Hayden Thomas v Hanseatic Marine Engineering Pty Ltd T/A Silver Yachts
[2019] FWC 1
•2 JANUARY 2019
| [2019] FWC 1 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Hayden Thomas
v
Hanseatic Marine Engineering Pty Ltd T/A Silver Yachts
(U2018/7204)
COMMISSIONER CRIBB | MELBOURNE, 2 JANUARY 2019 |
Application for an unfair dismissal remedy.
[1] Mr Hayden Thomas (the Applicant) has made an application for an unfair dismissal remedy in relation to his dismissal by Hanseatic Marine Engineering Pty Ltd T/A Silver Yachts (the Respondent, the company, Silver Yachts). The application was made under section 394 of the Fair Work Act 2009 (the Act).
[2] The Respondent raised a jurisdictional objection, on 24 July 2018, that Mr Thomas was not protected from unfair dismissal. This was on the grounds that Mr Thomas failed to satisfy the requirements of section 382 (b) of the Act.
[3] The jurisdictional objection was heard on Tuesday, 9 October 2018 by videoconference to Perth. During the hearing, Mr Thomas gave evidence whilst Mr D Woods, Director of the Respondent attested, under oath, to his witness statement. However, Jona Chou Yan Kan, Commercial Director of the Respondent, was not available to swear to his witness statement. Mr Kan’s witness statement1 was accepted into evidence on the basis that Mr Kan was not required for cross-examination and the content of Mr Kan’s statement was accepted as being Mr Kan’s evidence.2
[4] This decision deals solely with the Respondent’s jurisdictional objection.
Legislative framework
[5] Section 382 of the Act provides as follows:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”
[6] It was not disputed between the parties that Mr Thomas met the requirements of section 382 (a) of the Act. With respect to section 382 (b), it was also common ground that the Hanseatic Marine Engineering Pty Ltd Enterprise Agreement 2011 did not apply to Mr Thomas (section 382 (b) (ii)).3 Further, on the behalf of the Applicant, it was acknowledged that Mr Thomas’s earnings, at the date of his dismissal, were above the high income threshold (section 382 (b) (iii)).4 It was noted, in this regard, that Mr Thomas’s salary was only increased by the Respondent to a rate above the high income threshold approximately three weeks before Mr Thomas’s dismissal.5
[7] The contest between the parties concerned whether or not a modern award covered Mr Thomas (section 382 (b) (1)).6 In this matter, the award in question is the Manufacturing and Associated Industries and Occupations Award 2010 (the Award). This is the issue requiring determination by the Commission.
Evidence
Mr Kan
[8] In Mr Kan’s witness statement, Mr Kan stated the following:
● Mr Thomas was the manager of the Internal Fitout Design team.7
● Mr Thomas was regarded as a key management employee as no one else in the business had the same responsibility in relation to Internal Fitout Design.8
● over the past 3 – 4 years, Mr Thomas was invited to present the business to prospective strategic partners of the Respondent’s shareholder. This included Mr Thomas presenting his discipline on 18 October 2016 to key executives of a Hong Kong listed company.9
● Mr Thomas was one of twelve other key management employees who were informed in July 2017, in strict confidence, that the business had formed a strategic partnership with a Hong Kong listed company. A discretionary retention bonus was offered to key management employees including Mr Thomas.10
● over 2017, Mr Thomas indicated that he wished to further develop within the business. As a result, Mr Woods organised for Mr Thomas to be more involved in China, beginning with a visit to China in August 2017.11
● in September 2017 and November 2017, there were 2 conversations where it was mutually committed by himself and Mr Thomas (with Mr Woods at the second meeting) to create a professional development plan for Mr Thomas. The aim was for a higher management role within the Silver Yachts group of companies.12
Mr Woods
[9] In Mr Woods’ witness statement, Mr Woods stated that:
● Mr Thomas was covered by a common law contract of employment which commenced on 19 October 2009.13
● Mr Thomas was the manager for the Internal Fitout Design team. This team reported to Mr Thomas.
