breaches. Many have already been addressed by the foregoing discussion. The ones that have not concern Mr Elachi’s allegations that the respondents breached the following statutory and award provisions:
…
(d)Section 116 by failing to pay the Applicant when he was absent from his employment on days or part-days that are a public holiday;
…
(g)Section 323(1)(c) by failing to pay the Applicant at least monthly the amounts payable to him in relation to the performance of work;
(h)Section 340(1) for taking adverse action against the Applicant;
…
(j)Section 535(1) for failing to make and keep for seven years employee records in respect of the Applicant;
(k)Section 535(2) for failing to keep employee records in a form prescribed by the regulations and which include information prescribed by the regulations in respect of the Applicant:
(l)Section 536(1) and the related Fair Work Regulations 2009 by failing to provide payslips to the Applicant within one working day;
(m)Section 536(2) and the related Fair Work Regulations 2009 by failing to provide payslips to the Applicant in the prescribed form and containing certain information;
…
(q)Section 44(1) (contravening the National Employment Standards) by virtue of contravention of section 116 (payment for absence on public holiday).
…
(s)Section 45 (contravening the Modern Award) by virtue of contravention of clause 22.1 of the Modern Award (payment of wages to be made fortnightly).
…
(x)Section 45 (contravening the Modern Award) by virtue of contravention of clause 38 of the Modern Award (payment for absence on public holiday).
(y)Sections 342(1) and 351(1) for taking adverse action against the Applicant.
Public holiday pay
361.Mr Elachi did not particularise the allegation that the respondents had breached s.116 of the Act, which provides for paid leave on prescribed public holidays. Clause 38 of the Modern Award makes no provision in that regard, simply referring to the fact that the FW Act does so. However, the nature of his employment under the terms of the Commission Arrangement excludes the possibility that Mr Elachi was paid for any public holidays from the commencement of that arrangement until his departure in May 2014.
362.He is entitled to compensation in that regard. The entitlement can be determined by reference to uncontroversial public records and further evidence is not necessary. However, the number of paid public holidays varies year by year depending on whether they fall on weekends or weekdays and the minimum rates to which Mr Elachi was entitled changed over time. The parties will be directed to bring in a draft minute of order quantifying the compensation in question, namely unpaid public holiday entitlements from the commencement of the Commission Arrangement on 1 March 2009 until 13 May 2014.
Periodicity of payment
363.The FW Act requires wages or salary to be paid at least monthly and the Modern Award requires that they be paid at least fortnightly unless the employer and employee otherwise agree. Although the parties could contract out of the Modern Award’s requirement, and I accept that they did and that contractually payment to Mr Elachi was dependent on payment to NRG Legal, they could not contract out of the Act. The respondents’ failure, at least during the first year of the Commission Arrangement, to pay Mr Elachi at least once per month on occasions contravened the Act. However, how that failure might sound in financial compensation was not made clear as no submissions were made in relation to it. In the circumstances, and subject to consideration of Mr Elachi’s claim to compensation in the nature of general damages which follows, I have not been persuaded that pecuniary compensation should be ordered in connection with that conduct.
Adverse action
364.Mr Elachi alleged that from about 13 November 2014 he had sought a return to work and reinstatement of his prescribed pay and leave entitlements. He alleged that this amounted to the exercise of a workplace right and that the respondents’ refusal to accede to his requests was motivated by the fact of those requests as well as because he:
(a)suffered from, or was assumed to be suffering from, a mental disability;
(b)did not attain additional legal qualifications:
365.The allegation therefore concerns alleged breaches of s.340 and s.351 of the FW Act. The FW Act does not prescribe lack of qualifications as a proscribed reason for taking adverse action and so that alleged motivation need not be considered further.
366.Mr Elachi alleged that the respondents’ refusal to accede to his requests amounted to adverse action because it:
a)injured him in his employment;
b)altered his position to his prejudice; and
c)discriminated between him and others of the respondents’ employees.
367.Mr Elachi’s submissions did not address those contentions.
