Haisam Soueid and Secretary, Department of Employment
[2015] AATA 320
•14 May 2015
[2015] AATA 320
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/5194
Re
Haisam Soueid
APPLICANT
And
Secretary, Department of Employment
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 14 May 2015 Place Sydney The Tribunal affirms the decision under review.
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Senior Member J F Toohey
CATCHWORDS – Fair Entitlements Guarantee – real estate agent – whether applicant entitled to payment of account of wages – wages entitlement period – governing instrument – meaning of work done – decision under review affirmed
Legislation
Fair Entitlements Guarantee Act 2012 ss 5, 6(6),
REASONS FOR DECISION
Senior Member J F Toohey
Background
In 2010, Mr Haisam Soueid entered into a contract of employment with Cardoma Pty Ltd (the employer) under which he was employed as a commission-only sales representative. The contract provided that he was entitled to receive commission for each “property transaction” he effected.
On 30 April 2013, an administrator was appointed for the employer. The administrator terminated Mr Soueid’s employment on 2 August 2013. On 8 August 2013, a liquidator was appointed.
Between 21 September 2012 and 17 April 2013, Mr Soueid was responsible for contracts of sale of eight properties. On 30 April 2013, when the administrator was appointed, he had not been paid a commission from any.
In July 2013, Mr Soueid applied for an advance under the Fair Entitlements Guarantee Act 2012 (the FEG Act). The respondent decided he was eligible for an advance of $7991.60 of which $6012.50 was on account of unpaid wages, and $1979.10 was his payment in lieu of notice entitlement.
When Mr Soueid sought internal review of the respondent’s decision, the respondent determined that his entitlement has been calculated incorrectly and that he had been overpaid by $3279.54. Mr Soueid seeks review of that decision.
The issue
The FEG Act provides for various forms of entitlements of a person whose employment has ended. They include a wages component and a payment in lieu of notice component.
I have to decide the amount of Mr Soueid’s wages entitlement. There is no argument that he is entitled to a payment in lieu of notice.
It is not in dispute that commissions of the kind payable to Mr Soueid are wages for the purposes of s 6(6) of the FEG Act.
Contentions
Mr Soueid says he was due commissions in relation to sales of the following properties:
(a)26A Northcote Road, Greenacre, which settled on 3 January 2013;
(b)8/41 Fairmount Street, Lakemba, which settled on 22 April 2013;
(c)3/121 Yangoora Road, Lakemba, which settled on 8 May 2013;
(d)2/42 Colin Street, Lakemba, which settled on 8 May 2013;
(e)2/9 Fairmount Street, Lakemba, which settled on 10 May 2013;
(f)1/44 McCourt Street, Lakemba, which settled on 10 May 2013;
(g)2 Merrick Avenue, Lakemba, which settled on 29 May 2013; and
(h)131 Lakemba Street, Lakemba, which settled on 2 July 2013.
The respondent says Mr Soueid is only entitled to payment in relation to the second property and that the wages due to him in respect of the others fell outside the period covered by the FEG Act.
Provisions of the Fair Entitlements Guarantee Act 2012
A person’s wages entitlement under the Act is the amount of wages he or she is entitled to under the governing instrument from the employer for the work done, or paid leave taken, in the wages entitlement period: s 6(6).
Section 5 provides that the wages entitlement period for a person whose employment has ended means the 13 weeks ending on whichever of the following is earlier:
(i)the time when the employment ended;
(ii)the first time an insolvency practitioner has power (however expressed) to control or manage employment by the employer, or if the person was employed by a partnership, any of the partners who employed the person.
When was the wages entitlement period?
Mr Soueid’s employment was terminated on 2 August 2013. It appears his entitlement may have been calculated originally by reference to this date. However, the respondent contends that an insolvency practitioner had power to control or manage employment by the employer as of 30 April 2013, meaning the wages entitlement period was the 13 weeks from 30 January 2013 to 30 April 2013. Mr Soueid acknowledges that the first property above settled before the wages entitlement period commenced.
The insolvency practitioner, O’Brien Palmer Chartered Accountants, has confirmed in writing its appointment and assumption of powers in respect of employees as of 30 April 2013.
I am satisfied that the wages entitlement period was the 13 weeks from 30 January 2013 to 30 April 2013.
When was the work done?
Mr Soueid says he performed all of the “work done” in respect of each sale by the time contracts were exchanged; all that remained was to effect settlement. He submits he is entitled to FEG Act payment in relation to each property in relation to which contracts were exchanged within the wages entitlement period.
Mr Soueid’s wages were paid in accordance with his contract of employment which provided that he was entitled to receive commission for a “property transaction” effected by him. “Property transaction” was defined in the contract as the “sale or commercial lease of a property from which the employer has received a payment from a client”.
I am satisfied that the governing instrument for the purposes of s 6(6) of the FEG Act is his contract of employment.
The respondent contends the effect of the governing instrument is that Mr Soueid was not entitled to be paid commission until completion of the sale on settlement. Mr Soueid contends that the employer “received a payment from a client” when a deposit was paid. In my view, the respondent is correct. Until settlement, the employer held a deposit on trust.
An Exclusive Agency Agreement in the same form was used in each sale Mr Soueid was responsible for. It provided that the Agent’s fee is payable:
(i)on completion of the sale; or
(ii)if the sale is not completed owing to the default of the Principal after the parties have entered into a binding contact; or
(iii)if after the making of the contract the Principal and the purchaser mutually agree not to proceed with the contract; or
(iv)upon termination of the contract.
In each case, the sale of the property was completed on the settlement dates above. The employer as Agent became entitled to payment on those dates and Mr Soueid became entitled to his commission. The respondent contends, and I agree, that Mr Soueid’s work was not “work done” for the purposes of s 6(6) until he became entitled to payment of the commission.
During the wages entitlement period, Mr Soueid’s work was only “done” in respect of the property that settled on 22 April 2013. Leaving aside the first property, Aall of the others settled after 30 April 2013 and he was not entitled to commissions after that date. It follows that he is only entitled to FEG payment in respect of that one sale.
Mr Soueid submits that the Real Estate Industry Award 2010, which covers an employee engaged in a property sales and paid on a commission-only basis, is relevant. Clause 17.3 of the Award concerns entitlements after employment ends. In effect, it provides that an employee is entitled to a commission where there was a legally-enforceable contract before the cessation of the employee’s employment, and in other circumstances which do not apply here. Importantly, however, the entitlement arises if the employer is paid commission by the client in respect of the existing legally-enforceable contract and the commission payment is cleared into the employer’s bank account: cl 17.3.
Even if the Award could displace the contract of employment, it could not assist Mr Soueid. The Exclusive Agency Agreement provides, in effect, that the commission is paid to the employer when deducted from the deposit on completion of the sale. The only property in respect of which the sale was completed was that which settled on 22 April 2013.
Conclusion
Mr Soueid performed work under his employment contract throughout the wages entitlement period. Through no fault of his own, his employer went into administration and he finds himself without payment for a substantial amount of work. It is in the nature of real estate agents’ work that there is often a considerable time between when the work is done in the usual sense and when a sale is completed, and commissions paid. Unfortunately for Mr Soueid, the result is that he is only entitled to minimal payment under the FEG Act. I have sympathy for Mr Soueid but I am bound to apply the FEG Act.
I affirm the decision under review.
27. I certify that the preceding 26 (twenty-six) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey.
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AssociateDated 14 May 2015
Date(s) of hearing
1 May 2015
Representatives for the Applicant
Self-represented
Representatives for the Respondent
Ms Catherine Mann, Australian Government Solicitor
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