● There was no written Job Description for Mr Thomas’ position.14
● in the company organisation chart, dated October 2013, Mr Thomas reported to Mr Woods, General Manager, and was described as Possner Way Fitout Design with a one member Fitout Design team reporting to him.15
● in the company organisation chart, dated March 2016, Mr Thomas reported to Mr Singh, Chief Operating Officer (COO), who in turn, reported to Mr Woods. Mr Thomas was described as Owner and Guest Fitout Design with a three member Fitout Design team reporting to him.16
● in the company organisation chart, dated June 2016, Mr Singh’s position had changed to Managing Director/COO. The function of Owner and Guest Fitout Design remained reporting to Mr Singh and there were two rather than three members of the Fitout Design team reporting to Mr Thomas.17
● there was no change in relation to Mr Thomas in the company organisation chart dated November 2016.18
● in the company’s organisation overview, dated April 2018, a new position of Design Manager was created between Internal Fitout Design and the General Manager/Director and the Commercial Director. Mr Thomas’s position now reported to the new Design Manager rather than directly to the Managing Director/COO.19
● in the company’s organisation overview (Department Managers), dated April 2018, Mr Thomas was designated as the Department Manager of Internal Fitout Design.20
● Mr Thomas was the eighth highest paid employee.21
● at the time of the strategic partnership, Mr Thomas was offered a discretionary retention bonus.22
● Mr Thomas was responsible for hiring and firing within the Internal Fitout Design team subject to ultimate Director approval, based on Mr Thomas’s request.23
● Mr Thomas was responsible for the resourcing of the Internal Fitout Design team and was required to submit a budget. This included specifying material purchases which involved Mr Thomas travelling overseas to inspect and recommend particular purchases.24
● Mr Thomas was responsible for what the Internal Fitout Design Team was working on at any particular time.25
Mr Thomas
[10] Mr Thomas gave evidence that:
● in relation to remuneration increases for members of the Internal Fitout Design team, he would assess whether the individual team members were entitled to all or part of the company designated percentage increase.26
● his recommendations would be made to HR and upper management who had the authority to sign off the salary increases. Mr Thomas indicated that his recommendations would get approved and then implemented.27
● he commenced employment as the Interior Design Supervisor.28
● sometime during his employment, his job title changed to Designer and then to Senior Fitout Designer.29
● at no time has he ever referred to himself as Department Manager.30 The only reference to “Department Manager” was on the Respondent’s template resourcing spreadsheet.31 The spreadsheet was used by all Senior Designers to allocate resources for future projects. The cells under the heading “Resource” referred to the Project Lead as “Department Manager”.32
● his main duties and responsibilities were the creation and production of manufacturing drawings based on interpretation of clients’ designs.33
● once the manufacturing drawings were approved, he was required to ensure that the interior fitout designs complied with the applicable regulations.34
● he was then responsible for ensuring the quality and correctness of the work, in accordance with the approved designs.35
● he was directed that all of his time had to be allocated/assigned to working on a project specific task.36 He was not allocated a general management/supervision time code for managing colleagues.37
● he was required to complete timesheets using directed codes. 95% of his recorded time was attributed to design work on projects.38
● when he had occasionally attributed time to “support” codes, he was reminded by Mr Woods and the business’ owner that his job was purely technical and minimal time should be spent on “support” work.39
● he was responsible for sourcing materials from suppliers, as directed, to satisfy client specifications.40
● he was often directed by the owner to locate the cheapest material. This involved, at times, flying overseas to source suppliers and materials as they were significantly cheaper overseas.41
● he did not specify or recommend material purchases for the team.42
● around August 2017, he was directed by the owner to travel to China specifically to choose a marble supplier for a particular project. He did not attend any meetings with Chinese or prospective partners and did not attend any meetings where he was the nominated representative of the Respondent.43
● this trip included a stopover in Hong Kong which provided him with an opportunity to have dinner with Mr Kan. The alignment of his travel itinerary and Mr Kan’s availability was pure coincidence and not reflective of the Respondent’s support of his professional development or of his seniority in the company.44
● when he was initially employed, he was the only Guest Fitout Designer with no design team. His role reported to the Possner Way Fitout Production Manager.45 The same situation was said to have applied to the Electrical Designer.46
● pre-August 2013, he did not autonomously make decisions in relation to resourcing of the Internal Fitout Design team; hire staff; budgets or staff remuneration. Any decisions he was involved in were at the request of Mr Woods or in collaboration with Ms Newall.47
● at best, he was responsible for coordinating the work of the Internal Fitout Design team. He had limited authority to direct or performance manage team members and had no involvement in deciding to dismiss an employee.48
● his involvement in budget decisions was limited to providing management with the total number of hours it would take to complete a project’s internal fitout design.49