368.The phrase “injure an employee in his or her employment” covers injury of any compensable kind and the phrase “alter the position of an employee to the employee’s prejudice” is a broad additional category which covers not only such legal injury but also any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 17-18. When injury to an employee in his or her employment or the alteration of an employee’s position to his or her prejudice is alleged, an assessment of the impugned conduct calls for a comparison of the position of the employee before and after the employer’s alleged acts to determine the nature of any injury or prejudicial alteration: McIlwain v Ramsey Food Packaging Pty Ltd (2006) 154 IR 111 at 198 [349] per Greenwood J. In Australian Workers’ Union v BHP Iron-Ore Pty Ltd (2000) 106 FCR 482 Kenny J said that before an injury in employment or a prejudicial alteration will be found:
… it must be possible to say of an employee that he or she is, individually speaking, in a worse situation after the employer's acts than before them; that the deterioration has been caused by those acts; and that the acts were intentional in the sense that the employer intended the deterioration to occur. (at 499 [54])
See also BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 102 FCR 97 at 108 [35]; Unsworth v Tristar Steering and Suspension Australia Ltd (2008) 216 FCR 122 at 137 [24], 139 [31].
369.I have found that Mr Elachi agreed in April 2014 to absent himself from the NRG Legal offices and to do so on the terms Mr Jolly put to him. Mr Elachi’s present complaint is that the respondents did not revise those terms when he asked them to. It was not contended that he had a reasonable basis to expect that they would and so their refusal to simply amounts to no change and consequently no injury. Similarly, Mr Elachi’s position was not altered to his prejudice by the respondents insisting that the agreement they had reached with him be observed.
370.It is also not apparent what the discrimination alleged by Mr Elachi was. The discrimination between employees referred to in item 1 of s.342(1) involves an employer deliberately treating an employee, or a group of employees, less favourably than others of its employees in the same or comparable circumstances: Construction, Forestry, Mining & Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697 at [43]; Morton v Commonwealth Scientific and Industrial Research Organisation (No 2) [2019] FCA 1754 at [70] – [71]; Rangi v Kmart Australia Ltd [2019] FCA 1778 at [48] – [49]. However, Mr Elachi has not identified how the respondent’s insistence on him observing their agreement amounted to discrimination in the relevant sense.
371.For those reasons, I find that the respondents did not take adverse action, as that term is understood for the purposes of the FW Act, against Mr Elachi as alleged.
372.It is therefore not necessary to consider why the respondents acted as they did and whether they discharged the onus imposed by s.361 of the FW Act. However, in the event that I am wrong in finding that the respondents’ insistence on Mr Elachi abiding by their April 2014 agreement did not amount to adverse action, I will address that question.
373.The effect of s.361 of the FW Act is that, in proceedings under s.340 or s.351, if an allegation of adverse action for a prohibited reason is made, it is presumed that the action was taken for that reason, or with that intent, unless the employer proves to the contrary: Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 at 501 [109] per Wilcox and Cooper JJ. In Victoria (Office of Public Prosecutions) v Grant (2014) 246 IR 441 at 448 [32], Tracey and Buchanan JJ summarised as follows the principles concerning ss.360 and 361 established by the High Court in Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 and Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243:
·The central question to be determined is one of fact. It is: “Why was the adverse action taken?”
·That question is to be answered having regard to all the facts established in the proceeding.
·The Court is concerned to determine the actual reason or reasons which motivated the decision-maker. The Court is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker. Nor should such an enquiry be made.
·It will be “extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer”.
·Even if the decision-maker gives evidence that he or she acted solely for non-proscribed reasons other evidence (including contradictory evidence given by the decision-maker) may render such assertions unreliable.
·If, however, the decision-maker’s testimony is accepted as reliable it will be capable of discharging the burden imposed on the employer by s 361.
374.The effect of s.360 of the FW Act is that if adverse action is taken for a number of reasons, any one of them that is a substantial or operative factor in the reasons motivating the action is taken to be a reason for the action: Barclay’s case.
