Haggis v Bourke
[2014] FCCA 681
•28 April 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HAGGIS v BOURKE | [2014] FCCA 681 |
| Catchwords: INDUSTRIAL LAW – Small claims list – whether applicant entitled to unpaid wages and accrued untaken annual leave under the Workplace Relations Act 1996 – transitional arrangements. |
| Legislation: Fair Work Act 2009, s.548 Workplace Relations Act 1996, Div 4, Pt 7, ss.235(2), 229, 232 and 235 |
| McShane v Image Bollards Proprietary Limited (2011) FMCA 215 Black v Young Republic & Anor [2012] FMCA 729 Williams v Macmahon Mining Services Pty Ltd (No.2) [2009] FMCA 763 |
| Applicant: | SUSAN HAGGIS |
| Respondent: | MATTHEW BOURKE |
| File Number: | MLG 1922 of 2013 |
| Judgment of: | Judge Jones |
| Hearing date: | 28 March 2014 |
| Date of Last Submission: | 28 March 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 28 April 2014 |
REPRESENTATION
| Applicant appearing in person |
| Respondent appearing in person |
ORDERS
That the respondent pay the applicant the sum of $393.34 within 21 days of these orders;
That the application filed on 6 November 2013 that the respondent pay the applicant untaken accrued annual leave in the amount of $2,602.00 is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1922 of 2013
| SUSAN HAGGIS |
Applicant
And
| MATTHEW BOURKE |
Respondent
REASONS FOR JUDGMENT
Introduction
By application and Form 5 Small claim under the Fair Work Act 2009 (Cth) “(the Act”) filed on 6 November 2013, the applicant seeks:
a)Unpaid wages in the amount of $393.34; and
b)Untaken accrued annual leave in the amount of $2,602.00.
The respondent concedes that it is obliged to pay the amount of unpaid wages. Accordingly, an order will be made that the respondent pay the applicant an amount of $393.34. Mr Matthew Bourke, the owner and director of the respondent says there is no obligation on the respondent to pay accrued untaken annual leave.
The issue in dispute is whether the applicant worked, as she claims, 37.0 hours per week (except for the last four weeks of her employment with the respondent) or 25.5 hours per week as claimed by Mr Bourke. The applicant claims that she has accrued untaken annual leave of 135.55 hours as recorded in the Pay Advice Slip for the pay period ending 9 September 2008. Other than the last four weeks of her employment with the respondent, this accrued amount is derived from the applicant’s claim that her actual hours of work were 37.0 in each week of her employment. Mr Bourke says that the applicant has falsified the payslip as her ordinary hours of work each week were 25.5 hours.
The applicant has told the Court that she relies on her application Form 5, a bundle of supporting documents filed on 6 November 2013, the affidavit she filed on 18 March 2014 and the bundle of Pay Advice Slips for Sue Mary Haggis for the period 4 July 2006 to 24 June 2008 which she tendered at the hearing as an exhibit (“A1”).
The respondent says that it relies on its Response filed on 10 October 2013 and the affidavit of Matthew John Bourke filed on 11 February 2014.
The application filed by the applicant is being dealt with under s.548 of the Act which provides:
“(1)Proceedings are to be dealt with as small claims proceedings under this section if:
(a)a person applies for an order (other than a pecuniary penalty order) under Division 2 from a magistrates court or the Federal Magistrates Court; and
(b)the order relates to an amount referred to in subsection (1A); and
(c)the person indicates, in a manner prescribed by the regulations or by the rules of the court, that he or she wants the small claims procedure to apply to the proceedings.
(1A)The amounts are as follows:
(a)an amount that an employer was required to pay to, or on behalf of, an employee:
(i) under this Act or a fair work instrument; or
(ii) because of a safety net contractual entitlement; or
(iii) because of an entitlement of the employee arising under subsection 542(1);
(b)an amount that an outworker entity was required to pay to, or on behalf of, an outworker under a modern award.
Limits on award
(2)In small claims proceedings, the court may not award more than:
(a)$20,000; or
(b)if a higher amount is prescribed by the regulations--that higher amount.”