● around August 2013, there was a restructure and all positions in the Internal Fitout Design team, except for his, were made redundant. He was not consulted about the decision to downsize.50
● in 2015, work demands resulted in an increase in the resourcing of the Internal Design team. The team only ever consisted of between one and three people.51
● he did not have the autonomy to independently hire staff. In around September 2017, Mr Woods had directed him to contact MY in relation to an employment opportunity with the company.52
● prior to this, he had not identified a need to recruit staff. He had limited exposure to the pipeline of future work.53
● following Mr Woods’ direction, he met with MY and then provided feedback to Mr Woods regarding MY’s suitability. He had no further involvement in MY’s recruitment.54
● the correspondence provided by Mr Woods was described as portraying a level of accountability, autonomy and management that did not reflect his role with the company.55
● with the appointment of Mr Singh as COO around March 2016, another level of senior management was said to have been introduced into the organisation.56
● Mr Singh oversaw the day-to-day activity of the design teams including the Internal Fitout Design team.57
● around April 2018, a new Design Manager position was created. Following the appointment of Mr O’Shea into that position, he was required to report to Mr O’Shea regarding all work and projects being undertaken by the Internal Fitout Design team.58
● he was required to email Mr O’Shea fortnightly with details of the team’s workload and likely allocation of hours.59
● he was subject to Mr O’Shea’s directives regarding his work or project progress. Mr O’Shea had ultimate responsibility for the effective running of the team and projects and all of the associated decisions. He was unable to make any unilateral decisions about his work or that of any of the team members.60
● his role extended only to assisting Mr O’Shea in coordinating the team, and any contractors, to meet the imposed project deadlines.61
● discussions concerning remuneration were verified with Mr O’Shea and then ultimately signed off by Mr Woods.62
● he never participated in any key management meetings or strategic business discussions.63
● he was required to co-present with other senior designers to Chinese interested parties. However, he was never represented as an emanation of the management team.64
● in around September 2017, following receipt of the retention bonus letter, he had a discussion with Mr Woods about his future with the business. This was because he was concerned about his career progression and lack of professional development with the company.65
● in around November 2017, he was involved in further discussions with Mr Woods and Mr Kan. However, no changes to his duties or responsibilities occurred.66
● no professional development plan was developed for him regarding higher managerial duties within the Respondent or the group of companies.67
● the offer of the discretionary retention bonus was an enticement to remain with the company and to protect the Respondent’s know-how and intellectual property. Prior to receipt of the letter, almost no confidential information regarding the strategic partnership was discussed with him until Mr Woods announced the partnership in September 2018.68
Submissions
Silver Yachts
[11] It was submitted that Mr Thomas was not covered by the modern award because:
● Mr Thomas’s position was never intended to be captured by the relevant award and was well above any of the positions contemplated by the Award.69
● the position was to lead, manage and run the Interior Fitout Design team which was an important part of the company’s operations.70
● there was no evidence that Mr Thomas was ever treated as being subject to the Award during his employment.71
● Mr Thomas’s application made no reference to the Award and focused solely on the employment contract.72
● the Respondent’s business is building ultra luxury aluminium super yachts. The key operational areas of the business included electrical, architectural and structural, engineering, external design and fitout and internal design and fitout.73
● Mr Thomas was responsible for running one of the key areas – interior design and fitout with the team that he ran.74
● Mr Thomas’s contract of employment specified that Mr Thomas was employed as the Interior Design Supervisor.75 Mr Thomas’s role, from the beginning, involved managing or leading the Interior Fitout Design team.76
● the contract of employment included a non-competition clause (clause 15) and an entire agreement clause (clause 29).77
● at the beginning of Mr Thomas’s employment with the company, Mr Thomas’s salary was above the applicable high income threshold at the time.78
● when Mr Thomas was dismissed, Mr Thomas was the eighth highest paid employee (out of about 160 employees). Mr Thomas’s salary at the time of his dismissal was two and a half times the minimum salary for the Award classification that is argued to apply to him.79 This was said to be a further factor to be considered by the Commission.80
● there was no written job description for Mr Thomas’s position.81
● at the time of Mr Thomas’s dismissal, the company employed around 163 employees, 31 of whom were subject to a common law contract. The majority of those not covered by an employment contract were covered by the Agreement.82
[12] It was argued by the company that it was the company’s intention, as per Mr Woods’ evidence, that the Agreement applied to those employees who were covered by the Award but not those who were not covered by the Award.83 The company’s intention was said to be relevant because one matter which the Commission may weigh up is what was within contemplation of the parties. It was contended that the meaning of terms of an award should be consistent with the parties’ intentions. At both the beginning and the end of Mr Thomas’s employment, it was stated that the intentions of the parties about what the employer thought was its scheme for dealing with the various employment relationships, was a relevant consideration.84