375.Dealing first with the allegation that the respondents’ reluctance to take Mr Elachi back at the end of 2014, which was pleaded in terms of the respondents’ understanding of his mental condition or the imputation to him of a disability, it is to be noted that s.351of the FW Act speaks of adverse action being taken:
… because of the person’s …mental disability …
The operation of that part of the section depends on the employee having a mental disability but although it is plain that at one time Mr Elachi had serious depression, he did not demonstrate that, in November 2014, he still suffered from it. In that connection, it was not suggested that a depressive illness could not be a disability or that Mr Elachi’s behaviours prior to April 2014 could not have been a manifestation of such an illness: see the discussion in Western Union Business Solutions (Australia) Pty Ltd v Robinson (2019) 290 IR 414 per O’Callaghan and Thawley JJ. It was also not suggested that the propounded adverse action was lawful under one or more of the anti-discrimination Acts listed in s.351(3) or because of the inherent requirements of Mr Elachi’s particular position: see s.351(2)(b) and Western Union v Robinson.
376.Dr Basten’s second report records that, relevantly, Mr Elachi consulted him on 16 April 2014, 7 May 2014, 18 June 2014, 16 July 2014, 23 December 2014 and 6 May 2015. In his first report, dated 11 March 2015, Dr Basten stated:
The last time you came to see me was from April 2014 for several months. Again you represented with a major depressive disorder. …
Since then, you have not been at work and this has helped your emotional state considerably. At the same time you have resolved to complete your university degree and to advocate for your rights at work in a healthy way. In this context your mood has improved and I consider that your depressive disorder is in partial or complete remission.
It should be noted that the consultation immediately preceding the writing of that report took place on 23 December 2014, roughly 5 weeks after Mr Elachi wrote his 13 November 2014 email to the respondents requesting reinstatement. Dr Basten’s report points to Mr Elachi having been free or partially free of his depression no later than 23 December 2014 and, in all probability, at some point before that.
377.In cross-examination Mr Elachi’s evidence was that:
I said to the respondents that I was ready to come back to work in November of 2014. My claim for damages in respect of my psychiatric injury never related to a period beyond that.
So, Mr Elachi’s own case is that he was no longer suffering from depression and its effects when in November 2014 he sought to return to work.
378.Given those circumstances I would not be prepared to find that Mr Elachi suffered from depression at that time. That being so, s.351 of the FW Act has no relevant operation in this case.
379.However, in the event that it nevertheless does, the respondents’ evidence concerning the motivation for the respondents’ relevant conduct was Mr Jolly’s express reliance in his affidavit on what he had said in his email to Mr Elachi of 14 November 2014, quoted earlier and referred to further shortly, and Mr O’Shea’s reliance in his affidavit on the respondents’ email correspondence with Mr Elachi from 26 November 2014 to 24 December 2014, of which only the earlier part is relevant to this issue.
380.In his 13 November 2014 email, Mr Elachi wrote to the respondents noting that 6 months had passed and stating that he was “due to return”. Having already pressed for payment of outstanding commissions, he then addressed at some length questions of future pay and entitlements. As a postscript he added:
(p.s. I have an exam on Wednesday 26 November, so it might be best to just have me start after this date.)
381.Mr Jolly replied by email the next day saying, relevantly:
…
As for moving forward with NRG, you will recall your return was predicated on your fulfilment of certain terms set out in my email attached. This did not include the bombshell, which you dropped on us after this email, which was that you had not even completed your law degree. What disappointed me personally was that in all of the 10 years of my firstly asking and then demanding that you complete your practical legal training so that you could obtain your practising certificate you never once made mention of this. So you know it was a shock to all of us. As you know we have always supported you and so it goes without saying that we would agree to provide the references to both your University and to the Legal Admissions Board, in order for you to obtain exemptions to make the process of obtaining your practising certificate faster.
