ERGT Australia Pty Ltd v Kevin Govender
[2021] FWCFB 4992
•17 AUGUST 2021
| [2021] FWCFB 4992 |
| FAIR WORK COMMISSION |
STATEMENT |
Fair Work Act 2009
s.604—Appeal of decision
ERGT Australia Pty Ltd
v
Kevin Govender
(C2021/2800)
VICE PRESIDENT CATANZARITI | SYDNEY, 17 AUGUST 2021 |
Appeal against decision [2021] FWC 1788 of Deputy President Binet at Perth on 31 March 2021 and order PR728302 Deputy President Binet at Perth on 28 April 2021 in matter number U2020/11820.
[1] On 3 August 2021 we issued a decision 1 in this matter. In that decision we determined as follows:
“• Permission to appeal is granted in relation to the two grounds of appeal.
• The appeal is upheld in respect of both grounds of appeal.
• The Deputy President’s determination is quashed insofar as it concerns the payment of any compensation to Mr Govender.
• The order 2 that ERGT pay Mr Govender the sum of $24,633.75 is quashed.
• ERGT are not required to pay any compensation to Mr Govender. 3
[2] Subsequent to issuing the decision, on 8 August 2021 Mr Govender wrote to the Commission stating as follows:
“Dear Vice President Catanzariti
Thank you for your decision regarding C2021/2800.
However, your calculation regarding compensation did not factor the leave entitlements which was included in the Total Severance Pay. Leave entitlements are not considered remuneration. There are a number of previous fair work cases which have excluded leave entitlements to calculate compensation.
I have attached my redundancy letter and workings provided to me by ERGT Australia for my final pay which clearly indicate leave entitlements are included in my final payout for $40,427.03.
Below is my calculation for Total Compensation I believe ERGT is liable for:-
Severance Pay (Gross) | 22,386.81 |
Notice Period (Gross) | 6,396.23 |
Annual Leave (Gross) | 5,198.27 |
Long Service Leave (Gross) | 6,445.72 |
Total Received as per redundancy letter | 40,427.03 |
Amount Likely To Receive six months (Gross) | 36,354.61 |
Less Notice Period (Gross) | 6,396.23 |
Less Contingencies 10% (Gross) | 2,995.84 |
Less Severance Pay (Gross) | 22,386.81 |
Total Compensation ERGT Liable for | 4,575.73 |
Leave entitlements are not considered remuneration. As per my calculation above the Total Compensation which ERGT are liable for should be $4,575.73.
Please advise why my leave entitlements are included in your workings for compensation?”
[3] Subsequently on 10 August 2021, the Vice President’s Chambers wrote to parties in the following terms:
“Dear Parties,
We refer to the attached correspondence received from Mr Govender on 8 August 2021 to the Vice President’s Chambers. The correspondence has been drawn to the attention of the Full Bench.
In summary, Mr Govender asserts that the Appeal decision (C2021/2800) did not take into account the leave entitlements which were included in the amount of $40,427.03 which was paid to him at the time of his termination. Attached to the correspondence of Mr Govender is a letter dated 14 August 2020 signed by James Miller (the Letter). The Letter makes reference to “A final payment of $40,427.03 gross which includes all of your termination payment entitlements. A schedule is attached to this letter detailing the termination payment”.
The Commission has conducted a thorough search of all the materials that were before the Deputy President and have established that the Letter was included in the materials before the Deputy President. However, it is not apparent that a schedule of the type referred to in the Letter was provided to the Deputy President. The below excerpt from the transcript suggest that the schedule referred to in the Letter was not in evidence. Having regard to the schedule provided by Mr Govender, if it is the case that the Deputy President’s calculation of the value of severance pay and notice has included the payment of leave in the calculation, this raises the prospect that the calculation was incorrect. In turn, as the same calculation underpinned the calculations of the Full Bench, this raises the prospect the Full Bench calculation of the amount of compensation to be awarded would also require correction.
Having regard to this background, the parties are directed to advise Chambers by 17 August 2021 of the following:
Does either party contest the proposition that the schedule referred to in the Letter was not before the Deputy President?
Does the Appellant contest the proposition that the schedule attached to the correspondence of Mr Govender’s of 8 August 2021 is an accurate reflection of the basis of the calculations underpinning the payment to him on termination of $40,427.03. In particular, that the amount of $40,427.03 included payment of leave entitlements of $11,643.99, a payment for notice of $6,396.23 and a payment for severance pay of $22,386.81?
If the Appellant agrees with the above, does the Appellant agree that there needs to be a correction to the decision in relation to the amount of compensation to be awarded?
Excerpt from transcript (22 January 2021):
At PN416:
Okay. As a result of that, did we give you a termination letter which outlined the reason for the termination, the information about the amounts that you would be paid, the make-up of that pay which was for redundancy and for outstanding leave accruals owing to you?---On Friday the 14th, I believe, you emailed me a letter. Yes.
Then also at PN421:
THE DEPUTY PRESIDENT: Questions. Question. I don't have a copy of the breakdown, although it refers to it being attached to the termination letter. How many weeks' pay did Mr Govender receive? Do you know, Mr Miller?
Then from PN 426:
THE DEPUTY PRESIDENT: I've got the letter, but I haven't got the - it talks about a schedule which tells you the breakdown and I don't have a copy of the schedule. The schedule is attached as letter detailing the termination payment. But do you agree it was 18 weeks? I presume that is - was that consistent with the agreement? Is that - - -
MR MILLER: Yes. It's just - - -
THE DEPUTY PRESIDENT: It's just in accordance with the provisions - - -
MR MILLER: Yes. What we would normally do - we have a calculator that works all that out for us at work.