[13] With respect to the contention that Mr Thomas was a key member of the Respondent’s management team, the Commission was referred to the organisation charts which had been provided by the Respondent. In terms of the organisation charts, it was argued that:
● in the October 2013 chart, Mr Thomas’s position was immediately below the GM and so one step removed from the MD (GM). There was at least one member in Mr Thomas’s design team at that time.85
● it was conceded that, as of 2013, in a very flat organisation structure, Mr Thomas had the lowest number of people reporting to him (1).86
● the June 2016 organisation chart showed that there were two people in Mr Thomas’s design team.87
● with the April 2018 organisation chart, the was the insertion of a Design Manager with Internal Fitout Design comprising four people including Mr Thomas.88
● there was no evidence that Mr Thomas’s role changed with the insertion of the Design Manager or that Mr Thomas gave up any responsibilities. The effect of the evidence was that the Design Manager had overall responsibility for the design team.89
● in the second April 2018 organisation chart (Department Managers), Mr Thomas was identified as one of the Department Managers.90
[14] Further, the company submitted that, in September 2017, Mr Thomas was one of a group of employees who were offered a significant discretionary retention bonus. This occurred at the time the company was partly acquired by a Hong Kong entity. This was said to be a further factor which pointed to Mr Thomas’s seniority and importance to the business and the likelihood that it was never intended that Mr Thomas would be covered by an award.91
[15] With respect to Mr Thomas’s actual duties at the time of his dismissal, it was argued that:
● Mr Thomas was responsible for hiring and firing within his team subject to Director approval. The email chain in relation to the recruitment of a prospective employee92 was said to show that Mr Thomas played a significant role in this area.93
● the necessity for Director or HR approval regarding the hiring of a new employee was said to not be unusual.94
[16] In terms of Mr Thomas’s responsibility for the future resourcing of his team and their likely outputs, the Respondent pointed to the Resourcing document.95 It was stated that this document estimated the number of hours of human resource that was required to undertake each of the particular projects between November 2017 and January 2020. The company argued that, in conjunction with Mr Woods’ witness statement, this document showed the level of responsibility that Mr Thomas had for managing the numbers in his team and resourcing the outputs that were required of the team.96
[17] The Respondent also contended that the email sent by Mr Thomas to Mr O’Shea, dated 28 May 2018, regarding the weekly work priority list for the Interior Fitout Design team was an objective example of Mr Thomas having the autonomy to determine the priorities of his team in any particular week.97 Further, it was contended that Mr Thomas would specify material purchases that were required on behalf of his team and undertake overseas travel to inspect and recommend those purchases.98
[18] It was also submitted that Mr Thomas, on behalf of the Respondent, had presented to prospective strategic partners including a presentation in October 2016 to key executives. Also, it was stated that, prior to his dismissal, Mr Thomas had been in discussions with senior management regarding his potential future ascension to senior management of the group.99
[19] With respect to the applicable legal principles, it was submitted that there were two real issues to assess. The first one was whether Mr Thomas was covered by the Award which requires an assessment of the principal purpose for which he was employed. It was stated that assessment of the principal purpose does not require a quantitative assessment of the time spent carrying out various duties and that both parties seem to be in agreement about that proposition.100
[20] Secondly, it was argued that, at the heart of it, the Commission must assess the nature of the work undertaken and the circumstances in which the employee was employed to do the work with a view to ascertaining the principal purpose for which the employee was employed. It was stated that that is to be applied at the time of dismissal not at some earlier time. Such an assessment at the time of dismissal, was said to result in Mr Thomas’s team being the largest, the company being at its biggest and Mr Thomas was the eighth highest earning employee out of approximately 160 employees.101 Some the factors to be applied were set out in the decision in Tucker v Diagnostic Imaging Pty Ltd102 (Tucker).103
[21] The Respondent submitted that the Tucker decision dealt with a similar issue which was whether or not the employee was covered by a modern award. It was argued that, despite it being a different award, there were clear similarities between the Tucker case and this matter. The Commission was taken to the particular points of similarity to demonstrate application of the facts to the principal purpose test.104
[22] In terms of the Award classification C2(b) which was being asserted as applying to the Applicant, it was stated that Mr Thomas’s qualifications were well in excess of what was required by the classification.105
[23] The Commission was also referred to three other decisions in relation to the factors to be considered with respect to the principal purpose test.106 They were the Full Bench decision in McMenemy v Thomas Duryea Consulting Pty Ltd T/A Thomas Duryea Consulting (McMenemy)107 ; Oehme v Nilsen Resources Pty Ltd108 and Dart v Trade Coast Investments Pty Ltd (Dart)109.