The applicant’s claim for unpaid accrued annual leave arises out of obligations set out in Division 4, Part 7 of the Workplace Relations Act 1996 (Cth) (“the WR Act”). These provisions were repealed by schedule 1 to the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009 (“the Transitional Provisions”). Nevertheless, item 6, schedule 16 of the Transitional Provisions provide that a person must not contravene Part 7, Division 4 of the WR Act. Consequently, the Court is able to deal with the applicant’s claim under s.548 of the Act.
Although the Court is required to adopt a more informal and flexible procedure in dealing with small claims, including the need for the Court acting without regard to legal forms and technicalities, it is still necessary for the applicant to prove their claim as the Court can only act on evidence having a rational probative force.[1]
[1] Lucev FM in McShane v Image Bollards Proprietary Limited (2011) FMCA 215 which was approved of by of Nicholls FM (as His Honour then was) in Black v Young Republic & Anor [2012] FMCA 729.
Evidence
The applicant was employed by the respondent from 1 February 1999 to 15 September 2008, when she was dismissed for misconduct. The applicant says that she was employed as an office manager and her duties included bookkeeping and preparation of payroll runs. The respondent says the applicant was employed as a bookkeeper processing all accounts, invoices, payments and salaries as well as being responsible for the banking of the moneys received by the business. There is no dispute as to the following relevant facts:
a)The applicant’s duties included the preparation and processing of payslips of the employees of the business, including the applicant’s payslip;
b)There was never a written contract of employment. When the applicant commenced employment in 1999 as a casual the respondent told her that he would pay her for the hours she worked;
c)The applicant’s hours of work increased to 37 hours per week; and
d)Sometime in 2002, after the applicant had her second baby, she took a reduction in the days worked at the businesses’ premises from five days a week to 3 days a week.
The applicant and Mr Bourke dispute the effect of this reduction in days worked at the businesses’ premises on the applicant’s hours of work per week. The applicant says that she worked in the office at the businesses premises on Mondays, Tuesdays and Wednesdays from 8.30am to 5.00pm, however, she regularly worked at home and outside those hours at the office. In her attachment “SH1” to her affidavit filed on 18 March 2014, the applicant included a copy of her interview questions for her Long Service Leave Claim. In response to a question (Q6) regarding the hours she worked she said this:
“I took a reduction in hours in May 2002 –– upon the birth of my second child, my days reduced from five days to 3 days per week in the shop. I worked 8.5 hours per day (no lunch break, I ate between serving and doing my work) for three days per week.
I also began doing overtime work to try and keep the books up-to-date as the business grew. Overtime hours are as follows:
(1) 3-4 hours on a Monday night at home.
(2)7-10 hours on Wednesday night back at the office. I recorded these figures for the first year and then used the same for each of the next years because the pattern was the same. I say that Matt knew of my extra hours because he lived on the premises. I paid myself $19.18 37 hours per week with no overtime or meal allowance up till 4 July 2006. This was made up of my three days in the shop (25.5 hours) plus a balance of overtime which equals at least 37 hours if not more.”
The applicant relies on her exhibit A1 and says that the pay slips over the period 2006 to 2008 record 37.0 hours per week. There is no dispute that the pay slips do record 37.0 hours worked each week. She says that around four weeks before her employment was terminated, the hours she worked did reduce to 25.5 hours a week. This was, she says, because the respondent had brought in an accountant, who was performing her bookkeeping duties. She referred to a pay slip attached to the bundle of documents she filed on 6 November 2013, which is a Pay Advice for the pay period ending 2 September 2008 (being the last pay slip) which records hours of work at 25.5 hours per week. In response to a question from the Court, the applicant said that the difference between the 25.5 hours and 37.0 hours she claims she actually worked was overtime. She said her overtime did vary from week to week but that 37.0 hours was an average and that’s why she recorded those hours on her payslips. The applicant told the Court that she kept records of the hours worked. However, she has not produced these records to the Court.
