Gambhir v Fastserv Solutions Pty Ltd
[2021] FedCFamC2G 211
•11 November 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gambhir v Fastserv Solutions Pty Ltd [2021] FedCFamC2G 211
File number(s): SYG 2713 of 2019 Judgment of: JUDGE DRIVER Date of judgment: 11 November 2021 Catchwords: INDUSTRIAL LAW – claim for underpayments – several changes in employment status – leave records unreliable – issues of credit considered – claim found not to be established Legislation: Fair Work Act 2009 (Cth), ss 45, 61, 90, 535, 539, 545, 546, 547, 557C, 570
Long Service Leave Act 1955 (NSW), ss 2, 3, 4
Superannuation Guarantee (Administration) Act 1992 (Cth), s 12
Fair Work Regulation 2009 (Cth)
Cases cited: Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 136
Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100
Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118
Dental Corporation Pty Ltd v Moffet [2021] HCATrans 16
Elachi v O’Shea & Jolly Jointly Trading as NRG Legal & Anor [2020] FCCA 2706
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28
Re 4 Yearly Review of Modern Awards [2015] FWCFB 4839
Re 4 Yearly Review of Modern Awards [2015] FWCFB 6656
Division: Division 2 General Federal Law Number of paragraphs: 223 Date of last submissions: 30 July 2021 Dates of hearing: 21, 22, 25 June 2021 Place: Sydney Solicitor for the Applicant: Mr V Mishra of Redline Legal Counsel for the Respondent: Mr G Diggins Solicitor for the Respondent: Pannu Lawyers ORDERS
SYG 2713 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MANPREET SINGH GAMBHIR
Applicant
AND: FASTSERV SOLUTIONS PTY LTD
Respondent
ORDER MADE BY:
JUDGE DRIVER
DATE OF ORDER:
11 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The application lodged on 23 September 2019 and filed on 21 October 2019 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE DRIVER:
INTRODUCTION AND BACKGROUND
By an application and accompanying Form 2 filed on 21 October 2019, the applicant (Mr Gambhir) sought orders under ss 545(2)(b) and 547 of the Fair Work Act 2009 (Cth) (Fair Work Act) principally by way of compensation for alleged underpayment of employee entitlements in the sum of $28,276.11 plus interest. Mr Gambhir also seeks pecuniary penalties under ss 539 and 546 of the Fair Work Act.
The matter has had a rather long procedural history. It was initially docketed to Judge Altobelli, who referred the parties to mediation. The matter did not resolve. There were interlocutory disputes over subpoenas and disagreements over evidence.
Following the elevation of Judge Altobelli to the Family Court of Australia, the matter was transferred to my docket. The matter was ultimately heard over three days over 21, 22 and 25 June 2021.
The background to this matter is as follows.
Mr Gambhir was an employee of the respondent, Fastserv Solutions Pty Ltd (Fastserv) for two periods between 18 March 2013 and 31 March 2018[1] and from 1 July 2018 to 31 March 2019. It is common ground that during the intervening period, he was an independent contractor. There are thus three identifiable time periods in the case. The most significant is the first. How the first period of employment ended is in dispute.
[1] a period of five years and two weeks. The parties’ documents are not consistent in relation to the periods of employment but I do not understand there to be any dispute of substance over the time periods of employment
It is common ground that the third period of employment has little impact on the case. Mr Gambhir was terminated on 31 March 2019, which he does not contest. He claims, however, that he was underpaid in respect of the first period of employment. The main issues arising are whether:
(a)long service leave is payable to Mr Gambhir in respect of his initial period of employment;
(b)Fastserv owes Mr Gambhir any outstanding leave payment; and
(c)Fastserv owes Mr Gambhir superannuation payments for the period 1 April 2018 to 30 June 2018.
In the event that an underpayment is established, Mr Gambhir also seeks interest and penalties.
The matter was hard fought, including during the trial. With this in mind, Mr Gambhir also claims costs for the proceedings on the basis of unreasonable behaviour by Fastserv. Those costs are sought on an indemnity basis.
THE EVIDENCE AND SUBMISSIONS
Mr Gambhir relies on his own affidavits made on 12 October 2020 and 15 June 2021.
Fastserv relies on affidavits made by:
(a)Mr Sumeet Verma (the sole director of Fastserv) on 16 October 2020;
(b)Mr Verma’s wife and former operations manager of the business, Ms Swati Utneja, on 13 October 2020; and
(c)Mr Amit Verma on 14 October 2020.
There were objections as to evidence but, with the agreement of the parties, I received all of the evidence provisionally, subject to relevance and submissions. The parties had provided pre hearing submissions to Judge Altobelli but I gave leave for more extensive submissions to be made following the trial before me. Mr Gambhir’s post hearing submissions were filed on 9 July 2021 and those of Fastserv were filed on 23 July 2021. Submissions in reply on behalf of Mr Gambhir were filed on 30 July 2021.
I also received the following exhibits:
A1 email chain;
R1 email dated 26 March 2019;R2 email (including chain) dated 5 April 2019;
R3 email dated 11 April 2019;R4 email dated 14 December 2017;
R5 email (including chain with email comprising Exhibit R4) dated 14 December 2017;
R6 email (including chain) dated 30 January 2018;
R7 payment document for period ending 28 February 2018;
R8 payment document for period ending 31 March 2018;R9 annual leave list;
R10 payment document for period ending 31 January 2018;
R11 payment document for period ending 31 December 2017;
R12 ABN Lookup document;
R13 letter from Mr Sumeet Verma to Mr Gambhir dated 1 March 2018;
R14 further copy of payment document for period ending 31 December 2017;
R15 screenshot of inbox showing payslips;
R16 screenshot of Payslip History.CONSIDERATION
Fastserv is a family business. There are also cultural connections between Mr Gambhir and the operators of Fastserv. The evidence discloses a former degree of personal closeness between the natural persons working in or responsible for the business. Unfortunately, personal relationships have soured. It is noteworthy that Mr Gambhir’s claim is for a very specific amount. It emerged during the trial, however, that the records of leave and attendance in the business were found to be (and are) unsatisfactory and the true details of leave and entitlements for leave had to be teased out during the examination of the evidence. I found this exercise to be difficult and unsatisfactory. Proper record keeping is an obligation placed on employers by the Fair Work Act and Fair Work Regulations 2009 (Cth) (Regulations).[2] Mr Gambhir devotes much space in his submissions to asserted breaches by Fastserve of its record keeping obligations. Mr Gambhir is not, however, suing Fastserv over the quality of its record keeping. He is suing for what he claims are his leave entitlements based on the records available to him. Notably, Fastserv denies there was any underpayment, which it sought to support by reference to the evidence it led, both in chief from its own witnesses and by cross-examination of Mr Gambhir.
Mr Gambhir’s contentions
[2] See in particular Division 3 of Part 3-6 of the Regulations.
Long service leave payable to Mr Gambhir – 18 March 2013 to 31 March 2018
Mr Gambhir claims long service leave for the first employment period which was for a period of five years and two weeks.
The contracts of employment (made in 2013 and 2015[3]) provided at [8] that the employee is entitled to long service leave in accordance with legislation. The legislation is applicable in any event but Mr Gambhir makes the point that the contracts provided for this and when it was put to him, Mr Sumeet Verma was aware of this in both contracts and admitted the provisions continued to apply even after they expired and the employment relationship continued to be governed by the contracts.
[3] Pages 23 and 42 of Mr Sumeet Verma’s affidavit, Annexures SV2 and SV3.
Mr Sumeet Verma stated he did not pay long service leave as Mr Gambhir resigned and had wanted to be an independent contractor. He did not say he was unaware that the period of five years had been passed.
When asked for leave records showing this and for a letter of resignation signed by Mr Gambhir, nothing was able to be produced. Both Mr Sumeet Verma and Ms Utneja said the resignation was “verbal”. Ms Utneja points to Annexure I (or possibly Annexure J) of the affidavit of Mr Gambhir of 12 October 2020 which is a letter saying Fastserv accepted Mr Gambhir’s decision to terminate his employment.
Mr Gambhir has denied receiving the letter at the relevant time. Ms Utneja and Mr Sumeet Verma say it was personally handed over. It was not emailed. Mr Gambhir submits this evidence is self serving and of little probative value. He submits it does not in any way excuse Fastserv for not keeping proper records which it is obliged to do by the Fair Work Act.
Section 4(1) and (2)(a)(iii) of the Long Service Leave Act 1955 (NSW) (Long Service Leave Act) provides for long service leave payment to an employee provided he has worked for at least five years. It is payable on termination by the employer and at 4.425 weeks ordinary pay. The section relevantly states:
Long 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)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) …
(iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker's serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.
(a2) …
(a3) For the purposes of subsections (2), (3) and (3A), "month" means 4 and one-third weeks.
It is an admitted fact that Mr Gambhir was employed by Fastserv as a Customer Service Manager on a permanent full-time basis from 18 March 2013 to 31 March 2019. The five year requirement is satisfied.
Section 4(2)(a)(iii) of the Long Service Act apparently provides for 4.425 weeks long service leave if there is service for five years and if there is a termination by the employer. It is to be paid out on termination.
Mr Gambhir submits that it is Fastserv who brought his employment to an end and terminated him. Mr Sumeet Verma said he could not afford to pay him the salary he was on due to financial difficulties and asked him to go on to an independent contractor arrangement to which he had agreed.
Mr Gambhir submits there was a termination of his employment at $110,000 by Fastserv. That is said to be why Fastserv cannot provide a resignation letter by Mr Gambhir and it has a duty to keep proper records, which it has not done.
Mr Gambhir submits he was credible when he gave evidence that he for some three months used his ABN[4] and gave invoices as he had been requested by Mr Sumeet Verma until he was asked to come back on the payroll at $60,000 per annum plus commission, to which he agreed. This brought about the second period of employment which Fastserv terminated on 31 March 2019.
[4] Australian Business Number
From June 2017 Mr Gambhir was earning an annual salary of $110,000. For this he received a monthly net pay of $6,618.67 and total monthly gross earnings of $9,166.67. Mr Gambhir’s affidavit of 12 October 2020, Annexures “B” “E” and “F” are his payslips for June 2017, January and February 2018 which show these figures.
The payments Mr Gambhir received for the months of April to June 2018 were delayed by a month. He states that he was paid $5000 in June 2018; $7,995 in July 2018 and in August and September a figure over $5,000. This was on issue of invoices by him and an account is in Annexure A in his affidavit in reply deposed on 15 June 2021.
In his application Mr Gambhir has claimed $6,618 using the amount shown in the pay slips. That was for 4.425 weeks. He submits a declaration should be made that he is entitled to this amount for long service leave.
Evidence of termination by Fastserv of the first employment period
Mr Gambhir’s evidence of termination by Fastserv and that he was told by Mr Sumeet Verma the business was struggling financially and that he was asked to use his own ABN and take $5,000.00 a month and bonuses is contained in [18] and [19] of his affidavit of 12 October 2021 and [23]-[24] of his affidavit of 15 June 2021: [5]
18.Also annexed to that email was a letter dated 1 March 2018, regarding termination of my employment. This is the first time I was made aware of this letter. Annexed hereto and marked with the letter “J” is a copy of termination of employment.
19. I have never resigned or spoken to my reporting manager or HR about my resignation…
23. As to paragraphs 26 to 36 I did not suggest that I become an independent contractor. Mr Sumeet suggested that I use my own ABN and take $5,000.00 per month and bonuses and handle my own taxes as the respondent was struggling and had been making a loss. I deny this was due to my suggestion. I wasn’t working anywhere else in any event.
24. I agreed to this arrangement that I use my own ABN and just after a couple of months in June 2018 he asked me to come back on the respondent’s payroll at $5,000.00 per month and commission which I did. I all along worked in the same way.