As you are well aware our understanding for any future role in NRG was on the basis that you obtain your practising certificate. The other requirements we discussed were more delicate, as your inability to complete day to day tasks at the office and within the office hours (coming from 5pm till morning while it suited you was not ideal for us) surrounded issues which only you were aware of and I only at a peripheral level. … You need to have a good look at what you really want to do and fulfil the promises you made to us, if you want a place in this firm.
…
I would be happy to see you in person to discuss further if you want. Otherwise we wish you well in your journey and keep us notified of the status of your studies. …
382.Notwithstanding what he had said months earlier in his email of 14 April 2014, Mr Elachi remonstrated in his reply of 18 November 2014, stating that he was upset that the respondents were insisting on him obtaining a practising certificate before he could return to work. He wrote again on the morning of 21 November 2014 and canvassed the subject saying that he was willing to delay his return date if matters related to his future employment could be resolved. He wrote again that afternoon asking if he was to return to work after his final exam the following week.
383.On 24 November 2014 Mr O’Shea replied saying:
In relation to both of your points we are very clear that any consideration of you returning to work at NRG Legal was subject to you meeting certain milestones.
The main one being that you had to obtain your Legal Practicing [sic] Certificate.
That is also the reason we provided you with the letters to your university and the Legal Admissions Board, to assist you.
If you are due to obtain your Legal Practicing [sic] Certificate by June 2015 then that would be the earliest possible date for us to consider your return.
In relation to pay structure, you left on a specific pay structure that you had been on for a number of years and that is what you would return on.
When you left there was no discussion of any change of pay structure.
You have repeatedly stated that you cannot return to work on the same pay structure so please advise us if that is your final decision as we, just as you, need to know what may or may not happen in June 2015.
384.First, that correspondence satisfies me that the fact that Mr Elachi asked to return to work was not a reason why his request was refused, which is the circular concept he advances. Secondly, the correspondence satisfies me, notwithstanding the lack of direct affidavit or oral evidence on the subject, that the respondents, and in particular Mr Jolly, did not want Mr Elachi returning to work until he was a solicitor. I accept, from the consistency and firmness of their contemporaneous complaints and the vagueness of Mr Elachi’s claim to have advised his lack of academic progress, that the respondents did not know until early 2014 that Mr Elachi had not completed his law degree. As a corollary I accept that they were concerned by his long standing prevarication over his admission and infer that they were not willing to run the risk of enabling further prevarication.
385.In the event that s.351 of the FW Act is engaged in this matter I find that the respondents have demonstrated that their refusal to permit Mr Elachi to return to work in November 2014 was not motivated by his health issues, even though they had been important in April 2014, but by the fact that he had not yet signed the roll.
Failure to keep prescribed records for a prescribed time
386.The evidence indicates that the respondents’ record keeping was haphazard and esoteric at the relevant times and it was not demonstrated that their records concerning Mr Elachi’s employment and remuneration satisfied the requirements of the FW Regulations. As the prescribed records were not kept, they could not have been kept for the prescribed period.
387.However, but subject to consideration of Mr Elachi’s claim to compensation in the nature of general damages, notwithstanding that that conduct contravened the FW Act, it has not been demonstrated that it should sound in pecuniary compensation.
Failure to provide pay slips timeously and as prescribed
388.The evidence demonstrated that weekly pay slips were not provided to Mr Elachi. In the absence of submissions on the point, it has not been demonstrated that pecuniary compensation should be ordered in relation to this conduct.
389.What the respondents did give Mr Elachi from time to time did provide a lot of the information which was nominally required by the FW Regulations but I find that the NRG Legal Payment Summary Forms were supplied so infrequently as to be of little practical use except for taxation or annual accounting purposes.
390.Again, however, and subject to consideration of Mr Elachi’s claim to compensation in the nature of general damages, it was not demonstrated why pecuniary compensation should be ordered in relation to these contraventions.