The Pay Advice for the pay period ending 2 September 2008, records an hourly rate of pay of $31.7545. The applicant’s claimed amount for unpaid accrued annual leave is calculated by multiplying the claimed accrued hours of 135.55 by an hourly rate of $19.182. In response to questions from the Court, the applicant stated that she commenced paying herself the increased hourly rate when she reduced the hours worked to 25.5 hours. She said she had no authority from Mr Bourke to pay herself the hourly rate of $31.7545. She told the Court that she had pleaded guilty, at a Magistrates Court hearing in or around May 2011, to two of many charges, which followed from an investigation by the respondent’s accountant, DMK Taxation and Business Solutions during August to October 2008. She said the charge she pleaded guilty to was, Falsifying Records Required for Accounting. This relates to her conduct in recording the increased hourly rate of pay in her payslips in her last four weeks of employment, which she did without the authority of Mr Bourke. She said she was convicted with undertakings and repaid the respondent and agreed sum. In response to a question from the Court, the applicant conceded that her conduct had the effect that, although the hours worked on her payslip was reduced to 25.5 hours, the salary paid to her was maintained at the same level.
When asked why she recorded her hours of work in her Form 5 as 25.5 hours a week, the applicant responded that she thought the question was directed to her most recent hours of work. The Court notes that in her Workplace Complaint Form to the Fair Work Ombudsman, the applicant recorded at section 4.7 that she usually worked 25.5 hours each week.
Mr Bourke stated that he was aware that the applicant did work from home and did undertake some overtime, however, he disputes that she worked 37.0 hours per week each week up until early August 2008. He points to her conduct in falsifying her hourly rate of pay in the last four weeks of employment and asserts that, similarly, she falsified the hours of work on each of the pay slips from the period when she first commenced working her reduced hours. He says the fact that each of the pay slips records the same hours per week for hours of work which the applicant, on her own evidence, says was variable, means that the pay slips are not a reliable record.
Applicable Law
Section 235 (2) of the WR Act provided:
“If the employment on an employee who has not taken an amount of accrued annual leave ends at a particular time, the employee must be paid a rate for each hour (pro-rated for part hours) of the employee’s untaken accrued leave that is no less than the rate that, immediately before that time, is the employee’s basic periodic rate of pay (expressed as an hourly rate).”
Sections 229 and 232 of the WR Act provided:
“229. Meaning of nominal hours worked
Employees employed to work a specified number of hours
(1)For the purposes of this Division, if an employee is employed by an employer to work a specified number of hours per week, the number of nominal hours worked, by the employee for the employer during a week, is to be worked out as follows:
(a) start with:
(i) the specified number of hours; or
(ii)if the specified number of hours is more than 38 hours—38 hours;
(b) deduct all of the following:
(i) the number of hours (if any) in the week when the employee is absent from his or her work for the employer on leave which does not count as service;
(ii)the number of hours (if any) in the week (other than hours mentioned in subparagraph (i)) in relation to which the employer is prohibited by section 507 from making a payment to the employee.
Note: The actual hours worked from week to week by an employee who is employed to work a specified number of hours per week may vary, due to averaging as mentioned in section 226 or to some other kind of flexible working hours scheme that applies to the employee’s employment.
(2)If an employee is employed on a full time basis, but the terms and conditions of the employee’s employment do not determine the number of hours in a week that is to constitute employment on a full time basis for the employee, the employee is, for the purpose of subsection (1), taken to be employed to work 38 hours per week.
(3)If an employee is employed to work a specified number (the number of non-week specified hours) of hours over a period (the non-week period) that is not a week (for example, a fortnight), then, for the purpose of subsection (1), the employee is taken to be employed to work the number of hours per week determined, subject to the regulations (if any), in accordance with the formula:
Employees not employed to work a specified number of hours
(4)For the purposes of this Division, if subsection (1) does not apply to the employment of an employee by an employer, the number of nominal hours worked, by the employee for the employer during a week, is the lesser of the following:
(a) the number worked out as follows:
(i)start with the number of hours (if any) in the week that the employee both works, and is required or requested to work, for the employer;
(ii)add the number of hours (if any) in the week when the employee is absent from his or her work for the employer on leave that counts as service;
(iii)deduct the number of hours (if any) in the week in relation to which the employer is prohibited by section 507 from making a payment to the employee;
(b)the number of nominal hours the employee would be taken to have worked for the employer under subsection (1) during the week if the employee were employed to work 38 hours per week.
