Harris and Secretary, Department of Employment

[2016] AATA 706

Harris and Secretary, Department of Employment [2016] AATA 706 (12 September 2016) 

Division	GENERAL DIVISION
File Number	2015/3397
Re	Jonathon Harris
APPLICANT
And	Secretary, Department of Employment
RESPONDENT

DECISION

Tribunal	Miss E A Shanahan, Member
Date	12 September 2016
Place	Melbourne

The Tribunal affirms the decision under review.

........................[sgd]..........................................

Miss E A Shanahan, Member

SOCIAL SECURITY – Fair Entitlements Guarantee Act 2012 – company insolvency – advance paid in accordance with the Act – original decision reviewed – debt raised – applicant subject to a stand down period of six weeks – no work during stand down period – no unpaid leave – decision affirmed

Legislation

Fair Entitlement Guarantee Act 2012

Cases

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435

REASONS FOR DECISION

Miss E A Shanahan, Member

12 September 2016

1. Mr Harris was employed as a Business Development Manager with Global Contracting Pty Ltd (Global) commencing on 27 November 2012.  His position was essentially that of an estimator, costing various Victoria-wide highway and road repairs for VicRoads.  The position required quite long hours of work, driving throughout the state with frequent absences from his home.  His contract of employment was for 2,400 hours per annum with a salary rate of $105,700.00 with the provision of a motor vehicle, a telephone and a living away from home allowance as required. 

2. On 1 December 2013 Mr Harris was directed to return his utility vehicle, computer and telephone to the employer by 2 December 2013 as the company was to undergo restructuring.  He was advised that he had been stood down.  On 12 December 2013 he was formally advised that the company was closed to mid-January and everyone was on unpaid leave until that time.  Mr Harris’s employment was terminated on 10 January 2014.  A liquidator was appointed to Global on 24 February 2014. 

3. On 20 March 2014 Mr Harris lodged a claim for an advance under s 14 of the Fair Entitlements Guarantee Act 2012 the (FEG Act).  An advance payment of $35,687.19, which included an amount of $14,706.00 relating to unpaid wages was forwarded to the liquidator for distribution to Mr Harris following the decision of 2 July 2014. 

4. A review of the decision commenced on 28 November 2014 and on 1 April 2015, Mr Harris was advised that he had been overpaid the sum of $14,706.00 representing the six weeks of unpaid wages relating to the stand down period of 1 December 2013 until 10 January 2014. 

5. On 20 May 2015, Mr Harris sought an internal review of the decision under s 38 of the FEG Act.  On 9 June 2015 a delegate of the Department of Employment (the Department) affirmed the decision of 1 April 2015.

6. Mr Harris lodged an application for a review of the decision by the Administrative Appeals Tribunal on 11 July 2015.  The application also made a request for a Stay Order and this was approved on 16 July 2015, the Stay being in force until the application was determined. 

7. Mr Harris was self-represented at the hearing and Mr Lex Holcombe, solicitor of HWL Ebsworth Lawyers appeared for the Secretary of the Department. The Tribunal was provided with the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T-documents) (Exhibit R1) and the Applicant’s Statement of Facts and Contentions accompanied by nine attachments was taken into evidence as Exhibit A1.  Mr Harris gave evidence before the Tribunal.

   BACKGROUND TO THE APPLICATION

8. Mr Harris was employed as an estimator for tenders lodged by his employer Global.  He has described his employer as a company that expanded rapidly and in his opinion grew too fast.  It undertook a lot of flood recovery work in 2012 but following a change in government in Victoria, he believed there was a change in emphasis in state spending in favour of public transport as opposed to road transport. 

9. On 1 December 2013 Mr Harris was informed by the General Manager, Miss Penny David, that he was required to hand in his computer, his utility vehicle and work card the following day at which time he would be stood down without pay. As a result, he had no entitlement under his contract of employment to be paid. Mr Harris says he neglected to hand in his mobile telephone.  As a result of this oversight, he was the only person in the company who could be contacted by workers and clients.  Mr Harris considered that the work he performed, in terms of his contact with contractors and suppliers and the like, was work done.  He agreed that he had never been formerly asked to do any work and that he had negotiated a new job commencing on 13 January 2014. 

10. Initially, Global had informed its employees that the company would be closed for one week to enable restructuring.  This was extended for a further week but on 12 December 2013, Mr Harris was advised that Global would be closed until mid-January and all employees were on unpaid leave until that time.