[5] The email referred to in [18] is Mr Sumeet Verma’s email of 5 April 2019 which is Annexure “I” to Mr Gambhir’s affidavit of 12 October 2020.
There is said to be corroboration of what Mr Gambhir has deposed to, that he was told to take $5,000 plus bonus. Mr Gambhir refers to Mr Sumeet Verma’s affidavit of 16 October 2020 at numbered page 86 where it is shown that on 21 June 2018 he paid $5,000.00 to Mr Gambhir and on 12 July 2018 at page 89 he paid $5,460 to Mr Gambhir.
Ms Utneja could not produce any resignation letter from Mr Gambhir. When pressed and shown the employment agreement (which she said applied) which had a provision for notice to be given by the employee for a termination by him,[6] she said the notice was verbal.
[6] Paragraph 16(1)(c) of Annexure SV2 to the affidavit of Mr Sumeet Verma, page 27
Onus of proof and its reversal
The onus is on the employer to keep records of long service leave, annual leave, rates of pay, any termination details and other basic information for seven years. These are civil remedy provisions.
Mr Gambhir asserts that Ms Utneja also stated there was no record of him having completed five years on 18 March 2018. Mr Gambhir refers to s 535 of the Fair Work Act which provides there is a statutory obligation on Fastserv to keep employee records for seven years. It states as follows:
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.
Note: This subsection is a civil remedy provision (see Part 4-1).
(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.
Note: This subsection is a civil remedy provision (see Part 4-1).
(3) The regulations may provide for the inspection of those records.
Note: If an employer fails to comply with subsection (1), (2) or (3), the employer may bear the burden of disproving allegations in proceedings relating to a contravention of certain civil remedy provisions: see section 557C.
(4) An employer must not make or keep a record for the purposes of this section that the employer knows is false or misleading.
Note: This subsection is a civil remedy provision (see Part 4-1).
(5) Subsection (4) does not apply if the record is not false or misleading in a material particular.
Mr Gambhir refers to the Regulations as to the employer’s obligations regarding leave entitlements and requirements of leave and the fact that these have to be kept for seven years. He has highlighted some which are of relevance for ease of reference:
Part 3-6 – Other rights and responsibilities
Division 3—Employer obligations in relation to employee records and pay slips
Note about Subdivision 1
The regulations in Subdivision 1 set out the kinds of records that must be made and kept for the purposes of sections 535 and 796 of the Act. These records are required to be kept by employers for 7 years.
An employer must keep a record in respect of each employee about:
(a)basic employment details such as the name of the employer and the employee and the nature of their employment (e.g. part‑time, full‑time, permanent, temporary or casual); and
(b) pay; and
(c) overtime hours; and
(d) averaging arrangements; and
(e) leave entitlements; and
(f) superannuation contributions; and
(g) termination of employment (where applicable); and
(h) individual flexibility arrangements and guarantees of annual earnings.
There are also obligations on old employers and new employers in transfer of business situations.
Records must be properly maintained. For example, regulation 3.31 sets out form requirements to make sure that records are legible and readily accessible to an inspector. Regulation 3.44 sets out requirements to ensure that records are accurate at all times.
This subdivision also deals with obligations for employers in relation to facilitate the inspection and copying of records by employees (see also the inspector powers set out at Part 5‑2 of the Act).
Most of the obligations in this Part are civil remedy provisions. This means that Part 4‑1 of the FW Act will apply (including the course of conduct rule in section 550).
Note about Subdivision 2
The regulations in Subdivision 2 deal with the form and content of pay slips for the purposes of section 536 of the Act.
Pay slips must include all of the information set out in regulation 3.46.
Subdivision 1—Employee records
3.31 Records—form
(1)For subsection 535(1) of the Act, an employee record made and kept by an employer for this Subdivision must be of the following kind:
(a) a record in a legible form and in the English language;
(b) a record in a form that is readily accessible to an inspector.
Note: Subsection 535(1) of the Act is a civil remedy provision. Section 558 of the Act and Division 4 of Part 4‑1 of the Act deal with infringement notices relating to alleged contraventions of civil remedy provisions.
(2) For section 796 of the Act, an employee record made and kept by an employer for this Subdivision must be of the following kind:
(a) a record in a legible form and in the English language;
(b) a record in a form that is readily accessible to an inspector.
Note: Subregulation (2) is a civil remedy provision to which Part 4‑1 of the Act applies. Division 4 of Part 4‑1 of the Act deals with infringement notices relating to alleged contraventions of civil remedy provisions.
If there had been a termination arising out of a resignation Mr Gambhir submits that there should have been a signed record of it. This is especially as a five year term had been reached where long service leave payment was potentially payable.
There is no record of this leave entitlement and there is said to be a contravention by Fastserv. The onus of disproving any contravention is said to be on the employer. Division 3, Employer’s obligations in relation to employee records include a duty to keep a record of any termination.
These are civil remedy provisions of the Fair Work Act. Mr Gambhir has applied for penalties to be paid under s 539 of the Fair Work Act, albeit that his application is linked to an underpayments claim.
Fastserv relies on the letter by Mr Sumeet Verma dated 1 March 2018. It is said to be self serving, to have little probative value and to be prejudicial given the clear provisions regarding records to be kept of termination.
Mr Gambhir contends that Fastserv has not discharged the onus of proof upon it under a note to s 535(3) of the Fair Work Act[7] as there is said to be a contravention by Fastserv in not keeping a record of termination by resignation such as a signed resignation letter giving three weeks notice under the contract. The onus of proof to show that Mr Gambhir had resigned and had not been terminated by Fastserv is said to be on Fastserv.
[7] See s 557C
In annexure J1 of his affidavit of 12 October 2020 at page 32, Mr Gambhir strongly denied having received the letter from Mr Sumeet Verma which is part of his response to Mr Sumeet Verma’s email.[8] Mr Sumeet Verma agreed he did not respond to that portion of the email or provide the proof requested. Mr Sumeet Verma agreed in cross examination that it was his duty to see proper records were kept.
[8] Numbered page 31 of Mr Gambhir’s affidavit of 12 October 2020.
Mr Gambhir submits that Fastserv’s defence that he voluntarily ceased his employment with Fastserv on 31 March 2018 has not been proved. Mr Gambhir says it was concocted. He asserts that if he had resigned there would be a record of it and a signed resignation letter would have been asked for and kept. Mr Gambhir’s contract provided that he had to give a resignation notice of three weeks if he wanted to terminate his contract. Without that evidence he asserts that there was no resignation.
Mr Gambhir submits that Fastserv’s own evidence shows it had financial difficulties which Mr Gambhir has said was put to him as the reason why he had to go on a lesser pay. On page 70 of Mr Sumeet Verma’s affidavit, Fastserv’s account is shown as overdrawn on 30 April 2018 when Mr Gambhir was paid $6,618.67. An overdrawn fee of $15 was charged.
There are several loans such as $10,000.00 from Mr Sumeet Verma on 1 May 2018;[9] on 3 April 2018 of $2,500[10] and 11 June 2018[11] which are said to have been required to keep the business going. It is said to lend credence to the evidence of Mr Gambhir as to why he was asked to effectively reduce his salary. The motive, he submits, was to deprive him of his legitimate entitlements.
[9] page 70
[10] page 65
[11] page 84
Mr Gambhir referred the Court to some of the loans made by Mr Sumeet Verma to Fastserv “to keep it afloat” and why Fastserv’s personnel had a financial motive to “get rid of any entitlement” Mr Gambhir had to annual and long service leave:
(a)12/03/18 - $5,000.00 loan from Mr Sumeet Verma;[12]
(b)3/04/18 - loan of $2,500;
(c)1/05/18 – loan of $10,000;
(d)2/05/18 - “deposit Utneja, Swati Loan from Sumeet”, $5,162;
(e)23/03/18 - deposit from Westpac Business, $2,000;
(f)26/03/18 - $1,000 deposit from Westpac Business;
(g)3/04/18 - $2,000 deposit from Westpac Business;
(h)18/04/18 - $10,000, deposit from Westpac Business;
(i)30/04/18 - $4,040, deposit from Westpac Business.
[12] page 61
Mr Gambhir submits that it is Fastserv through Mr Sumeet Verma who terminated Mr Gambhir’s employment at a fixed rate of $110,000.00 per annum by persuading him to go on an independent contractor mode at a lesser payment rate. His own bank records annexed to his affidavit are said to show Fastserv had to be propped up by a number of loans. It is said to corroborate Mr Gambhir’s evidence.
Mr Gambhir submits that he is entitled to long service leave of $6,618.00 of 4.425 weeks as he was terminated.
Annual leave
This is the main part of Mr Gambhir’s claim. Mr Gambhir’s pay slip for the month for December 2017 is Annexure SV4[13] to Mr Sumeet Verma’s affidavit. It shows an annual leave balance of 753.2210 hours was owing to Mr Gambhir. Mr Sumeet Verma states at [14] that this pay slip is corrected.
[13] page 57
The pay slip of January 2018[14] shows that he has an entitlement to 735.4877 hours of annual leave.
[14] Mr Gambhir’s affidavit of 12 October 2021 Annexure “E”
In Exhibit R1, Mr Gambhir writes to Mr Sumeet Verma by email of 26 March 2019 shortly before his termination on 31 March 2019 and points out that his leave had reduced from 725.3544 to 48.1336 as at the payslip of February 2018.
The essence of Fastserv’s case is put by Mr Sumeet Verma’s email of 5 April 2019 which is Annexure I to Mr Gambhir’s affidavit of 12 October 2020 on pages 27 and 28. He states that there may have been “delays in framing and implementing strict leave application policies within business” and later on the second page states that “due to an accounting software issue” records of 312.20 hours were omitted when Fastserv did an email and data migration in 2017.
These are said to be crucial admissions of an employer of contraventions of employer obligations in relation to employee leave records and pay slips and in cross-examination Mr Sumeet Verma accepted and admitted he had agreed to pay for 312 hours.
Mr Gambhir’s overseas trips and acceptance of some leave taken
Mr Sumeet Verma pointed out the three trips taken by Mr Gambhir to India and New Zealand of 34 working days, 12 working days and 2 working days (48 days) of leave taken, much of which Mr Gambhir did accept, although he considered that it was half work and half holiday. Mr Sumeet Verma states[15]:
However, we are committed to ensuring our compliance with workplace laws and regulations and we would like to correct this now by paying out these remaining hours of accrued annual leave to you.
[15] Annexure I to Mr Gambhir’s affidavit of 12 October 2020, page 28
Mr Gambhir asserts that Mr Sumeet Verma accepts Fastserv’s records are erroneous and are in breach of the Fair Work Act. Mr Gambhir responded to the email, and accepted 334.40 hours as leave having been taken by him although he feels he worked when he went to India for Mr Amit Verma’s wedding, by fielding customers by phone while at the wedding.
Mr Gambhir did not accept totally the hours given but accepted a total of 44 days for the trips. This is four days less than the 48 days stated by Mr Sumeet Verma. Mr Gambhir gave the hours of 342.8208 as outstanding annual leave and that is what he has finally claimed before this Court. He submits that he has been consistent, and that his evidence is truthful and should be accepted.
As to the fact that Mr Gambhir worked on his telephone and by email in dealing with customers, it is submitted there was dire need for this as Mr Sumeet Verma and Mr Amit Verma were also abroad for the wedding. Mr Amit Verma and Mr Gambhir were the only fulltime employees. According to him it was half work and half holiday but he accepts 44 days for the trips and claims 342.8208 hours. However he complains that as an employee he was entitled to rely on the accuracy of the pay slips given to him. He submits that if there have been contraventions by Fastserv it cannot be laid at his door.