[24] In response to the Applicant’s submissions, the Respondent argued the following:
● Mr Thomas’s salary was in excess of high income threshold from the beginning, in 2009 and at the end. Given this, it appeared that Mr Thomas’s salary was in lockstep with the high income threshold. There was no evidence that Mr Thomas’s last salary increase was a reflection of his success in fulfilling his role or for any other reason other than in the normal course.110
● it was acknowledged that Mr Thomas has satisfied the minimum training requirements under the Award but Mr Thomas has exceeded them to the extent that he appears to not be covered by that Award at all.111
● there is a non-compete clause in the employment contract but there was not an extended notice period. The latter was said to not necessarily be determinative of a senior employee’s position. It was accepted that there was not an ongoing incentive program and that the retention bonus was a one off.112
● there are features of the contract and of Mr Thomas’s employment which do suggest some level of seniority and importance to the company and some suggestion that his principal purpose was not that of an employee who was captured by the Award.113
● Mr Thomas has admitted that he coordinated employees and contractors. This was said to correspond to the factor considered in Tucker of the extent to which an employee has an outward facing role, presents to external parties and provides direction to external parties.114
[25] In its submissions in reply, the Respondent stated that the focus on the assessment of the work is at the time of Mr Thomas’s dismissal and not what happened in the past. At the time of the dismissal, Mr Thomas was running a team, he was the eighth highest paid employee and was one of the small group of 163 employees who were otherwise subject to the enterprise agreement.115
[26] Secondly, in relation to the Applicant’s evidence that Mr Thomas was not a representative of the company outwardly, this was said to conflict with Mr Kan’s witness statement which was submitted by consent.116
[27] Finally, in relation to Mr Thomas’s tertiary qualifications, the Respondent’s submission was that, when one looks at the classifications, Mr Thomas’s tertiary qualifications seem to indicate that he is not covered by the Award.117
Mr Thomas
[28] On behalf of Mr Thomas, it was submitted that Mr Thomas was covered by the Award and by the classification of Principal Technical Officer.118 It was stated that, from the outset, consideration was given to award coverage at the time of filing rather than it coming quite late in the piece.119
[29] The Applicant argued that a modern award covers an employee in relation to their employment if the award is expressed to cover the employee. It was stated that clause 1.4 of the Award covers employers throughout Australia in the manufacturing and associated industries and occupations covered by the classifications in the award. This means that it was necessary for the Respondent to have been in the manufacturing and associated industries and occupations and for Mr Thomas to have been engaged in a classification for which the Award made provision.120
[30] It was stated by the Applicant that clauses 4.9 and 4.10 of the Award include the manufacture, making, assembly, processing, treatment, fabrication and preparation of ships, boats, barges and marine vessels of all descriptions and components. In the absence of an alternative position by the Respondent, it was stated that there did not appear to be any dispute that the Respondent is principally concerned with manufacturing marine vessels falling within the meaning of clauses 4.9 and 4.10 of the Award.121
[31] It was said to be common ground that determination of whether the Award covered Mr Thomas’s employment at the time of his dismissal required the application of the principal purpose test. This was stated to require an examination of the nature of the work undertaken; the circumstances in which Mr Thomas was employed to do the work and whether Mr Thomas, in that employment, fell within the coverage of the Principal Technical Officer classification as described in Schedule B of the Award.122
[32] The Applicant submitted that the principal purpose test should also include consideration of a variety of factors, none of which is singularly determinative of the outcome nor universally applicable but have some level of significance. This was said to distinguish the principal purpose test from the concept of the substantive role or function of an individual. It was stated that the latter involved an examination of the actual time involved in performing different tasks which resulted in determination of the nature of the work based on the work that was performed for the largest portion of time.123
[33] It was submitted that the factors relevant to the principal purpose of assessment included reference to the contents of a job description, the possession or absence of particular qualifications and whether those qualifications are necessary, and the exercise of authority and direction.124 The Applicant argued that, in determining the principal purpose of the work performed by Mr Thomas, it was a question of fact and is to be determined by reference to the duties that actually attached to Mr Thomas’s position rather than what the Respondent believed him to do or by reference to a position title.125
[34] The Applicant contended that the Respondent’s argument that an employee’s title was determinative of the principal purpose for which an employee was employed was largely irrelevant. This was on the basis that, when Mr Thomas was first employed, in 2009, he did sign an employment contract for the position of Interior Design Supervisor. However, during his employment with the company, Mr Thomas’s job title changed to Designer and then later to Senior Fitout Designer. These changes could not be contributed to anything specific regarding Mr Thomas’s duties and responsibilities but seem to have morphed over time.126
[35] With respect to the template Resource spreadsheet which was attached to Mr Woods’ witness statement, it was stated that the nomenclature “Department” and “Department Manager” was chosen by the Respondent and was used in a templated document which had no specific application to Mr Thomas but was used by all of the senior designers to allocate resources for future projects. It was contended that “Department Manager” was not a title that was ever attributed to Mr Thomas during his employment, with which Mr Thomas associated and it was not a title that was recognised by the team that he coordinated or by any other employees of the Respondent.127