11. Mr Harris was formally advised of the FEG Act initial decision regarding his entitlements on 2 July 2014. 

12. The Department undertook a review of their decision commencing in November 2014 and advised Mr Harris of their action on 28 November 2014.  It was determined that he had been overpaid in the amount of $14,706.00 for the period from 1 December 2013 until 10 January 2014, having been stood down without pay for that period.  Thus, his claim for unpaid wages for six weeks between those dates was outside his entitlement and the Department sought repayment of the $14,706.00. 

13. In the interim, Mr Harris had lodged an application with the Fair Work Commission (the Commission) relating to the legality of the stand-down instituted by Global.  Mr Harris claimed that this stand-down was unlawful.  The claim was subsequently expanded to include a claim for unfair dismissal.  The matter was listed for conference before Senior Deputy President Watson on 28 January 2014.  Mr Harris gave evidence that Deputy President Watson joined the two claims and at the conference level it was indicated that the stand down was unfair and did not meet the Commission’s standards. No decision was made in relation to this application. 

14. The Department regarded the unfair dismissal application and that to determine legality of the stand-down as irrelevant to the decision before the Tribunal as Mr Harris had not been expected to nor required to perform any work during the stand-down. The only avenue open to Mr Harris was to seek compensation in the form of damages from his former employer. 

15. Mr Harris and the Department both provided a copy of Mr Harris’s terms of employment with Global that outlined his responsibilities including the observation of all lawful orders or instructions given.

16. Attached to Mr Harris’s Statement of Facts and Contentions was a record of Global’s tenders awarded or submitted to VicRoads prior to the office closure (Exhibit A1).  

    RELEVANT LEGISLATION

17. Section 3 of the FEG Act outlines the objects of the Act as being:

    3       Objects of this Act

    The main objects of this Act are:

    (a)to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers in cases where:

    (i)the employers are insolvent or bankrupt; and

    (ii)the end of the employment of the former employees was connected with that insolvency or bankruptcy; and

    (iii)the former employees cannot get payment of the entitlements from other sources; and   ...

    Section 4(2) provides:

    4Simplified outline of this Act

    (1)This section is a simplified outline of this Act.

    (2)Under Part 2, a person is eligible for financial assistance under this Act (called an advance) if:

    (a)     the person’s employment by an employer has ended; and

    (b)     the employer is being wound up or bankrupt; and

    (c)     the end of the employment is connected with the insolvency or bankruptcy of the employer; and

    (d)     the person has not been fully paid his or her entitlements relating to that employment; and

    (e)     the person has made a claim for the advance.

18. Section 5 of the FEG Act deals with the definitions of the terminology and relevant to this particular matter, a governing instrument for employment in this definition includes:  

    ...

    (b)     an award, determination or order that is made or recorded in writing;

    ...

    (d)     an agreement (whether a contract or not).

19. The wages entitlement period is defined as being:

    wages entitlement period for a person whose employment by an employer has ended means the 13 weeks ending at the earlier of the following times (or either of those times if they are the same):

    (a)the time the person’s employment ended;

    (b)the first time an insolvency practitioner has power (however expressed) to control or manage employment by:

    (i)the employer; or

    (ii)if the person was employed for a partnership by 2 or more partners—any of the partners who employed the person.

20. Section 6 of the FEG Act defines the Kinds of employment entitlements covered by the FEG Act. These include the annual leave entitlement (s 6(2)), long service leave entitlements (s 6(3)), payment in lieu of notice (s 6(4)) and redundancy payment entitlement as provided by the governing instrument.

21. The conditions of eligibility outlined in s 10 and s 14 of the FEG Act in relation to procedural requirements have all been met by Mr Harris. It is agreed that he has made an effective claim as required by the FEG Act.

    SUBMISSIONS

22. Mr Harris submitted that the FEG Act does not clearly define the term governing instrument or work done and that these phrases are open to interpretation by the Tribunal.  He contended that in the six week period between 2 December 2013 and 10 January 2014, he had undertaken work for Global as he was the only person in the company available or contactable to answer the queries of clients, suppliers and subcontractors.  Mr Harris agreed that he had not been directed to work and that his contactability arose from his failure to return his work issued mobile telephone. 

23. Mr Harris maintained that the Commission had verbally informed him that the stand down procedure was possibly or probably illegal.  Despite this contention, he agreed that no formal decision had been made by the Commissioner and the matter had only been considered at a conference level. 