Certain types of leave not to count as service
(4A)For the purposes of subparagraphs (1)(b)(i) and (4)(a)(ii), a period of authorised unpaid leave or unauthorised leave does not count as service in relation to an employee except:
(a) as expressly provided by:
(i) a term or condition of the employee’s employment; or
(ii)a law, or an instrument in force under a law, of the Commonwealth, a State or a Territory; or
(b) as prescribed by the regulations.
Note: For whether leave guaranteed under this Part counts as service, see subsections 238(2) (annual leave), 260(2) (paid personal leave), 261(2) (unpaid carer’s leave) and 316(2) (parental leave).
Definition
(5)In this section:
hour includes a part of an hour.
Note 1: The regulations may prescribe a different definition of nominal hours worked for piece rate employees (see section 231).
Note 2: An employee’s hours of work may be varied (by number or time) in accordance with a workplace agreement, award or contract of employment that binds the employee and his or her employer.
Note 4: Because of the definition of hour in subsection (5), an employee’s nominal hours worked may be a number of hours and part of an hour.
232 The guarantee
(1)For the purposes of this Division, annual leave means leave to which an employee is entitled under this Subdivision.
All employees to whom this Division applies
(2)An employee is entitled to accrue an amount of paid annual leave, for each completed 4 week period of continuous service with an employer, of 1/13 of the number of nominal hours worked by the employee for the employer during that 4 week period.
Example: An employee whose nominal hours worked for a 12 month period were 38 hours per week would be entitled under this subsection to 152 hours of annual leave (which would be the equivalent of 4 weeks of annual leave if his or her nominal hours worked remained unchanged).
Additional leave entitlement for shift workers
(3)An employee is also entitled to accrue an amount of paid annual leave, for each completed 12 month period of continuous service with an employer, of 1/52 of the number of nominal hours worked by the employee, for the employer, as a shift worker during that 12 month period.
Example: A shift worker whose nominal hours worked for a 12 month period were 38 hours per week, and who worked as a shift worker throughout that period, would be entitled under this subsection to an additional 38 hours of annual leave (which would be the equivalent of one week of annual leave if his or her nominal hours worked remained unchanged).”
In Williams v Macmahon Mining Services Pty Ltd (No.2) [2009] FMCA 763, Federal Magistrate Lucev (as His Honour then was) considered the operation of s.229. His Honour’s reasoning, with which I respectfully concur, is set out at [12] to [17]:
“12.Under s.229(1)-(3) the meaning of “nominal hours worked” is to be determined by reference to whether:
a) an employee works a specific number of hours per week for the purposes of s.229(1); or
b) if the employee does not work a specified number of hours per week, then the employee “is taken” for the purposes of s.229(1) to have nominal hours calculated which are:
i) referable to the specified number of hours the employee was employed to work over a period; or
ii) If the hours are not able to be determined but the employee is employed on a full-time basis, then the specified hours are 38 hours per week.
13.Therefore, s.229(1)-(3) deals with employees who are to work:
a) specified hours per week: s.229(1);
b) full-time without specified hours: s.229(2); or
c) specified hours over a period: s.229(3),
and in the latter two cases, the hours are nominated, at 38, under s.229(2), and calculated under s.229(3), and are taken to be the specified number of hours for the purposes of s.229(1). Thus s.229(1) is taken to apply to employees to whom s.229(2) and (3) apply.
14.Section 229(4) applies to an employee only if s.229(1) does not apply to the employment of the employee. Because s.229(1) is taken to apply to employees to whom s.229(2) and (3) apply, s.229(4) does not apply to an employee if the employee is caught by s.229(2) or (3).
15.The Court therefore needs to initially determine whether any one of s.229(1), (2) or (3) applied to Mr Williams’ employment.