[36] Further, with respect to the Resource template, the Applicant argued that the template was designed to look forward to an ideal team set up so that the company was able to then work on multiple projects contemporaneously. It was stated that, as at the production date of the Resource template, the Respondent had only previously built one project at a time. Therefore, reliance on this document was said to be misplaced as it was not a document that was currently used.128
[37] The Applicant submitted that the appropriate classification in relation to application of the principal purpose test is that of Principal Technical Officer (level C2 (b)). This was on the basis of the duties that Mr Thomas undertook to execute the principal purpose for which he was employed and despite the absence of a position description.129
[38] It was noted that clause 12 of the employment agreement set out Mr Thomas’s responsibilities and duties in a rather perfunctory manner.130 The Applicant argued that there was nothing in the employment agreement which suggested that the primary purpose of Mr Thomas’s employment was to manage other employees or the Respondent’s business operations or to make commercial decisions. Rather, clause 12 was said to make clear that Mr Thomas’s primary duty and responsibility (and primary purpose) was to “complete projects and work as directed by the [Respondent] from time to time”.131
[39] Therefore it was contended that the nature of the work performed by Mr Thomas was best described as referencing classification C2 (b). The Applicant argued that giving Mr Thomas responsibility to look after projects and coordinate project contractors is appropriately covered by the Principal Technical Officer classification. It was stated that Mr Thomas was given a general authority to make some very limited decisions in relation to the coordination of work, directing of the Internal Fitout Design team, performance management of the team and some very limited budget considerations as to the number of hours the project might take and the related costings. This was argued to be consistent with the Award classification.132
[40] It was stated that at no time did Mr Thomas have the authority to employ or terminate any staff or to set the wages of the employees that he coordinated. The Applicant argued that his only involvement was to inform the Director if he considered that a prospective employee would be suitable. It was indicated that he gave feedback about the performance of his team but, in doing so, he was allowing the Director to make the final determination that he wished to make about salary or continuity of employment.133
[41] With respect to organisational restructures, it was stated that Mr Thomas was no more appraised about any restructures than anybody else. Mr Thomas was said to have been advised of the decision when it was announced at a staff meeting. Therefore, it was contended that it could not be argued that Mr Thomas was a key management employee because, if he had been, he surely would have been brought into communications/been consulted about significant organisational restructures. It was noted that one of the organisational restructures resulted in the complete obliteration of his team so that he was the only team member remaining.134
[42] In terms of Mr Thomas having autonomy regarding team budgets and the hiring of staff, the Applicant submitted that this was always at the request of Mr Woods or in collaboration with Ms Newall.135 With respect to the prospective employee MY, Mr Thomas recalled a discussion with Mr Woods when Mr Woods directed him to contact the prospective employee whom he had then met. Following the meeting, Mr Thomas had felt that MY would be a good fit and so had passed on that recommendation. Mr Thomas had no further involvement in MY’s recruitment. It was stated that, prior to this discussion, Mr Thomas had not identified any need to recruit staff nor had he indicated a need to recruit staff. Mr Thomas’s evidence was said to have been that he had very limited exposure and visibility to the pipeline of future works or contracts.136 The email chain submitted by the Respondent in this regard, when taken in isolation, portrayed a level of accountability, autonomy and leadership management which in reality was not commensurate with the role that Mr Thomas performed.137
[43] Regarding the Respondent’s submissions that, as was the case in Dart, Mr Thomas’s employment contract had the hallmarks of a managerial contract, these were vehemently refuted by the Applicant. This was on the basis that there are significant provisions that would usually exist in an executive agreement which were not in Mr Thomas’s employment agreement. The non-compete clause in Mr Thomas’s contract was actually an exclusivity of service clause and not post-termination obligations which would be usual in an executive employment agreement. Secondly, it was stated that the employment contract did not contain an extended notice period clause which would be expected in a managerial contract.138
[44] It was acknowledged by the Applicant that Mr Thomas was paid quite considerably above the minimum Award rate. This was said to be reflective of the success that Mr Thomas had achieved in performing his role and reflects Mr Woods’ view that Mr Thomas was a valuable member of staff, and was increasingly valuable to the business, especially when it came to the share sale. In addition, it was stated that Mr Thomas was a long-standing member of staff and, although he may not have been the longest serving employee, in today’s terms, 9 or 10 years of service is not insignificant.139 Further, it was argued that Mr Thomas being within the top eight salary earners in the business did not speak to whether Mr Thomas was covered by the Award.140
[45] Finally, concerns were expressed about the timing of Mr Thomas’s last salary increase given the history between the parties leading up to Mr Thomas’s dismissal. It was argued that this salary increase had an unwritten purpose to it as Mr Thomas’s salary was below the high income threshold prior to the increase which was about three weeks prior to Mr Thomas’s dismissal. The Applicant stated that there were certainly periods, as the high income threshold increased periodically, when Mr Thomas fell below the high income threshold.141