Basically Mr Sumeet Verma says that due to Fastserv’s computer software problems there were erroneous figures shown in February 2018 that Mr Gambhir only had 48.1336 hours of annual leave.[16]
[16] Annexure F to Mr Gambhir’s affidavit of 12 October 2020, Salary Slip for February 2018, page 23
Alleged short payment of Mr Gambhir’s annual leave
Mr Gambhir was on 31 March 2018 paid 40.6336 of annual leave hours which was annual leave accrued for February 2018 and March 2018. His pay slip for March is annexure “G” in his affidavit of 12 October 2020.[17]
[17] Page 24
That document is said to be disturbing. Fasterv has had it in their system and it has been in this affidavit from 12 October 2020. It is said to show his payout rate as $30.3030 on a salary of $60,000.00 when it is agreed that his salary was $110,000.00 up to the end of March 2018. His hourly rate should have been $55.55.
Mr Gambhir’s pay rate is not stated in many of his salary slips which is said to be a contravention on every occasion.
Mr Gambhir submits that he has clearly been short paid. He contends that for 7.5 hours the amount should have been $416.625 and not $227.27 and there is a shortfall in payment of $189.35. For the 40.6336 hours of annual leave he asserts that the payout should have been $2,257.19 and there is a shortfall of $1,025.87. This is said to be a serious contravention and breach. Fastserv is said to have been guilty of making and keeping a false and misleading record in breach of s 535 of the Fair Work Act.
Fastserv is said to have the burden of disproving the contraventions. There is said to be an admission by Mr Sumeet Verma in his email of 5 April 2019 that Mr Gambhir was owed leave of 312.20 hours and that proper leave records as required by legislation have not been kept.
It is submitted by Mr Gambhir that he is therefore entitled to be paid annual leave under clause 7 of the employment agreement and under Division 6 of Part 2-2 of the Fair Work Act in the sum of $19,045.62.[18]
[18] $55.5556 (hourly rate) x 342.8208 (hours) = $19,045.62
Mr Gambhir contends that the employer owes a duty of care to the employee and the consideration he provides is the legitimate and proper pay an employee is entitled to. It is said to be a duty which is contractual but it also has fiduciary aspects accompanying it and this is said to have been breached. Mr Gambhir submits the shortfalls of $189.35 and $1,025.87 totalling $1215.22 should be added to the above amount so the total to be paid is said to be $20,260.84.
Mr Gambhir contends that these are not the only discrepancies. There are said to be others. There are examples of two pay slips for the same pay period. Mr Gambhir contends that if Fastserv has not maintained proper records (which it is by law obliged to) for annual or long service leave it has breached its duty and he submits he is entitled to significant compensation by way of interest and otherwise and for the costs and inconvenience he has been put to.
It is said to be of significance that Mr Gambhir has been deprived of the use of this money for a considerable time.
Mr Gambhir’s annual leave adjustment of four days for not reaching a sales target by Ms Utneja
Mr Gambhir also points out that four days was taken of his annual leave for not having reached a sales target given to him. This is in Exhibit R6 and he refers to the email of 25 January 2018 by Ms Utneja where she added 3 to 5 January 2018 and 25 January 2018 against his annual leave as the given target was not achieved. That is four days of annual leave at 7.6 hours and amounts to $1,688.72.
Mr Gambhir claims (rather vaguely) that he may have been intimidated. He submits this should also be added to what he is allowed to recover, bringing the total to $21,949.56.
When this was put to Mr Sumeet Verma he confirmed there was a sales target but described it as an incentive and gave no explanation as to why Mr Gambhir’s leave was treated in this way. It is submitted by Mr Gambhir that this is also plainly wrong and an “abuse” by the employer when Mr Gambhir was on a fixed salary of $110,000.00 per annum with his annual leave accruing monthly. It also is said to show that attempts were being made in an “unlawful manner” to reduce the legitimate payout to employees and both Mr Sumeet Verma and Ms Utneja were involved.
This is also said to be a serious contravention.
Excel record of leave taken kept by Mr Sumeet Verma.
All employers in Australia are obliged by law to keep proper employment records which include pay slips which the employee and government inspectors can rely on.
Mr Gambhir submits that, having admitted at the trial there were software problems, Ms Utneja has tried to say they have an Excel spreadsheet list of days on which leave was taken, which was maintained more or less contemporaneously kept by Ms Utneja. This was not put to or given to Mr Gambhir in the email of 5 April 2019.
He submits that this is a recent invention. This Excel spreadsheet which was apparently prepared by Mr Sumeet Verma and given to Ms Utneja so she could “cancel” the accumulated leave of Mr Gambhir was called for and not produced.
Mr Gambhir submits that he has discharged the onus upon him. There are discrepancies in the record keeping and the payout of annual leave should not have been on $60,000.00 but on $110,000.00.
Further, Mr Gambhir submits that both he and Ms Utneja agreed under cross-examination there should not have been two pay slips for the same period; one showing a salary of $110,000.00 and another $60,000.00. There were other discrepancies in the pay slips, some of which emerged in the cross-examination of Mr Gambhir.
Mr Gambhir’s claim for leave loading of 17.5 % under the General Retail Industry Award 2020
Fastserv is a federal system employer as contemplated by the Fair Work Act. It employed Mr Gambhir in a telecommunication retail and supply business. Fastserv sells mobile phones and other electronic accessories at Parramatta.
Fastserv is an employer whose business is covered by the General Retail Industry Award 2020 (the Award). Mr Gambhir was an employee whose position with Fastserv is covered by the Award.
The Award provides that during a period of annual leave an employee who does not receive commission must also be paid a loading of 17.5 % calculated on the employee’s minimum rate of pay as prescribed by clause 28.3 of the Award which provides:
Additional payment for annual leave
(a)During a period of paid annual leave an employer must pay an employee an additional payment in accordance with clause 28.3 for the employee’s ordinary hours of work in the period.
(b) The additional payment is payable on leave accrued.
(c) For an employee other than a shiftworker the additional payment is the greater of:
(i)17.5% of the employee’s minimum hourly rate for all ordinary hours of work in the period; or
(ii)The employee’s minimum hourly rate for all ordinary hours of work in the period inclusive of penalty rates as specified in clause 22—Penalty rates.
Mr Gambhir was on a fixed salary of $110,000.00 per annum. Thus he submits that the sum of $21,949.56 should be given a loading of 17.5% which on $100,000.00 per annum amounts to $3,841.17 and he submits this brings the total to $25,790.73 of what he ought to be paid.
Mr Gambhir refers to Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2)[19] which noted that s 90 of the Fair Work Act in Part 2-2 of Chapter 2 sets out the National Employment Standards. Section 61(1) provides these are the minimum standards that apply to employees. Section 90(2) protects the whole entitlement to annual leave and includes loading. In this case, that loading is 17.5%.
[19] [2015] FCA 136
Mr Gambhir contends that Ms Utneja had “tried to say” the 17.5% loading was somehow wrapped up in the $110,000.00 salary per annum but if one looks at the contracts there is no mention of loading.
He submits that in any event one cannot contract out of the entitlement. Mr Sumeet Verma was also questioned by me and it is said to have been clear after my questioning that Mr Sumeet Verma did not ask for legal advice on this or what award Mr Gambhir came under.
Mr Gambhir submits that Fastserv did not include the leave loading as it was legally bound to do. The attempt to justify not putting it into Mr Gambhir’s salary by saying he was not in retail sales is said to go against Mr Sumeet Verma’s own evidence, where he described what his business consisted of. It was retail sales and Mr Sumeet Verma or Fastserv held an agency from Vodafone and was paid a commission for each contract Fastserv obtained.
Clause 4.1 of the Award covers to the exclusion of any other modern award:
(a) employers in the general retail industry throughout Australia; and
(b) employees (with a classification defined in defined in Schedule A—Classification Definitions) of employers mentioned in clause 4.1(a).
Clause 4.2 provides that:
general retail industry means the retail sale or hire of goods or services for personal, household or business consumption including:
(a) clothing; and
(b) food; and
(c) furniture and household goods; and
(d) personal and recreational goods;
Schedule A.1 relevantly states:
A.1.1 Retail Employee Level 1 means an employee performing any of the following functions at a retail establishment:
(a) receiving or preparing for sale or displaying goods in or about a shop; or
(b) …
(c) …
(d) selling or hiring goods by any means; or
(e) …
(f) recording a sale or sales by any means; …
This is said to be yet another contravention. 17.5% loading to annual leave ought to have been put into the pay slips and this was not done either. It was admitted that this was not done and the pay slips are said to be defective in yet another way. On this aspect it is not alleged that the failure to include loading was deliberate but it could have been “turning a blind eye” when “this surely was a matter which could have been discovered by a simple telephone call”.
Mr Gambhir submits that it was difficult for him to know all this and he trusted Mr Sumeet Verma. If Fastserv had “done the proper thing” and simply annexed a schedule for the whole period of employment with all the pay slips, it would have been easy to see what was owed and what was not.
Despite having admitted software problems and that records were not properly kept and not having given Ms Utneja’s list, Fastserv denies owing anything at all. It is submitted there is a clear lack of bona fides as far as Fastserv is concerned. It is said to be vexatious as well, given the content and annexures of the two affidavits of Mr Sumeet Verma and Ms Utneja.
Other issues
Fastserv asserted that Mr Gambhir was responsible for not doing entries in the Xero recording system. He submits the responsibility is that of the employer and it cannot shirk that. The Xero system in any event after cross-examination was shown to be rather a poor system or at least a not properly implemented or run system. It is submitted that Fastserv was not able to show Mr Gambhir had been remiss in any way or that he had been properly trained in the use of the system.
Mr Gambhir refers to his second affidavit made on 15 June 2021, at [8], that he was not given a log in number.
Mr Gambhir refers to Mr Sumeet Verma’s affidavit at [18]-[20] regarding the Xero system and how pay slips were given, which is said to show that there was “a comedy of errors”.
Mr Gambhir concedes that in his spare time he did some extra work of his own and Fastserv’s own letter of 1 April 2019[20] shows referral commissions it itself was giving to Mr Gambhir. Mr Gambhir also deposes as to that at [30] of his second affidavit of 15 June 2021.
[20] Annexure H of Mr Gambhir’s affidavit of 12 October 2020, page 25, last paragraph
Fastserv also sought to put as an excuse that the leave entitlement of Mr Gambhir was not corrected because it would affect his loan application to buy a flat. He submits what was of importance there was his income as shown on his salary slips and his salary rate of pay rather than any leave he had accumulated. It is submitted that this simply rings hollow and in no way excuses the “blatant disregard of the provisions of the Fair Work Act”.
Observations on the evidence at trial
Mr Gambhir submits that Mr Sumeet Verma was often argumentative and unresponsive to specific questions put to him in cross-examination. It is submitted his evidence regarding the disorganisation in his leave and salary record keeping duties was unconvincing and contradicted the evidence of Ms Utneja. By way of example he refers to the “elusive” Excel document in which Ms Utneja says Mr Sumeet Verma had kept a rough record which he had given to her in October 2017 as to the leave he alleged Mr Gambhir had taken.
As against this Mr Gambhir submits that he stood up well in cross-examination and his evidence remained consistent even though he was cross-examined (often repetitively) for the best part of a day. When he said that some of the slips annexed to Fastserv’s affidavits were “fraud documents” he was able to show the differences of the salary slips annexed to Fastserv’s affidavits shown to him to those which were given to him and which he had annexed.
As an example Mr Gambhir refers to Annexure G of his affidavit of 12 October 2020, which is his salary slip for March 2018,[21] showing his income at $60,000 was wrong. It was $110,000 until the end of March 2021. It was put to him that other than that, his Annexure G was the same as Ms Utneja’s annexure SU13[22] and he disagreed, showing the second last column under leave has different numbers under the balance. Ms Utneja’s has balances of 12.6667 and 49.3997 while his annexure G has zero for annual leave and 43.0664 for sick leave.