    Mr Holcombe

24. Mr Holcombe submitted that the governing instrument in this instance was Mr Harris’s contract of employment and in particular paragraph one of his responsibilities which included, responsibility to observe all lawful directions, orders or instructions given.  On 1 December 2013 Mr Harris had been directed not to attend work from that day forward and to return his utility vehicle and computer.  This direction was a verbal instruction from the General Manager, Ms Penny David.  Mr Holcombe pointed out that Mr Harris had been paid all wages owing up until and including 1 December 2013.

25. Mr Holcombe contended that the Commission can only make an order or award for compensation in the form of damages or reinstatement of employment in accordance with the provision of the Fair Work Act 2009.  The Commission had not made any decision relating to Mr Harris’s application and this had been explained in the letter from the Fair Work Ombudsman dated 13 February 2014.

26. Mr Holcombe submitted that in terms of the interpretation of various aspects of the FEG Act, the Department relied on the common law and in particular on the decision of the High Court of Australia in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 436 where at page 465 Dixon J said:

    ... The common understanding of a contract of employment at wages or salary periodically payable is that it is the service that earns the remuneration, and even a wrongful discharge from the service means that wages or salary cannot be earned, however ready and willing the employee may be to serve and however much he stand by his contract and decline to treat it as discharged by breach...

    and

    ... His only remedy is in unliquidated damages for wrongful dismissal.

27. Mr Holcombe contended the period in which Mr Harris was stood down, or the reason for the stand down was not relevant as the employer did not want any work done, did not expect any work to be done or had requested that any work be done.  In the Department’s Statement of Facts and Contentions Mr Holcombe contended that the FEG Act does not define work because it intends that the relevant governing instrument will be referred to in each case. 

28. It was accepted by the Department that Mr Harris had answered queries from clients, subcontractors and suppliers of Global in the period between 2 December 2013 and the date on which his employment ended.  However, Mr Holcombe reiterated his submissions that Mr Harris had not been asked or required to perform these duties and had been kept informed both verbally and in writing during the period of the stand down and on 10 January 2014 of termination of his employment. 

    TRIBUNAL’S DELIBERATIONS

29. The Tribunal acknowledges Mr Harris’s frustrations and the degree of residual anger arising from his experiences between 1 December 2013 when he was formally stood down until his termination of employment on 10 January 2014, the advice that he would be advanced the pre-tax payment of $35,687.19 and the subsequent re-assessment advised on 1 December 2014 that he had been overpaid in the sum of $14,706.00 (gross). 

30. Mr Harris had been invited to provide comments on the decision and after further internal review the Department affirmed the decision on 9 June 2015.  Mr Harris was requested to repay $14,706.00 within 28 days from 9 June 2015. 

31. While Mr Harris has challenged the legality of the stand-down period and his eventual termination of employment with the Commission, a resolution was not reached and the Fair Work Ombudsman terminated the complaint. 

32. Mr Harris has claimed and it has not been refuted that in the six week period under consideration he, of his own volition, performed work or what he considered to be work in relation to advising clients, suppliers and subcontractors. He also claimed that he had sought to contact the managerial staff of Global on numerous occasions.  However, it is clear on the facts before the Tribunal that Mr Harris was paid his salary up to and including 1 December 2013, was advised that he was to be stood down and was required to return his motor vehicle and computer to the office. 

33. He was not requested or expected to perform any work whilst the company considered restructuring possibilities.  He was kept informed of the progress of the restructuring and on 16 December 2013 was advised that the stand down would continue until after the Christmas period. Mr Harris’s employment was officially terminated on 10 January 2014.

34. Mr Harris had requested fast tracking of his claim for reasons of financial hardship although he has given evidence that he obtained another job on 13 January 2014 and remains employed with that firm.  The fast track request was approved in June 2014, and payment was made 10 days later.  On 19 August 2014 the insolvency practitioner, in response to the Department’s query relating to the stand down period, advised there were no unpaid wages owed to employees as at 1 December 2013. 

35. Despite Mr Harris’s argument that the overpayment was a departmental error unrelated to his activity and lodgement for a claim for advance, the FEG Act is clear as to the terms of wages entitlement, these being wages for work done or paid leave taken.  During the period 1 December 2013 to 10 January 2014, Mr Harris did not undertake any work at the request of the employer, nor had he applied for or been granted paid leave. 

36. The Tribunal affirms the decision under review. 

37.     I certify that the preceding 36 (thirty‑six) paragraphs are a true copy of the written reasons herein of Miss E A Shanahan, Member.

...............[sgd]............................

Associate

Dated   12 September 2016

Date of hearing	21 July 2016
Applicant	In person
Advocate for the Respondent	Lex Holcombe
Solicitors for the Respondent	HWL Ebsworth Lawyers