16.Section 229(1) is directed to a circumstance where an employee “is employed … to work a specified number of hours per week”. The wording of this provision makes it apparent that what is in issue is whether the employee “is employed” to work those specified hours, not whether the employee actually does work those specified hours. That interpretation is consistent with the concept of “nominal hours worked”. Likewise, s.229(3) relates to the hours the employee is employed to work, rather than the hours that the employee actually does work. Section 229(2) is different because it does not envisage determination of the number of hours worked, but rather requires that the employee be employed on a full-time basis.
17.To determine whether or not Mr Williams was employed for a “specified number of hours” consideration must be given to what is meant by “specified”. That which is “specified” is that which:
Is or has been definitely or specifically mentioned, determined, fixed or settled.
Likewise, to “specify” is to:
Mention particularly; to make specific; to set down as required”.”
His Honour then proceeded to consider various authorities dealing with the meaning, “specified.” In particular, His Honour considered the following authority at [22]:
“22.In Andersen v Umbakumba Community Council the Industrial Relations Court of Australia, applying Reid and Re Kutner, held that a “specified period of time” was a certain period of time, and that a contract of employment was for a “specified period of time” where the time of commencement and the time of completion were unambiguously identified by a term in the contract, by stating definite dates, or by stating the time or criterion by which one or other end of the period was to be fixed, and by stating the duration of the contract of employment. The contract was not for a “specified period of time” if either party had the right to terminate the contract by notice at any time between the commencement date and the nominal cessation date.”
I am satisfied that the concept, “specified number of hours” connotes hours of work that are unambiguous and can be readily ascertainable.
Relevantly, FM Lucev also considered the operation of overtime worked in the context of s.229 and made the following observation at [29], with which I respectfully agree:
“29.What constitutes reasonable overtime is a matter capable of significant variation and complexity, and will almost always be dependent upon the particular circumstances of the case. It is therefore not a matter ordinarily capable of fixed specification as to the hours of overtime which are reasonable.”
Consideration
There is no dispute that the applicant did not work more than 38 hours per week, was not employed on a full–time basis and was not employed to work a specified number of hours over a non-week. Consequently, ss.229(1)(a)(ii), 229(2) and 229(3) of the WR Act do not apply.
The questions to be determined are, therefore:
a)Was the applicant employed for a specified number of hours per week and, if so, how many: s.229(1)(a)(i); and
b)If the applicant was not employed for a specified number of hours, what were her nominal hours she both worked and was required or requested to work: s.229(4).
The applicant says that she worked 25.5 hours each week in the office over three days, and, in addition to this, she worked over time which was variable but which averaged 11.5 hours each week. The respondent says that the applicant worked 25.5 hours each week in the office. Mr Bourke concedes that the applicant did work overtime but denies that she worked regular overtime to the extent that it was an average of 11.5 hours each week.
As observed earlier, overtime worked will almost always be variable and dependent upon, on the one hand, the needs of the business and, on the other hand, the availability of an employee to work reasonable overtime. The nature of overtime hours worked is not susceptible to be characterised as specified number of hours of worked each week. In this case the applicant says her overtime was variable but she has averaged it out each week for the purpose of recording her hours of work on the pay slips. This practice of the applicant in recording her hours of work on her payslips cannot render what are, in essence variable hours of work a week, to specified number of hours of work a week. I find that overtime worked does not fall within the meaning of “specified number of hours” pursuant to s.229(1)(a)(i) of the WR Act.
I find therefore, that the applicant’s specified number of hours each week were, at all material times from mid 2002 onwards, 25.5 hours.
Conclusion
The applicant’s claim for accrued undertaken annual leave in the amount of $2,602.25 derives from an accrual rate based on the applicant working 37.0 hours each week. I have found that the applicant’s entitlement to annual leave under the relevant provisions of the WR Act is to be derived from an accrual rate of 25.5 hours each week, that being the applicant’s specified number of hours each week.
Having failed to satisfy the Court that she is entitled to accrued undertaken annual leave in the amount of $2,602.25, the applicant’s application that the respondent pays her this amount is dismissed.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 28 April 2014
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