[21] page 24
[22] page 72 of her affidavit
Alleged contraventions and penalty
Mr Gambhir also made detailed submissions on penalty. It follows from my reasons below that I reject those submissions which in any event were premature and related to asserted record keeping breaches which had not been pleaded.
Superannuation Guarantee (Administration) Act 1992 (Cth), s 12(3)
Mr Gambhir accepts that from 1 April 2018 to 30 June 2018 he worked as an independent contractor. From 18 March 2013 to 31 March 2018 is a period of over five years.
The Superannuation Guarantee (Administration) Act 1992 (Cth) (Superannuation Act) has expanded the definition of an employee to cover all those who work under a contract principally for their labour. Mr Gambhir submits this is the case with him and he was working principally as a sales person. Therefore, he submits he is entitled to be paid superannuation even during the three months he was an independent contractor and submitting invoices.
The relevant portion of s 12 of the Superannuation Act provides as follows:
Interpretation: employee, employer
(1)Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):
(a) expand the meaning of those terms; and
(b) make particular provision to avoid doubt as to the status of certain persons.
….
(3)If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
Under Clause 4.2 of the first employment contract, superannuation of 9% was payable to Mr Gambhir. Under Clause 4.2 of the second employment contract of Mr Gambhir, superannuation of 9.5% was payable to him.
He refers to the case of Dental Corporation Pty Ltd v Moffet[23] where a dentist had sold his dental business to the Dental Corporation. He then signed a contract where he still provided essentially the same dental work on patients. He was still found to be employed chiefly for his labour as a dentist and it was held that his superannuation was payable.
[23] [2020] FCAFC 118
If a contract is substantially for labour, superannuation is payable under extended definition under s 12(3) of the Superannuation Act.
There is no independent contractor agreement in evidence. It is said to be essentially the same work which was being done and only the mode of payment had changed. Mr Gambhir rendered invoices and was paid.
Mr Gambhir was still refunded expenses. He refers to his affidavit of 15 June 2021 at [26] where he was reimbursed. He annexes his bank statements showing reimbursements for fuel and travelling from Fastserv in the sums of $380.64 and $1,032 and the use of his car for the period April to June 2018 which was the period of independent contracting.
He was still being paid for his labour and effort. He therefore asks that he be paid his superannuation of $870.83 per month which he was previously being paid for three months, which amounts to $2,612.49.
Alternatively Mr Gambhir has given an account of what he received for the three months in his bank account, which is Annexure A in his affidavit of 15 June 2021 for April 2018 to July 2018. This is said to have covered the money he received for the three months of independent contracting where he did the same work as a sales person. For the three months it is $22,722.72 and 9% of that is $2045.04.
Costs and interest
Section 570 of the Fair Work Act 2009 provides as follows:
Costs only if proceedings instituted vexatiously etc.
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2)The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; …
Mr Gambhir submits that here it was Fastserv’s unreasonable conduct which led to this action being filed. When these proceedings were filed Fastserv is said to have unreasonably denied all the claim when it should have admitted at least the 312.00 hours which it had offered. That is incorrect. The defence filed on 21 April 2020 makes relevant admissions, and otherwise makes Fastserv’s position clear. I reject Mr Gambhir’s submissions to date on costs.
Lastly, it is submitted that Mr Gambhir is also entitled to interest at 6% per annum on the long service leave and annual leave. He is not asking for interest on the superannuation or any penalty or costs awarded.
Resolution
I am not persuaded that Mr Gambhir has established his claim of allegedly unpaid accrued annual leave entitlements, long service leave and superannuation. It follows that no pecuniary penalty should be imposed. In reaching this conclusion, I have been assisted by Fastserv’s submissions and my assessment of its evidence relied upon.
Section 557C of the Fair Work Act provides as follows:
(1) If:
(a)in proceedings relating to a contravention by an employer of a civil remedy provision referred to in subsection (3), an applicant makes an allegation in relation to a matter; and
(b) the employer was required:
(i) by subsection 535(1) or (2) to make and keep a record; or
(ii)by regulations made for the purposes of subsection 535(3) to make available for inspection a record; or
(iii) by subsection 536(1) or (2) to give a pay slip;
in relation to the matter; and
(c) the employer failed to comply with the requirement;
the employer has the burden of disproving the allegation.
(2)Subsection (1) does not apply if the employer provides a reasonable excuse as to why there has not been compliance with subsection 557C(1)(b).
(3) The civil remedy provisions are the following:
(a)subsection 44(1) (which deals with contraventions of the National Employment Standards);
Clause 3.36 of the Regulations deals with the record-keeping requirements in relation to leave. It states as follows:
(1)For subsection 535(1) of the Act, if an employee is entitled to leave, a kind of employee record that the employer must make and keep is a record that sets out:
(a) any leave that the employee takes; and
(b)the balance (if any) of the employee's entitlement to that leave from time to time.
(2) If an employer and employee agree to cash out an accrued amount of leave:
(a)a copy of the agreement is a kind of employee record that the employer must make and keep; and
(b)a kind of employee record that the employer must make and keep is a record that sets out:
(i)the rate of payment for the amount of leave that was cashed out; and
(ii) when the payment was made
The evidence in these proceedings is that Fastserv had a dedicated electronic system for maintaining staff records, including annual leave. That system was the Xero system which had been in place since at least 2013.[24] A central issue in these proceedings is the accuracy of the details of Mr Gambhir’s annual leave total as shown on the Xero system.
[24] Exhibit R16, showing Mr Gambhir’s payslip history on the Xero system, dates back to the pay slip for the fortnight ending 12 May 2013.
It is necessary to remember, however, that Fastserv asserts that it maintained a separate record of the annual leave taken by Mr Gambhir. This was by means of the table annexed to Ms Utneja’s affidavit.[25] Mr Sumeet Verma in examination in chief gave evidence that he had created this table and recorded in it the details of annual leave taken by Mr Gambhir as such leave was taken. Ms Utneja gave evidence that when she started working with Fastserv in October 2015 she was given the table by Mr Sumeet Verma and thereafter assumed responsibility for maintaining it. Ms Utneja indicated that she had not made alterations to what was recorded in the document concerning leave taken prior to her commencing employment. The above evidence concerning the provenance of the table is sufficient for me to be satisfied that the table was maintained as a record of annual leave taken by Mr Gambhir up until 20 November 2017, the last date recorded in it. Thereafter, after some short delay associated with Mr Gambhir’s home loan application, the information recorded in the Xero system was corrected and operated as a record of Mr Gambhir’s annual leave.
[25] Ms Utneja’s affidavit, Annexure SU3 (page 36); Exhibit R9.
In light of the above, I am satisfied that Fastserv discharged the requirement of clause 3.36(1) of the Regulations to the extent that it related to keeping a record of leave taken.
To the extent that there was any failure of Fastserv to comply with the requirements of clause 3.36 of the Regulations, there is in my view a reasonable excuse for that non-compliance. That reasonable excuse is the failure of Mr Gambhir (and other sales staff) to comply with the requirements of that system. Ms Utneja in her affidavit said that she had repeatedly asked the sales employees to record in the Xero system annual leave used by them. Her requests were to no avail.[26] She was cross-examined on her affidavit and proved to be an impressive witness.
[26] Ms Utneja’s affidavit at [9] and [10].
Ms Utneja’s evidence in this regard is corroborated by Mr Amit Verma in his affidavit.[27] Notably, Mr Amit Verma was one of the sales staff who had failed to comply with Ms Utneja’s repeated requests.
[27] Mr Amit Verma’s affidavit at [5].
It would create an anomalous situation indeed if an employee who ignored his employer’s repeated requests to use a properly-developed system for recording leave and thereby caused what is recorded in that system to be inaccurate could, in a dispute concerning that employee’s leave entitlements, rely on s 557C of the Fair Work Act to place the burden of disproving his claim on the employer. The avoidance of such an anomalous and plainly unfair situation is permitted by the reasonable excuse exception in s 557C(2).
I proceed on the basis that the burden of proof on Mr Gambhir has not been shifted as a result of s 557C of the Fair Work Act.
In any event, any shifting of the burden of proof as a consequence of s 557C would operate only in relation to the allegation concerning underpayment of annual leave. That is, it would not operate in relation to either the long service leave claim or the superannuation claim.
The claim for long service leave arises under the Long Service Leave Act, not the Fair Work Act. The claim for superannuation for the period from 1 April 2018 to 30 June 2018 also cannot arise under the Fair Work Act. Any award entitlement to superannuation cannot arise in relation to this period as during this time Mr Gambhir concedes he worked as an independent contractor. By definition, the Award is applicable only to employees. Any entitlement to superannuation therefore can only arise under the Superannuation Act. Neither the Long Service Leave Act nor the Superannuation Act are civil remedy provisions for the purposes of s 557C(1) and (3) of the Fair Work Act.
Mr Gambhir’s credibility as a witness
I accept that the credibility of Mr Gambhir, whether he is a witness of truth, is a live issue in these proceedings. The following matters are relevant in this regard.
In Mr Gambhir’s initial claim upon Fastserv for alleged unpaid annual leave[28], he calculated the amount claimed by reference to an amount of accrued leave as at December 2017 of 753.2210 hours. That number of hours equates to 99 days. [29] For that figure to be correct, Mr Gambhir would have had to have taken no annual leave whatsoever during the period of employment from 18 March 2013 to 31 December 2017.[30] When Mr Sumeet Verma pointed out to Mr Gambhir[31] that Fastserv held documentary proof of two trips he took to India and one trip to New Zealand, Mr Gambhir re-cast his claim.[32] Any suggestion that Mr Gambhir was not fully aware that he had taken two trips to India and one to New Zealand is untenable. When confronted in cross-examination with the arithmetic outlined above, Mr Gambhir repeatedly prevaricated and provided no explanation beyond that he relied on the pay slip (a document he knew was inaccurate). There is no scope for any suggestion that Mr Gambhir, in formulating his claim based on the December 2017 pay slip, had not appreciated that the number of hours leave he was claiming was incorrect. This is because in the email he identifies that his annual leave entitlement equated to 152 hours per year. That is, the email demonstrates that he had turned his mind to the arithmetic of his claim. The willingness of Mr Gambhir to make a claim that he knew (on a view of the evidence most generous to him) was at the very least exaggerated diminishes his credibility.
[28] Email dated 26 March 2019, Exhibit R1.
[29] 753 hours ÷ 7.6 hours per day = 99.08 days.
[30] Annual leave accrues at 20 days p.a. 20 days = 152 hours per annum (20 x 7.6=152).
[31] Email 5 April 2019, Exhibit R2.
[32] Email 11 April 2019, Exhibit R3.
Despite Mr Gambhir’s willingness to re-cast his claim in discussions with Mr Sumeet Verma to account for the two trips to India and one to New Zealand as referred to above, in his affidavit of 12 October 2020 Mr Gambhir deposed that he had not been paid for 735.4877 hours of annual leave.[33] That number of hours leave equates to almost 97 days.[34] Mr Gambhir’s assertion in his affidavit that he was owed 97 days leave is irreconcilable with his earlier acceptance that he had taken leave to travel to India twice and to New Zealand. Despite such leave having previously been expressly drawn to his attention by Mr Sumeet Verma,[35] Mr Gambhir was prepared to depose that almost 97 days of annual leave was unpaid.
[33] Affidavit of Mr Gambhir of 12 October 2020 at [15].
[34] 735.4877 ÷ 7.6 = 96.7746974.
[35] Email 5 April 2019, Exhibit R2.