[46] The Applicant confirmed that Mr Thomas was responsible for the coordination and resourcing of workers engaged on various projects. It was stated that the Principal Technical Officer classification provided for this function. In addition, it was argued that the expectations attached to Mr Thomas’s role relating to supervision or coordination of less experienced employees was very common amongst long serving, experienced and successful employees such as Mr Thomas.142
[47] It was submitted that the Internal Fitout Design team was a very small team and often only consisted of Mr Thomas. Therefore, it was said to be difficult to understand the Respondent’s position that the principal purpose of the nature of the work was this overall management. This was because, for years at a time, Mr Thomas was stated to have been the entire team of one. The Applicant argued that a far more reasonable conclusion was that the principal purpose for which Mr Thomas was employed was to apply his high level technical skills and abilities to completing projects.143
[48] With respect to the organisational charts annexed to Mr Woods’ witness statement, it was stated that, when Mr Thomas was initially employed, there was no design team at the time and Mr Thomas’s role fell under the direction and management of the Possner Way fitout and production team. One of the electrical designers was also said to have been in the same situation. Between 2009 and 2013, the number of employees in the Interior Fitout Design team increased to five employees. With the restructure in 2013, the team was reduced to one - Mr Thomas – who worked as the sole designer for almost two years. In 2015, increased work demands resulted in the size of the Internal Fitout Design team increasing to between one and three people. With the appointment of Mr Singh as COO, in 2016, it was argued that this introduced another level of senior management. Mr Thomas’s evidence was to the effect that Mr Singh oversaw the day-to-day activity of the design teams, including Mr Thomas and his design team.144
[49] In April 2018, it was stated that the Respondent introduced a new position of Design Manager. Following the appointment of Mr O’Shea, Mr Thomas was stated to have been given a direction by Mr Woods to report to Mr O’Shea regarding all works on projects being performed by the Internal Fitout Design team. It was contended that, if there was any autonomy that could have been exercised by Mr Thomas, it seems to have been reduced with the appointment of Mr O’Shea.145
[50] The Applicant argued that many of the aspects of decision, control and supervision as defined by the Respondent as management functions were absent from Mr Thomas’s duties and responsibilities. It was stated that Mr Thomas performed considerable skill, expertise and experience in his particular area but at no time could it be said that he was a key management employee of the Respondent’s business.146
[51] With respect to the discretionary retention bonus that was offered to Mr Thomas in about September 2017, it was submitted that this was acknowledgement of Mr Thomas’s skill level and ability and his long service with the business. It was also said to have encouraged Mr Thomas to continue in his position with the Respondent and was not as a result of his management responsibilities. Further, contemporaneously, it was noted that Mr Thomas was in discussion with Mr Woods about his concerns regarding a lack of professional development and career projection.147
[52] In terms of Mr Thomas’s overseas travel, the Applicant submitted that he was required to do this to source suppliers of materials due to his extensive technical knowledge and expertise. It was stated that Mr Thomas’s travel schedule was not indicative of any level of seniority or autonomy that Mr Woods placed in him. Mr Thomas’s evidence was that at no time was he ever required to present to strategic partners as an emanation of the Respondent’s management team.148 Further, it was stated that Mr Thomas’s unintended stopover in Hong Kong in August 2017 did provide an opportunity for Mr Thomas to have dinner with Mr Kan. However, it was argued that this coincidental alignment of Mr Thomas’s travel itinerary cannot be reframed as Mr Thomas having significantly more senior levels of autonomy or decision-making authority than he had.149
[53] With respect to the issue regarding qualifications, it was stated that the Principal Technical Officer training requirements were minimum training requirements and that the Award did not exclude employees with tertiary qualifications being classified as level C2(b). The Applicant disagreed with the Respondent’s submission that, because Mr Thomas had a tertiary qualification, it placed him within the scope of the Professional Employees Award. It was stated that that award could not apply to Mr Thomas as he needed to have been an engineer, a geologist or an IT software developer for the Professional Employees Award to have applied to his employment.150
Consideration
[54] As has been indicated above, the issue to be determined by the Commission is whether or not a modern award covers Mr Thomas. The Applicant submitted that he is covered by the Manufacturing and Associated Industries and Occupations Award 2010 (the Award) and specifically, by the classification of level C2(b) – Principal Technical Officer.
[55] For this Award to cover Mr Thomas, it is necessary for the Respondent’s business to be covered by the Award and also for Mr Thomas to be covered by one of the classifications contained in the Award. The relevant clauses of the Award are clauses 4.1, 4.9 and 4.10.
Award coverage
[56] Clause 4.1 of the Award provides that:
“4.1 This award covers employers throughout Australia of employees in the Manufacturing and Associated Industries and Occupations who are covered by the classifications in this award and those employees.”
[57] ‘Manufacturing and Associated Industries’ is defined at clauses 4.9 and 4.10, relevantly, as:
“4.9 Manufacturing and Associated Industries and Occupationsmeans:
(a) the following industries and parts of industries:
(i) the manufacture, making, assembly, processing, treatment, fabrication and preparation of:
the products, structures, articles, parts or components set out in clause 4.10; or….”