THE DEPUTY PRESIDENT: Yes. So some of that would have bene notice and some of it's - - -
MR MILLER: Yes. So separate to notice. Separate. Now, I don't think I've got any other questions at this point in time.
THE DEPUTY PRESIDENT: Thank you, Mr Miller. There's not any other point in time.”
[4] Both parties responded to the correspondence. The response from ERGT Australia Pty Ltd (ERGT) included the following:
“
The Appellant accepts that:
• the schedule was not part of the evidence before DP Binet;
• the final termination payment included the Applicant’s leave entitlements;
• the leave entitlements are not part of the Sprigg calculations; and
• DP Binet’s calculations were wrong because they overstated the value of the notice and severance payments.
The Appellant’s calculations of the loss are as follows:
• 6 months’ pay at $73,150.88 per annum $36,570.02;
• Less 10% contingencies ($ 3,657.00)
• Less pay in lieu of notice and severance pay ($28,783.04)
• Loss $ 4,129.98
Given DP Binet’s conclusions, and the clear error in her calculations, the Appellant agrees that the final order in [48] of the Full Bench’s decision should be replaced with an order that the Appellant pay the Applicant $4,129.98 as compensation.”
[5] Mr Govender responded as follows:
“I do not contest the proposition that the schedule referred to in the Letter was not before the Deputy President.
(a) The steps for the Sprigg formula are:-
1. Estimate the remuneration the employee would have received if they had not been dismissed. Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment, ie the anticipated period of employment.
2. Deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment. Workers compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation awarded.
3. Deduct an amount for contingencies. This is a calculation of future economic loss.
4. Consider the impact of taxation and adjust the figure accordingly.
5. Assess the figure against the compensation cap. If the amount is more than the compensation cap it should be reduced to the compensation cap.
I have reviewed the Sprigg formula above and based on the formula I have revised my calculations for the compensation as follows:-
Amount Likely To Receive six months (Gross) | 36,354.61 |
Less Notice Period (Gross) | 6,396.23 |
Less Severance Pay (Gross) | 22,386.81 |
Subtotal | 7,571.57 |
Less Contingencies 10% (Gross) | 757.16 |
Total Compensation Excluding Super | 6,814.41 |
Superannuation (9.5%) | 647.37 |
Total Compensation Including Super | 7,461.78” |
[6] Having considered the submissions, it is apparent that the calculation of compensation made by the Deputy President was incorrect, in that the amount the Deputy President determined had been paid to the Applicant by way of notice and redundancy pay were both incorrect, to the extent that the payments for long service leave and annual leave were included in the calculations.
[7] It is also apparent that it is not in contest that the correct amounts of notice and redundancy are reflected in the schedule provided by Mr Govender on 8 August 2021. The parties agree that this schedule was never provided to the Deputy President, nor was the schedule provided to the Full Bench. Mr Govender did not make any reference to the amounts the Deputy President determined as the amounts paid for notice and severance pay in his submissions to the Full Bench. ERGT, who we note was represented, maintained in their written submissions to the Full Bench that the amount of $31,488.25 should be deducted, 4 despite this clearly being inconsistent with the schedule that ERGT provided to Mr Govender.
[8] It is also apparent that while the parties agree that given the error in calculation, an amount of compensation should be awarded to Mr Govender to compensate for his loss, however, the parties have calculated different amounts.
[9] It is our provisional view that the correct amount of compensation to be awarded is to be calculated as follows:
• The amount likely to have been received in the 6 months of further employment: $36,354.61. 5
• Less payment in lieu of notice: $6,396.23
• Less severance pay: $22,386.81
• Compensation amount: $7,571.57
[10] This leaves an amount of compensation of $7,571.57, less tax according to law, plus superannuation.
[11] We note that we have not made a deduction for contingencies. Contingencies apply to the anticipated period of employment. 6
[12] In this matter, the anticipated period of employment was known at the time the Deputy President made the decision on 31 March 2021, Mr Govender having been dismissed on 14 August 2020 and his anticipated period of employment being 6 months.
[13] We note that the Deputy President made a deduction for contingencies. However, our provisional view is that she was in error in doing so.
Conclusion
[14] Having regard to all of the circumstances, the provisional view of the Full Bench is that an order be made that ERGT pay $7,571.57 gross, less taxation as required by law plus superannuation of 9.5% to Mr Govender in lieu of reinstatement.
[15] Further, that the decision 7 of the Full Bench be varied as required to reflect the provisional views expressed in this Statement.
[16] In the event that either party objects to the provisional views expressed in this statement and the variation of the decision of the Full Bench to reflect the provisional views the matter will be listed for hearing. Parties will have until 5pm on Friday 20 August 2021 to indicate whether they object. In the event that there are no objections the Full Bench decision will be varied to reflect the provisional views expressed above and an order made for the payment of compensation by ERGT to Mr Govender of $7,571.57 gross, less taxation as required by law plus superannuation of 9.5% within 14 days of the date the Order is made.
VICE PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR732791>
1 [2021] FWCFB 4508.
2 PR728302.
3 ERGT Australia Pty Ltd v Kevin Govender[2021] FWCFB 4508 at [48].
4 Appellant Submissions, paragraphs 37-38.
5 PR728302 at [6].
6 Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001) at [39]; citing Ellawala v Australian Postal Corporation Print S5109(AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) at [43].
7 ERGT Australia Pty Ltd v Kevin Govender[2021] FWCFB 4508.
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