In the usual course of events the preparedness of a witness to make appropriate concessions can be an important test in assessing their credibility. In cross-examination Mr Gambhir persistently refused to concede anything unless and until confronted with incontrovertible documentary evidence. For example, he denied receiving the email from Ms Utneja dated 14 December 2017[36] until confronted with evidence of him replying to the email in question.[37] Even when confronted by documentary evidence, he sought to suggest that the evidence was somehow inaccurate or incomplete or otherwise refused to provide answers that were responsive to the questions posed. For example, when presented with evidence of Ms Utneja updating him via email of his annual leave balance on 25 January 2018,[38] Mr Gambhir suggested that the email chain was inaccurate due to replies from him being absent. Ms Utneja confirmed in examination in chief that the full email chain had been attached to her affidavit.
[36] Exhibit R4.
[37] Exhibit R5.
[38] Exhibit R6; Ms Utneja’s affidavit, Annexure SU10, page 61.
In relation to the contents of the table recording his annual leave annexed to Ms Utneja’s affidavit,[39] Mr Gambhir was prepared to concede the accuracy of the table insofar as it recorded that he took annual leave for two trips to India and one to New Zealand. However, he said that he took only 10 days leave (rather than the 12 recorded) for the trip to India in December 2016 and only one day of leave (rather than the two recorded) for the trip to New Zealand in April 2017. Mr Gambhir otherwise denied that he took the leave recorded in the table. The effect of that denial is that he asserts that he took no leave whatsoever for the first three years of his employment and no leave at all during the entire first period of employment (March 2013 to March 2018) at such times as Christmas and New Year, despite shutdowns of Fastserv’s operations during such periods. Such evidence is implausible and I reject it.
[39] Exhibit R9; Ms Utneja’s affidavit, Annexure SU3, page 37.
I am concerned with the veracity of much of Mr Gambhir’s evidence. Where the evidence of Mr Gambhir is in conflict with that of other witnesses, I prefer the evidence of the other witnesses.
Annual leave
Fastserv submits and I accept that the evidence demonstrates that Mr Gambhir has been paid his annual leave entitlements in full.
First period, 18 March 2013 – 31 March 2018
Mr Gambhir’s first period of employment with Fastserv was from 18 March 2013 to 31 March 2018. This was a period of five years and two weeks. In that period Mr Gambhir’s accrued annual leave would (if no leave whatsoever was taken) have been 100.77 days.
Mr Gambhir places particular reliance on the contents of certain pay slips, in particular that for December 2017, generated by the Xero system. Why that approach is misleading is explained in detail in Fastserv’s evidence. Ms Utneja explains at [8] to [25] of her affidavit that there was a longstanding problem experienced by Fastserv in having sales staff (including Mr Gambhir) use the Xero accounting and payroll system to record leave. The consequence was that the Xero records continued to show accrued leave with no allowance for leave actually taken. This resulted in artificially inflated (incorrect) leave figures.
This longstanding problem came to a head in late 2017 when the matter was raised in the sales forum held on 6 December 2017. In the forum Ms Utneja explained to sales staff the proper process for applying for leave. [40]
[40] Ms Utneja’s affidavit at [12]; Mr Sumeet Verma’s affidavit at [11]; Mr Amit Verma’s affidavit at [7].
Following the sales forum, Ms Utneja and Mr Sumeet Verma met with Mr Gambhir and Mr Amit Verma. Ms Utneja explained to both Mr Gambhir and Mr Amit Verma that they had each taken all their accrued annual leave as at 30 June 2017, that the figures for accrued annual leave showing on their respective pay slips were wrong and that she would be correcting the figure recorded on their pay slips.[41]
[41] Ms Utneja’s affidavit at [12]; Mr Sumeet Verma’s affidavit at [11]; Mr Amit Verma’s affidavit at [8].
In the course of the post-sales forum meeting Mr Gambhir agreed that he had taken all the annual leave he had accrued to 30 June 2017 and that the figure on his pay slip was wrong.[42]
[42] Ms Utneja’s affidavit at [12]; Mr Sumeet Verma’s affidavit at [11]; Mr Amit Verma’s affidavit at [8].
Importantly, in the course of the post-sales forum meeting, Ms Utneja showed Mr Gambhir a “spreadsheet” recording his annual leave taken. Although Mr Gambhir denies that he was shown the spreadsheet, there is consistency in the evidence of Ms Utneja, Mr Sumeet Verma and Mr Amit Verma that Mr Gambhir was shown the spreadsheet.[43] This spreadsheet is the table annexed to Ms Utneja’s affidavit.[44]
[43] Ms Utneja’s affidavit at [13]; Mr Sumeet Verma’s affidavit at [12]; Mr Amit Verma’s affidavit at [9].
[44] Ms Utneja’s affidavit, Annexure SU3, page 37; Exhibit R9.
On 11 December 2017 and following up on the sales forum, Ms Utneja emailed sales staff, including Mr Gambhir, addressing among other matters the proper process for applying for leave through the Xero system.[45] This email is annexed to Ms Utneja’s affidavit.[46] Mr Amit Verma, one of the persons to whom the email was addressed, confirmed that he received it.[47]
[45] Ms Utneja’s affidavit at [14].
[46] Ms Utneja’s affidavit, Annexure SU4, pages 39-40.
[47] Mr Amit Verma’s affidavit at [10], Annexure AV2, pages 7-8.
Ms Utneja, Mr Sumeet Verma and Mr Amit Verma give consistent versions of what happened at the post-sales forum meeting on 6 December 2017. Further corroboration is obtained as a result of the subsequent actions of Ms Utneja recorded in the “paper trail” of emails concerning the process by which the annual leave balances for both Mr Gambhir and Mr Amit Verma were re-set or corrected.
In relation to Mr Amit Verma, on 14 December 2017 Ms Utneja sent an email to Fastserv’s accountant requesting that Mr Verma’s annual leave accrued up to 30 June 2017 be cleared as it had been taken.[48] The pay slip attached to the email recorded Mr Verma’s annual leave as 531 hours (that is, 69.9 days).[49] The accountant responded the same day.[50] His email attached the corrected payslip for Mr Amit Verma. [51] That pay slip shows that the annual leave balance of 531 hours recorded on the pay slip as forwarded by Ms Utneja earlier that day had been moved to the column for “Used” leave. The same day, 14 December 2017, Ms Utneja emailed Mr Amit Verma advising of the re-set of his annual leave and providing a copy of the corrected pay slip.[52]
[48] Ms Utneja’s affidavit at [15], Annexure SU5, page 43. Ms Utneja confirmed in cross-examination that “Kaushal” is an employee of Fastserv’s accountant.
[49] Ms Utneja’s affidavit, Annexure SU5, page 44.
[50] Ms Utneja’s affidavit at [16], Annexure SU6, page 46.
[51] Ms Utneja’s affidavit, Annexure SU6, page 48.
[52] Ms Utneja’s affidavit at [17], Annexure SU7, pages 50-51.
On the same day as the events in the preceding paragraph, Ms Utneja began a similar process with the accountant for correcting the annual leave details of Mr Gambhir. She sent an email to the accountant requesting that Mr Gambhir’s annual leave accrued up to 30 June 2017 be cleared as it had been taken.[53] That request was, however, put on hold pending determination of Mr Gambhir’s home loan application.[54] Ms Utneja nevertheless that day also sent an email to Mr Gambhir in which she confirmed that his accrued annual leave balance was 63.33 hours.[55] Mr Gambhir in cross-examination denied that he received that email. When given the opportunity to consider that evidence, he maintained the denial. It is nevertheless plain that he did receive it, as he responded to it.[56]
[53] Ms Utneja’s affidavit at [18], Annexure SU8, page 53.
[54] Ms Utneja’s affidavit at [19], [20], Annexure SU8, page 53.
[55] Ms Utneja’s affidavit at [21], Annexure SU9, page 56. Later conceded in evidence to be 66.33 hours.
[56] Ms Utneja’s affidavit at [21], Annexure SU9, page 57.
Following receiving Mr Gambhir’s response to her email, Ms Utneja had a conversation with Mr Gambhir in which she explained the re-setting of the annual leave balance to 66.33 hours given that he had used his annual leave accrued up to 30 June 2017. In that conversation Mr Gambhir indicated his understanding of what had occurred.[57]
[57] Ms Utneja’s affidavit at [22].
After the events of 14 December 2017 set out above, Ms Utneja emailed Mr Gambhir on 25 January 2018 and 30 January 2018 advising him of his annual leave balances (the figures were 45.59 and 38.09 hours respectively).[58] It should be borne in mind that at this stage the re-set of Mr Gambhir’s annual leave balance on the Xero system was yet to occur, given the delay associated with his home loan application as referred to above. Mr Gambhir is recorded in the email chain as receiving and responding to the later email. His response clearly indicates that he has turned his mind to the annual leave figure recorded. Mr Gambhir was asked about these emails in cross-examination. It was suggested to him that if he had any issue with the accuracy of what was recorded as his annual leave balance he would have raised that issue with Ms Utneja. His responses were to suggest that the email chain was incomplete. Ms Utneja confirmed in examination in chief that the complete email chain was annexed to her affidavit. The inference I draw is that Mr Gambhir accepted the accuracy of the figures recorded in the emails. Mr Gambhir gave evidence in chief to the effect that whenever he got a payslip he went through the hours.
[58] Ms Utneja’s affidavit at [23], Annexure SU10.
In early February 2018 Ms Utneja had a conversation with Mr Gambhir in which she enquired whether his home loan application had been approved.[59] Ms Utneja explained her query by reference to the fact that Fastserv needed to rectify the record of his annual leave balance in the payroll system. In that conversation Mr Gambhir indicated that his home loan had been approved and agreed to the rectification of his annual leave balance in the payroll system.
[59] Ms Utneja’s affidavit at [24].
On 28 February 2018 Ms Utneja emailed Fastserv’s accountant requesting that Mr Gambhir’s annual leave balance be cleared of leave accrued up to 30 June 2017.[60]
[60] Ms Utneja’s affidavit at [25], Annexure SU11, page 64.
I accept the truth and reliability of the oral and affidavit evidence of Ms Utneja, Mr Sumeet Verma and Mr Amit Verma concerning the circumstances of the re-setting of Mr Gambhir’s annual leave balance on the Xero system. Their evidence is consistent with the objective “paper trail” of emails referred to above.
Despite the evidence set out above, Mr Gambhir persists in emphasising the erroneous figure recorded in the December 2017 payslip. In his submissions Mr Gambhir referred to at [14] of the affidavit of Mr Sumeet Verma in which Mr Sumeet Verma makes reference to Annexure SV4 which attached the December 2017 payslip. Mr Sumeet Verma in his examination-in‑chief explained that the December 2017 payslip as annexed to his affidavit was incorrect inasmuch as it was the uncorrected version, that is, it showed the incorrect figure of 753.2210 hours. Mr Sumeet Verma gave evidence that the correct version is that which appears at page 66 of Ms Utneja’s affidavit (showing an annual leave balance of 76 hours).
As discussed above in dealing with the issue of Mr Gambhir’s credibility as a witness, 753.2210 hours would equate to 99 days leave. Given that Mr Gambhir concedes at least that he took annual leave for two trips to India and one to New Zealand (on his version this leave totalled 44 days – 334.4 hours), it is impossible as a matter of arithmetic for the figure of 753.2210 hours to be correct.
Calculation of annual leave taken after the 30 June 2017 reset
I accept that the evidence demonstrates that Mr Gambhir had used all his annual entitlements that accrued up until 30 June 2017. The task then becomes to determine whether any leave is owing to Mr Gambhir for the period from 1 July 2017 to 31 March 2018. In that period Mr Gambhir would have accrued exactly 15 days annual leave.[61] The task of determining what leave was taken in this period can be undertaken by reference to the available documentary evidence.