Compensation – general damages
391.Mr Elachi alleged that the respondents’ alleged contraventions of the FW Act had caused him pain, suffering, distress, hurt, humiliation and psychiatric injury in the form of Major Depressive Disorder (recurrent. severe). He sought pecuniary compensation in respect of those matters in the following terms:
The Applicant seeks an order pursuant to sections 545(1) and 545(2)(b) of the Fair Work Act 2009 for compensation for loss suffered by the Applicant because of contraventions of the civil remedy provisions of the Fair Work Act 2009 as relating to the Applicant's pain. suffering, distress, hurt, humiliation and psychiatric injury pleaded at paragraph 68.
392.Sections 540 and 545 of the FW Act relevantly provide:
540 Limitations on who may apply for orders etc.
Employees, employers, outworkers and outworker entities
(1)The following persons may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision, only if the person is affected by the contravention, or will be affected by the proposed contravention:
(a) an employee;
…
545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
…
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
(c)an order for reinstatement of a person.
393.I have found that the respondents contravened the following provisions of the FW Act:
a)s.44(1) in respect of a contravention of s.116: failure to provide paid leave on public holidays;
b)s.323(1)(c): failure to pay salary or wages at least monthly;
c)s.535(1): failure to keep prescribed records for 7 years;
d)s.535(2): failure to keep records with the prescribed information and in the prescribed form;
e)s.536(1): failure to provide pay slips within one day of payment; and
f)s.536(2): failure to provide pay slips with the prescribed information and in the prescribed form.
394.While I accept that the manner and amount of remuneration under the Commission Arrangement caused Mr Elachi great dissatisfaction and I also find, based on Dr Basten’s evidence, that Mr Elachi’s depression was caused, at least in part, by his work environment, I am not persuaded that any of the statutory contraventions that have been made out caused loss and damage of the sort alleged. That is because it has not been made apparent that those contraventions affected Mr Elachi in the manner alleged, namely by causing him “pain, suffering, distress, hurt, humiliation and psychiatric injury”. In concluding that this allegation has not been proved, and as far as the periodicity of payment is concerned, I have not overlooked Mr Elachi’s frequent requests of the respondents that he be paid. However, those requests concerned the payment of allegedly overdue commission rather than the lack of monthly payments and he did not identify in what way breaches of, specifically, s.323(1)(c) affected him.
Reinstatement
395.An order for the reinstatement of an employee need not necessarily require that individual’s return to the position they held before they were dismissed: Port Kembla Coal Terminal Ltd v Construction, Forestry, Mining and Energy Union (2016) 248 FCR 18 at 99 [281] per Jessup J, Rangiah and White JJ agreeing at 137 [463] and 158 [571]. However, the Court will not grant such relief if the working relationship between the parties has broken down: Shea v TRUenergy Services Pty Ltd (No.6) (2014) 242 IR 1 at 139-141 [850]-[861]. Mr Elachi has alleged that the respondents have treated him poorly and misled him. The respondents seem to feel the same way about Mr Elachi. It appears to me that the relationship of trust and confidence which once existed between the parties has broken down.
396.But in any event, although the Court is empowered by the FW Act to order reinstatement when there has been a breach of a civil remedy provision, it would be inappropriate to make such an order if the remedy had no real connection with the contravention which caused the power to be engaged. Section 540 of the FW Act suggests as much by, relevantly, limiting access to the remedies available under s.545 to employees who are affected by contraventions of civil remedy provisions. Mr Elachi has been affected by, for instance, the respondents’ failure to provide paid leave on public holidays; but the proper remedy for that is pecuniary compensation because it is a pecuniary loss that he has suffered. In none of the other civil remedy provision breaches that I have been found, am I persuaded that reinstatement would be a remedy appropriate to and commensurate with the wrong.
397.For these reasons, reinstatement will not be ordered.
CONCLUSION
398.Most of Mr Elachi’s claims for compensation have not been made out. However, he has proved a very small underpayment of superannuation contributions and a failure to provide him with paid leave on public holidays. There will be orders in relation to these matters.
399.Mr Elachi has also proved that the respondents contravened the FW Act in certain respects. A hearing on potential penalties will be the next stage of this proceeding.
400.The matter will be listed for directions.
I certify that the preceding four hundred and zero (400) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 30 September 2020
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