[61] This period is exactly nine months. Annual leave accrues at 20 days per annum.
The starting point in this process is the table maintained by Ms Utneja of the annual leave taken by Mr Gambhir.[62] That table records him taking leave on 2 August 2017, 6 August 2017, 2 September 2017, 3 September 2017, 6 September 2017, 3 October 2017 and 20 November 2017. This amounts to seven days leave.
[62] Exhibit R9.
In relation to the month of January 2018, the payslip for the period ending 31 January 2018 [63] records 30.4 hours of annual leave being taken. That equates to exactly 4 days.[64] However, the email notifications to Mr Gambhir from Ms Utneja on 25 and 30 January 2018[65] refer to five days annual leave being taken, that is, 3, 4, 5, 25 and 29 January 2018.
[63] Exhibit R10; Ms Utneja’s affidavit, Annexure SU11, page 67.
[64] 30.4 ÷ 7.6 = 4.
[65] Exhibit R6.
In relation to the month of February 2018, the payslip for the period ending 28 February 2018[66] records 22.8 hours of annual leave being taken. That equates to exactly three days.[67]
[66] Exhibit R7; Ms Utneja’s affidavit, Annexure SU11, page 68.
[67] 22.8 ÷ 7.6 = 3.
To this point the records identify Mr Gambhir as having taken either 14 or 15 days leave in the period from 1 July 2017 (depending on whether reliance is placed on the four days leave referred to in the January 2018 payslip or the five days leave as referred to in Ms Utneja’s emails).
In relation to the month of March 2018, the payslip for the period ending 31 March 2018 records Mr Gambhir as having taken annual leave.[68] The fact that this payslip refers to an hourly rate of $30.3030 rather than the correct hourly rate of $55.5556 can be put to one side. This is because the banking records indicate that Mr Gambhir received his usual net monthly salary payment of $6,618.67 for the month of March 2018.[69] It follows that that the annual leave taken was paid at the correct hourly rate.
[68] Exhibit R8; Ms Utneja’s affidavit, page 72.
[69] Affidavit of Mr Sumeet Verma, page 75, see the entry for 30 April 2018 on the bank account statement.
Allowing for the one day’s leave taken in March 2018, Mr Gambhir is recorded as having taken either 15 or 16 days leave in the period 1 July 2017 to 31 March 2018. Depending on which figure is adopted, Mr Gambhir has therefore either taken his exact leave accruing in that period (that is, 15 days) or his exact leave and one additional day.
There is an anomaly of the payslip for the period ending 31 March 2018 recording Mr Gambhir as having 40.6336 hours paid out and seemingly being paid again for the one day’s leave taken in March 2018 (payment for which had been included in the usual salary payment for that month) and referring to the incorrect hourly rate of $30.3030. In cross examination neither Ms Utneja nor Mr Sumeet Verma could explain the reference in this payslip to the incorrect hourly rate. Both readily conceded that the hourly rate was incorrect. Mr Sumeet Verma said that the matter was under investigation. Whatever is the explanation, the error in this payslip’s reference to the hourly rate does not support any suggestion that Mr Gambhir was underpaid his annual leave entitlements. Indeed the evidence suggests that he has been overpaid. That is, that the amount of $1,458.59 he received [70] was not in fact owing to him. The amount of $1,458.59 represents approximately 3 ½ days’ pay for Mr Gambhir.[71] It might hypothetically have been called into account to offset any arrears of annual leave otherwise demonstrated.
[70] Affidavit of Mr Sumeet Verma, page 67, the receipt is verified by the reference in the bank account statement of the Fastserv.
[71] 7.6 hours x $55.5556 per hour = $422.22. $1,458.59 ÷ $422.22 = 3.45.
Other issues
In the course of cross-examination Mr Gambhir alleged that he had been directed by Mr Sumeet Verma to attend the wedding of Mr Amit Verma in India in December 2016. Curiously, no such allegation had been made in Mr Gambhir’s affidavit evidence. In re-examination Mr Gambhir expanded on his allegation, to be that Fastserv forced him to go to the wedding and that he had no choice but to attend. The apparent inference that the Court was invited to draw from this assertion is that the annual leave taken by Mr Gambhir to attend that wedding was not genuine leave and should therefore not be regarded as taken or should otherwise be discounted. I reject the invitation.
As emerged in the evidence in chief of Mr Sumeet Verma, Mr Gambhir was invited to the wedding. Such an invitation was also extended to and accepted by Mr Gambhir’s mother, father, sister and brother. The background to the invitation is that, prior to the apparent breakdown in the relationship in recent times, Mr Gambhir and the Verma family were friends. Both Mr Sumeet Verma and Mr Amit Verma gave evidence that the latter and Mr Gambhir lived together as housemates for a period of time. Mr Sumeet Verma also gave evidence that the trip to India suited Mr Gambhir as it allowed him to accompany his elderly father back to Australia. Mr Sumeet Verma was not challenged on this evidence in cross-examination.
I reject Mr Gambhir’s allegation that he was directed to attend the wedding of Mr Amit Verma.
A further allegation made by Mr Gambhir in cross-examination was that Mr Sumeet Verma had directed him to take phone calls or otherwise attend to work while on annual leave. This is another matter which was not raised in Mr Gambhir’s affidavit evidence. In re-examination the allegation changed to be that Mr Sumeet Verma did not mention anything about not taking calls from clients while on leave. Putting to one side the difference in these competing versions, the apparent suggestion is that the court should to some extent discount the leave taken to account for such work. I reject that suggestion. In his examination in chief Mr Sumeet Verma denied directing or requiring Mr Gambhir to take phone calls or work while on annual leave. In cross-examination he accepted that he could not compel a worker to take calls while on annual leave. Mr Sumeet Verma provided the common sense explanation that (given the nature of the business) clients may have called Mr Gambhir while he was on leave, that he was at all times able to decline to take the call or otherwise deal with the matter and that any phone call/s would have been momentary. Further, in relation to the period of Mr Gambhir’s annual leave when attending Mr Amit Verma’s wedding in India, Mr Sumeet Verma indicated that they were at various times travelling in regional areas where there was no mobile phone network available.
At times during cross-examination of Ms Utneja and Mr Sumeet Verma, Mr Gambhir sought to impugn the reliability of certain payslips given that they stated Mr Gambhir’s annual salary to be $60,000 rather than the correct figure of $110,000. This persists in Mr Gambhir’s submissions as set out above. The potency of this attack dissolves in light of Mr Sumeet Verma’s evidence that the reason for the incorrect salary figure on some payslips is that they were generated from the Xero system for the purposes of the present litigation. At that time, the Xero system showed Mr Gambhir’s details and profile based on the most recent information held by it, that is, the details applicable to the second period of employment from 1 July 2018 to 31 March 2019.
In Mr Gambhir’s submissions it is also said that Fastserv deducted annual leave from Mr Gambhir because he had not achieved sales targets. This misrepresents the evidence. The evidence from both Ms Utneja and Mr Sumeet Verma was that Fastserv operated a competition or bonus incentive scheme under which certain amounts of annual leave otherwise taken would be re-credited if certain sales targets were met. A failure to meet those targets would not operate to deny an employee annual leave entitlements. All that the employee lost was the opportunity to have re-credited leave otherwise taken.
In his submissions set out above Mr Gambhir suggests that Mr Sumeet Verma in his email to Mr Gambhir on 5 April 2019[72] had implicitly or otherwise accepted that Mr Gambhir is owed 312 hours (41 days) of annual leave. This is seemingly the evidential high point of Mr Gambhir’s case. Mr Gambhir’s suggestion is, however, incorrect.
[72] Exhibit A1.
In the email in question Mr Sumeet Verma told Mr Gambhir that Fastserv held documentary evidence (copies of plane tickets, photographs taken by Mr Gambhir as shared with others and a copy of his passport provided previously) that proved that Mr Gambhir took annual leave for the two trips to India and one trip to New Zealand. It was after being told this that Mr Gambhir abandoned his claim in relation to those days. In the email Mr Sumeet Verma also indicated the following:
We had all the records of other days also taken off by you during abovementioned period in our emails, however due to an accounting software issue in the company, records of remaining 312.20 hours got omitted, when our company did an email and CRM migration in 2017.
The “abovementioned period” referred to by Mr Sumeet Verma was indicated in the paragraph immediately preceding the above extract as being the period from 18 March 2013. What Mr Sumeet Verma was stating in the email is simply that Fastserv had previously held email records of all annual leave taken by Mr Gambhir, that is, in addition to the leave taken to travel to India twice and to New Zealand. As noted, the travel to India and New Zealand could be separately proven by other documents. As expanded upon by Mr Sumeet Verma in his affidavit[73] and in his oral evidence, Fastserv was unable as at April 2019 to locate the records of those 312 hours as a result of data loss consequential to a software change. It was as a consequence of that inability that Mr Sumeet Verma attempted to avoid the present dispute by offering to pay the 312 hours so as to be done with the matter. This was not an admission that the hours were owed. Rather, it was a commercial attempt to try to avoid the substantial costs in terms of money, time and resources of an ongoing dispute, including the present litigation.
[73] Affidavit of Sumeet Verma at [36].
In his submissions Mr Gambhir suggests that the reference by Mr Sumeet Verma in the 5 April 2019 email to a “software issue” means that 312 hours had been incorrectly omitted from Mr Gambhir’s annual leave balance with the consequence that the 48.1336 hours balance recorded in the February 2018 payslip was incorrect. This is not the evidence. As outlined in the preceding paragraphs, the evidence is that Fastserv had email records to prove that the 312 hours of leave referred to had been taken and that those email records had been lost due to the software issue when its email database was changed in 2017. Further, as was pointed out by both Ms Utneja and Mr Sumeet Verma on numerous occasions in cross-examination, the Xero system and the email system are entirely separate. A loss of data in the email system would not have an effect on the Xero system. It was the Xero system that produced the pay slips.
In his submissions Mr Gambhir suggests that the table maintained by Fastserv recording his leave[74] was a recent invention. It is said that a call was made for the document and that it was not produced. It should be remembered that Ms Utneja, Mr Sumeet Verma and Mr Amit Verma all gave evidence that the table was shown to Mr Gambhir in the course of the meeting on 6 December 2017 that followed the sales forum.[75] Ms Utneja and Mr Sumeet Verma gave evidence in relation to the creation and maintenance of the document. The table was an electronic document which was created by Mr Sumeet Verma. He recorded Mr Gambhir’s leave in it until Ms Utneja was employed by Fastserv in October 2015. Thereafter Ms Utneja accessed the electronic document and undertook herself the task of recording in it Mr Gambhir’s leave. The table was annexed to Ms Utneja’s affidavit.[76] Plainly the document exists in electronic form. A hard copy of the document is in evidence. There was nothing more that could be produced.
[74] Exhibit R9.
[75] Ms Utneja’s affidavit at [13]; Mr Sumeet Verma’s affidavit at [12]; Mr Amit Verma’s affidavit at [9].
[76] Ms Utneja’s affidavit, Annexure SU3.
In his submissions Mr Gambhir suggests that Fastserv was not able to show that he had been properly trained in the operation of the Xero system. Reference is also made to Mr Gambhir’s evidence that he was not given a log in number. Ms Utneja gave evidence that the Xero system automatically sends an email to an employee when they are registered in the system. The employee is then required to create an individual password. There is nothing to suggest that the requirements of this system were any more demanding than similar electronic database or online systems that exist in areas of working and personal life.
Second period, 1 April 2018 – 30 June 2018
Mr Gambhir concedes that he was an independent contractor in the period 1 April 2018 to 30 June 2018. It follows that no entitlement to annual leave arises during that period.
Third period, 1 July 2019 – 31 March 2019
Mr Gambhir was re-employed by Fastserv effective 1 July 2018. This second period of employment ceased on 31 March 2019.
Mr Gambhir was invited during the course of the hearing to indicate if there was any claim for underpayment of annual leave in this period. He ultimately conceded that there is no such claim.
Annual leave loading not applicable
The claim for annual leave loading is misconceived.
There is no mention in either of the written contracts of employment of any such loading being payable. Such a loading can arise only as an award matter. A copy of the General Retail Industry Award 2010 (2010 Award) was provided with the parties’ submissions.
The 2010 Award provided for an annual leave loading of 17.5%.[77]
[77] Award, clause 32.3(a).
Critically however, clause 2.2 of the 2010 Award expressly provided:
The monetary obligations imposed on employers by this award may be absorbed into overaward payments. Nothing in this award requires an employer to maintain or increase any overaward payment.
Clause 2.2 was a standard absorption clause that formerly existed in all Modern Awards. The clause was inserted in all Modern Awards following the Fair Work Commission’s Transitional Provisions decision on 2 September 2009.[78] The 2010 Award commenced operation on 1 January 2010. [79]
[78] Re 4 Yearly Review of Modern Awards [2015] FWCFB 4658 at [16].
[79] See clause 2.1.
In its decision Re 4 Yearly Review of Modern Awards on 30 September 2015[80] the Full Bench of the Fair Work Commission considered whether the clause should remain in Modern Awards. It ultimately came to the conclusion that it should not.[81] Clause 2.2 was removed from the 2010 Award on 1 October 2020 when that Award became the General Retail Award 2020.[82]
[80] [2015] FWCFB 6656 (30 September 2015) per Ross J (P), Hatcher VP, Hamberger SDP, Bull DP and Bissett C.
[81] [2015] FWCFB 6656 at [56].
[82] Re 4 Yearly Review of Modern Awards [2020] FWCFB 4839 at [24].
It follows from the above that clause 2.2 of the 2010 Award was in force at all times Mr Gambhir was employed by Fastserv. The submission on behalf of Mr Gambhir that his employment was governed by the General Retail Industry Award 2020 is incorrect. That Award (as its name would indicate) was not in operation during 2013 to 2018 when the events of concern in these proceedings occurred.
In the course of deciding in its decision Re 4 Yearly Review of Modern Awards on 30 September 2015 in which it held that clause 2.2 of the 2010 Award should not remain, the Full Bench of the Fair Work Commission considered the operation of the clause. It stated as follows at [67]:
But during the course of oral argument Ai Group acknowledged that the first sentence of the absorption clause established a right, exercisable by the employer, to absorb any monetary obligation under the award into any over award payment.
(emphasis added)
The Full Bench further stated at [69]:
Contrary to ABI’s submission we think that the first sentence of the absorption clause creates a right whereby an employer may set off the monetary obligations imposed by the award against overaward payments. Further, such a right overrides any contrary contractual arrangement between the employer and employee.
I accept the submission by Fastserv that, in light of the far-reaching operation of clause 2.2 of the 2010 Award as identified by the Full Bench of the Fair Work Commission, it is not necessary for the Court to consider the alternative issue of the common law principles relating to the set off of contractual over-award payments against award entitlements.[83] Any limitations that might exist at common law in Fastserv being permitted to set-off its over-award payments (as outlined below) to Mr Gambhir plainly do not arise in circumstances where the set-off is expressly permitted by the Award.
[83] See, for example, the decision of Anderson J of the Western Australian Industrial Appeal Court in James Turner Roofing Pty Ltd v Peters [2003] WASCA 28 (in particular at [21]) and the decision of the Full Federal Court in WorkPac v Rossato [2020] FCAFC 84. Rossato was appealed to the High Court. The High Court allowed the appeal on a different basis so the reasoning of the Full Federal Court on this point was left undisturbed.
The 2010 Award provided that the loading is “calculated on the rate of wage prescribed in clause – Minimum weekly wages of this award”.[84] That is, the 2010 Award does not operate to require payment of the annual leave loading on any (above-award) contractual rate of pay. The submission of behalf of Mr Gambhir that any leave loading would be payable at the contractual rate of pay is therefore incorrect.
[84] clause 32.3(a).
Mr Gambhir has not identified what classification under the 2010 Award it is alleged is applicable to his position. Fastserv submits and I accept that the proper classification under the 2010 Award for Mr Gambhir would be no higher than a Retail Employee Level 4. The 2010 Award indicates that the tasks indicative of an employee at the classification Retail Employee Level 4 include management of a defined section/department, supervision of up to four sales staff (including self) and a requirement to utilise the skills of a trades qualification for the majority of the time in a week.[85]
[85] 2010 Award, Schedule B – Classifications clause B.4, page 62.
Even if the highest classification, Retail Employee Level 8, were adopted, Mr Gambhir’s hourly rate was at all times above the Award minimum.
Mr Gambhir’s annual salary from 18 March 2013 to 17 August 2015 was $52,000,[86] an hourly rate of $26.32.[87] The hourly rate payable in relation to a level 8 employee under the Award as at 17 August 2015 was $23.23.[88] Mr Gambhir therefore received an over-award payment of $3.09 per hour.[89] Applying the leave loading rate of 17.5% to four weeks annual leave at the hourly rate of $23.23 would result in an amount of $617.92 per annum being payable as a loading for the retail employee level 8 classification.[90] The over-award payment of $3.09 per hour received by Mr Gambhir amounts to $6,105.84 per annum[91], offsetting the amount of the annual leave loading otherwise payable.
[86] Affidavit of Mr Sumeet Verma dated 16 October 2020, Annexure SV2, page 17; see clause 4.1.
[87] $52,000 ÷ 52 weeks per annum ÷ 38 hours per week = $26.32 per hour.
[88] See Fair Work Ombudsman pay rate summary for Retail Employee Level 8 under the 2010 Award as at 17 August 2015, filed by Fastserv with its submissions
[89] $26.32-$23.23=$3.09.
[90] $23.23 per hour x 7.6 hours x 20 days x 17.5% = $617.92.
[91] $3.09 per hour x 7.6 hours per day x 5 days per week x 52 weeks per annum = $6,105.84.
From 18 August 2015 Mr Gambhir’s annual salary was $54,000 ,[92] an hourly rate of $27.33.[93] The hourly rate payable in relation to a level 8 employee under the Award as at 31 May 2017 was $23.79.[94] Mr Gambhir therefore received an over-award payment of $3.54 per hour.[95] Applying the leave loading rate of 17.5% to four weeks annual leave at the hourly rate of $23.79 would result in an amount of $632.81 per annum being payable as a loading for the retail employee level 8 classification.[96] The over-award payment of $3.54 per hour received by Mr Gambhir amounts to $6,995.04 per annum[97], again offsetting the amount of the annual leave loading otherwise payable.
[92] Affidavit of Mr Sumeet Vermda dated 16 October 2020, Annexure SV3, page 36; see clause 4.1.
[93] $54,000 ÷ 52 weeks per annum ÷ 38 hours per week = $27.33 per hour.
[94] See Fair Work Ombudsman pay rate summary for Retail Employee Level 8 under the 2010 Award as at 31 May 2017, filed by Fastserv with its submissions.
[95] $27.33-$23.79=$3.54.
[96] $23.79 per hour x 7.6 hours x 20 days x 17.5% = $632.81.
[97] $3.54 per hour x 7.6 hours per day x 5 days per week x 52 weeks per annum = $6,995.04.
From May/June 2017 Mr Gambhir’s annual salary was increased to $110,000, an hourly rate of $55.5556. The hourly rate payable in relation to a level 8 employee under the Award as at 31 March 2018 was $24.57.[98] Mr Gambhir therefore received an over-award payment of $30.99 per hour. There can be no issue that this amount greatly offset any annual leave loading otherwise payable under the Award.
[98] See Fair Work Ombudsman pay rate summary for Retail Employee Level 8 under the 2010 Award as at 31 March 2018, filed by Fastserv with its submissions.
The calculations in the preceding paragraphs demonstrate that, allowing the most generous assumption in favour of Mr Gambhir, the highest Award classification, any entitlement of Mr Gambhir to an annual leave loading under the 2010 Award was comfortably absorbed into the substantial over-award payments that he received. Under clause 2.2, this absorption was expressly permitted by the Award.
In his written submissions Mr Gambhir refers to the decision of Buchanan J in Centennial Northern Mining Services. Mr Gambhir submits that that decision supports his case for payment of an annual leave loading. It should be noted that Buchanan J’s decision was appealed. The Full Federal Court delivered its appeal judgment in Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union.[99] In any event, it is not apparent how either decision provides any support for Mr Gambhir’s claim. The decisions concern the interaction of a modern award or enterprise agreement with s 90 of the Fair Work Act. The Full Federal Court stated at [38]:
Section 90(1) creates the minimum standard: payment at the base rate for ordinary hours worked. The effect of s 90(2) is that if that is the rate at which the employee is paid when he or she takes annual leave, then that is the minimum amount that must be paid for any accrued untaken annual leave. If, on the other hand, there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then s 90(2) stipulates that that is the rate which is payable where annual leave has accrued but has not been taken.
[99] [2015] FCAFC 100 per Tracey, Flick and Katzmann JJ.
There is nothing in the extract set out above that has any present relevance.
Long service leave
Any entitlement of Mr Gambhir to long service leave arises under s 4(2)(a)(iii) of the Long Service Leave Act. That is, Mr Gambhir needs to establish that he has had at least five years service and that his services were terminated:
(a)by the employer for any reason other than the worker’s serious and wilful misconduct;
(b)or by the worker on account of illness, incapacity or domestic or other pressing necessity;
(c)or by reason of the death of the worker.
Importantly, s 4(11)(a) of the Long Service Leave Act defines “service of a worker with an employer” to mean continuous service. “Worker” is defined in s 3(1) to be an employee.
Any entitlement of Mr Gambhir to long service leave can arise only in respect of his first period of employment with Fastserv, that is, from 18 March 2013 to 31 March 2018. In his submissions Mr Gambhir states that it is admitted that he was employed by Fastserv from 18 March 2013 to 31 March 2019. It may be assumed for present purposes that the intended reference was to 31 March 2018. Mr Gambhir has of course admitted that he was engaged as an independent contractor in the period 1 April 2018 to 30 June 2018. There is no unbroken period of employment to 31 March 2019.
Given that Mr Gambhir commenced employment with Fastserv on 18 March 2013, the initial five years of service expired on 18 March 2018. Mr Gambhir’s employment ceased on 31 March 2018 when he was engaged as an independent contractor. That Mr Gambhir ceased to be employed by Fastserv was expressly accepted by him.
In respect of Mr Gambhir’s second period of employment with Fastserv, commencing on 1 July 2018 and concluding on 31 March 2019, he did not work at least five years so no claim for long service leave can arise.
Mr Gambhir’s claim for long service leave is therefore to be determined by reference to the circumstances in which his first period of employment, from 18 March 2013 to 31 March 2018, came to an end.
The entitlement arising upon death of a worker can be put to one side.
If it were found that Mr Gambhir terminated his services (see further below), there is no evidence that he did so on the basis of illness, incapacity or domestic or other pressing necessity.
The remaining issue is whether Mr Gambhir’s services in the first period of employment were terminated by Fastserv.
Mr Sumeet Verma gave evidence in relation to this issue at [15]-[17] of his affidavit. It is said to be clear from that evidence that the termination of the employment relationship was the result of a decision by Mr Gambhir to resign. My view is that, following discussion between Mr Gambhir and Mr Sumeet Verma and Ms Utneja, he agreed to resign.
The objective documentary evidence is consistent with the conclusion that Mr Gambhir made a decision to resign in order to work as an independent contractor. Mr Gambhir had previously been registered for ABN purposes. That registration lapsed on 1 January 2013. Mr Gambhir renewed that registration effective 1 July 2017. He also registered for GST purposes for the first time on 1 January 2018, only three months before commencing as an independent contractor.[100] It was put to Mr Gambhir in cross-examination that the reason for undertaking these steps was in preparation for striking out on his own as an independent contractor. Although Mr Gambhir denied this, no evidence was offered in re-examination as to any other reason for undertaking these steps.
[100] Exhibit R12.
The letter dated 1 March 2018 that is annexure SU12 [101] to the affidavit of Ms Utneja is consistent with this course of events. That letter records Mr Gambhir’s request to discontinue his employment and Fastserv’s acceptance of that decision. Both Ms Utneja and Mr Sumeet Verma in their respective affidavits gave evidence that this letter was handed to Mr Gambhir in a meeting that they both attended with him on 1 March 2018. Ms Utneja in cross-examination confirmed that she saw Mr Gambhir receive the letter. Mr Gambhir in cross-examination of Ms Utneja and Mr Sumeet Verma sought to make something of the fact that the letter had not been sent to Mr Gambhir by email. Ms Uteja explained that Mr Gambhir was “not good” with emails. Mr Sumeet Verma said that Mr Gambhir was “never an email person”. I accept that if a meeting is to be held with a person, handing them a letter in the course of the meeting would be a normal way to proceed. Emailing the person the letter before the meeting might seem inappropriate. Emailing it afterwards might be unnecessary other than for the purpose of creating a paper trail impervious to challenge.
[101] Also Exhibit R13.
In his submissions Mr Gambhir suggests that Fastserv’s personnel had a financial motive to get rid of any entitlement Mr Gambhir had to long service leave. If Fastserv’s personnel were acting to get rid of such entitlement then it should be observed that they were remarkably inept in doing so. All that would have been required to deny Mr Gambhir his long service leave entitlement was for the events in question to have occurred some two weeks earlier such that Mr Gambhir never gained five years’ service and thus never qualified for long service leave. This fact militates against Mr Gambhir’s suggestion.
While the decision to resign may have suited Fastserv at the time, I am not persuaded that the evidence indicates that Fastserv was in financial difficulties. In the absence of proper evidence (for example, evidence from a forensic accountant) concerning Fastserv’s financial position as at March 2018, Mr Gambhir’s submission invites the Court to engage in speculation.
An analysis of the bank account statements of Fastserv for March 2018 [102] indicates the following:
(a)at no point was the account overdrawn;
(b)the account balance fluctuates with the periodicity of payment from organisations such as Hutchison 3G;
(c)substantial payments were received from Hutchison 3G on 14 March 2018 ($8,468.96), 21 March 2018 (two payments: $8,468.96 and $23,339.36) and 28 March 2018 ($8,468.96). Total: $48,746.24;
(d)there was only one loan from Mr Sumeet Verma, this was on 12 March 2018 for the sum of $5,000; and
(e)additional payments were received from Westpac Business on 23 March 2018 ($2,000)[103] and 26 March 2018 ($1,000). Contrary to what Mr Gambhir submits, there is nothing that suggests that these deposits were loans.
[102] Affidavit of Sumeet Verma Annexure SV 5 (pg 60).
[103] The document appears to disclose a second payment of $1,444 on 23 March 2018 but nothing turns on that.
The high water mark of Mr Gambhir’s allegation concerning Fastserv’s financial position seems to be that Fastserv was momentarily overdrawn on its bank account on 30 April 2018. This was a full month after Mr Gambhir became an independent contractor. The bank account statement for April 2018 also indicates the following:
(a)substantial payments were received from Hutchison 3G on 4 April 2018 ($8,468.96) and 11 April 2018 ($8,468.96); and
(b)additional payments were received from Westpac Business on 3 April 2018 (two deposits of $10,000 and $3,500), 18 April 2018 ($10,000) and 30 April 2018 (two deposits of $1,500 and $4,040). Contrary to what Mr Gambhir submits, there is nothing that suggests that these deposits were loans.
I reject the suggestion that occasional loans from Mr Sumeet Verma to Fastserv demonstrate that it was in financial difficulties. The business was and remains a going concern.
Fastserv is a small family business. Mr Sumeet Verma is its sole director and secretary. That short-term loans would be extended from time to time from Mr Sumeet Verma is unremarkable. Many businesses, particularly small businesses, from time to time operate on lines of credit to cover such matters as cash flow due to irregularity of payments. In the circumstances of a small family business, such a line of credit would most obviously and readily be obtained from the individuals operating that business.
Mr Gambhir takes issue with the evidence of Mr Sumeet Verma that working as an independent contractor was his (Mr Gambhir’s) idea. He suggests that it was Mr Sumeet Verma’s idea. Mr Gambhir’s position on this requires some analysis.
First, in his submissions Mr Gambhir states that Mr Sumeet Verma persuaded him to become an independent contractor. The language of “persuasion” suggests an acceptance that Mr Gambhir did in fact resign, albeit that the genesis of the idea was with Mr Sumeet Verma.
Secondly, Mr Gambhir’s evidence is that he “agreed to this arrangement”. This was evidence given in Mr Gambhir’s affidavit in reply. He verified the accuracy of this evidence in attesting to the accuracy of the affidavit. It follows that on Mr Gambhir’s own account of events, there was a mutual agreement to abandon the contract effective 31 March 2018 rather than a termination by Fastserv. The binary opposite options of resignation by Mr Gambhir versus termination by Fastserv suggested by Mr Gambhir in his submissions are less likely than this third means by which the contract could be brought to an end.
Mr Gambhir’s suggestion in his submissions that the inability of Fastserv to produce a resignation letter from Mr Gambhir means that there was a termination by Fastserv and that this somehow constitutes a breach of its record-keeping obligations is unpersuasive. It was open to Mr Gambhir to submit his resignation orally. In the absence of written notice of resignation being given, Fastserv could not retain and produce a copy.
In his submissions Mr Gambhir states that Fastserv’s defence that he voluntarily ceased his employment with Fastserv on 31 March 2018 has not been proved. This statement incorrectly suggests that the onus of proof rests on Fastserv. The onus rests on Mr Gambhir to prove that his services were terminated by Fastserv in order for him to have any entitlement to long service leave. There can be no reversal of the onus of proof because of s 557C of the Fair Work Act. The claim for long service leave arises under the Long Service Act rather than the Fair Work Act.
I find that Fastserv did not terminate Mr Gambhir’s services at the end of the first period of employment. The claim for long service leave accordingly fails.
Superannuation
The claim for superannuation is confined to the period 1 April 2018 to 30 June 2018. Mr Gambhir concedes that in this period he was an independent contractor rather than an employee of Fastserv.
Any award entitlement to superannuation does not arise in relation to the period in which Mr Gambhir was an independent contractor. By definition, the Award is applicable only to employees.
The Superannuation Act operates by reference to the concept of an “employee” in its ordinary meaning. However, I accept that the concept of “employee” in the Superannuation Act is extended by s 12(3) to a person who is working “under a contract that is wholly or principally for the labour of the person”.
In Dental Corporation[104] the Full Federal Court[105] considered the operation of s 12(3) of the Superannuation Act. The Court stated:[106]
In our opinion, what s 12(3) requires is that: (a) there should be a ‘contract’; (b) which is wholly or principally ‘for’ the labour of a person; and (c) that the person must ‘work’ under that contract. There is no doubt that Dr Moffet provided his work under the Services Agreement so the requirements of (a) and (c) are met.
So far as (b) is concerned, the word ‘for’ is purposive but even the simplest employment relationship has two purposes depending on the perspective from which it is viewed. From the employer’s perspective an employment contract is ‘for’ the provision of labour (in return for wages); from the employee’s perspective it is ‘for’ the receipt of wages (in return for labour).
Since s 12(3) poses the question of whether the contract is ‘for’ the labour of a person, this shows that Parliament was mandating an inquiry into the purpose of the contract from the perspective of the person obtaining the benefit of the labour (ie the quasi-employer). On no view could the question posed by s 12(3) be answered by asking whether the contract was wholly or principally ‘for’ wages.
[104] Special leave to appeal was refused by the High Court in Dental Corporation Pty Ltd v Moffet [2021] HCATrans 16 (11 February 2021).
[105] Perram, Wigney and Anderson JJ.
[106] at [82]–[84] per Perram and Anderson JJ. See also the comments of Wigney J at [115], [116].
I regrettably have insufficient evidence before me to enable me to conduct the analysis outlined in Dental Corporation and proceed to make a finding as to whether the contract (which Mr Gambhir concedes was not a contract of employment) between the parties in the period 1 April 2018 to 30 June 2018 was wholly or principally for Mr Gambhir’s labour.
What is required in order for that analysis to be conducted is evidence of the terms of the independent contractor agreement.[107] There is little evidence on this issue. In his submissions Mr Gambhir states that there is no independent contractor agreement here. Presumably what is meant is that there is no written agreement. It was open to Mr Gambhir to lead oral evidence as to the terms of the independent contractor agreement. He did not do so. Mr Gambhir has the onus of proof on this issue and his onus has not been discharged.
[107] Dental Corporation at [86].
Moreover, the available evidence does not support the allegation that the contract was wholly or principally for Mr Gambhir’s labour. There is evidence of certain commission payments being made by Fastserv. There is also evidence of Mr Gambhir submitting invoices to Mobile Citi apparently for the sale of mobile phones. Importantly, in her affidavit Ms Utneja deposes that during this period Mr Gambhir “did not work any set hours and attended the office premises according to his suitability and on a needs basis only”.[108] Ms Utneja was not challenged on this evidence in cross-examination. In cross-examination, Mr Sumeet Verma stated that in the period when Mr Gambhir was working as an independent contractor he (Mr Sumeet Verma) was not concerned whether Mr Gambhir was at work or not. Such evidence does not suggest that the contract was wholly or principally for Mr Gambhir’s labour. Rather, it suggests that the agreement was that Mr Gambhir would be remunerated (by commission) for results achieved by way of sales. How he achieved those sales was a matter for him. He was not required to apply himself for sales tasks on behalf of Fastserv for fixed or minimum hours and was free to undertake sales work for others (for example, Mobile Citi). Importantly, there is no evidence that it was necessary that Mr Gambhir personally undertake the sales tasks in order to receive commissions. This issue was critical to the reasoning of the Full Federal Court in Dental Corporation.[109] In the present case there is no evidence to permit the Court to make such a finding.
[108] Ms Utneja’s affidavit of 13 October 2020 at [34].
[109] See [87], [90], [101] per Perram and Anderson JJ; [116] per Wigney J.
Even if a superannuation entitlement could have been established, the Court is confined to granting declaratory relief rather than making an order for compensation (at least directly to Mr Gambhir). As was observed by Judge Cameron in Elachi v O’Shea & Jolly Jointly Trading as NRG Legal & Anor[110]:
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].
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.
[110] [2020] FCCA 2706 at [352], [353].
Finally, in the absence of any entitlement to superannuation arising under the Award rather than the Superannuation Act, there can be no contravention of a term of an award for the purposes of s 45 of the Fair Work Act so as to give rise to a potential pecuniary penalty order.
Pecuniary penalty
For the reasons outlined above, I find that there has been no relevant breach of a civil remedy provision of the Fair Work Act so as to give rise to a potential pecuniary penalty order.
CONCLUSION
I conclude that Mr Gambhir has not established the elements of his claim. It follows that the application should be dismissed. I will so order.
Mr Gambhir also sought costs on an indemnity basis. It was premature for any costs application to made prior to this judgment. I will hear the parties as to costs to the extent necessary.
I certify that the preceding two hundred and twenty-three (223) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Driver. Associate:
Dated: 11 November 2021
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