“4.10 For the purposes of clause 4.9(a)(i), the products, structures, articles, parts, components, materials and substances include:
(a) all products made from, or containing, steel, iron, metal, sheet metal, tin, brass, copper and non-ferrous metal.
(b) melting and smelting of metals.
(c) articles made from wire and the drawing and insulation of wire.
(d) industrial gases.
(e) ships, boats, barges and marine vessels of all descriptions, and components…..”
[58] On the basis of the description of the Respondent’s business provided by the Respondent (building ultra-luxury aluminium super yachts), I find that the Respondent is covered by the Manufacturing Award in respect to the work carried out by its employees in the classifications contained in Schedule B of the Award. This is by virtue of clauses 4.1, 4.9(a)(i) and 4.10(e) of the Award.
Is Mr Thomas covered by one of the classifications in the Award?
[59] Clause 24 of the Award sets out the various classification levels in the Award whilst Schedule B contains the classification structure and definitions which apply to employees covered by the Award.
Minimum training requirement
[60] Clause B.2.1 of Schedule B of the Award provides that Classification level C2(b) is titled Principal Technical Officer with the minimum training requirement for this classification being Advanced Diploma.
[61] With respect to the minimum training requirement for a Principal Technical Officer, there was no agreement between the parties as to this aspect of the classification descriptors. It was common ground that it was a fact that Mr Thomas held a tertiary qualification (Bachelor of Built Environment). The Respondent contended that, as Mr Thomas’s qualification far exceeded the training requirements of Principal Technical Officer, this indicated that Mr Thomas was not covered by the Manufacturing Award. On the other hand, it was argued by the Applicant that the training requirements in the Award were minimum training requirements so therefore, Mr Thomas met this classification requirement.
[62] At clause B.2.1 of Schedule B of the Award, the minimum training requirements for each of the classification levels are set out. The Award does not provide for a maximum level of qualification for the classification levels, rather, it establishes the minimum qualification required to be classified at each of the levels. That Mr Thomas holds a tertiary qualification and not an Advanced Diploma does not disqualify him from being classified as a Principal Technical Officer. If Mr Thomas held a lower qualification, e.g. a Certificate IV, this would preclude him from entry into the Principal Technical Officer classification. Therefore, I am satisfied that Mr Thomas meets the minimum training requirement for the classification of Principal Technical Officer.
Definition of Principal Technical Officer
[63] Clause B.3.16 of Schedule B defines Principal Technical Officer, in part, as follows:
“Principal Technical Officer
(a) A Principal Technical Officer works above and beyond an employee at the C2(a) level and has successfully completed sufficient additional training to enable the employee to perform work within the scope of this level in addition to a national advanced diploma or equivalent. Within organisational policy guidelines and objectives a principal technical officer:
(i) | ● performs work requiring mature technical knowledge involving a high degree of autonomy, originality and independent judgment; |
● looks after and is responsible for projects and coordinating such projects with other areas of the organisation as required by the operation of the organisation; | |
● is responsible for the coordination of general and specialist employees engaged in projects requiring complex and specialised knowledge; | |
● plans and implements those programs necessary to achieve the objectives of a particular project; | |
● in the performance of the above functions, applies knowledge and/or guidance relevant in any or all of the fields of designing, planning and technical work as required by the operation; | |
● operates within broad statements of objectives without requiring detailed instructions; or | |
(ii) | ● performs work at the above level of skill in a particular technical field; |
● has as the overriding feature of their employment the ability to perform creative, original work of a highly complex and sophisticated nature; | |
● provides specialised technical guidance to other employees performing work within the same technical field. |
(b) In a laboratory, a Principal Technical Officer will exhibit and use technical principals, research and development skills as well as interpersonal/supervisory skills in the co-ordination of a specialist laboratory team.”
[64] It was common ground between the parties that the method for determining the question of modern award coverage is application of the principal purpose test. This approach has been set out in various decisions of the Commission and its predecessors. A Full Bench of the Australian Industrial Relations Commission (AIRC) in R Brand v APIR Systems Limited2used what may be described as the principal purpose test. That decision, in turn, cited the decision of the Full Bench of the AIRC in Carpenter v Corona Manufacturing Pty Ltd,3 which stated relevantly as follows:
“In our view, in determining whether or not a particular award applies to identified employment, more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed. In this case, such an examination demonstrates that the principal purpose for which the appellant was employed was that of a manager. As such, he was not “employed in the process, trade, business or occupation of ... soliciting orders, obtaining sales leads or appointments or otherwise promoting sales for articles, wares, merchandise or materials” and was not, therefore, covered by the Award.”4
[65] In Nicholas McMenemy v Thomas Duryea Consulting Pty Ltd T/A Thomas Duryea Consulting5 a Full Bench of the Commission also referred to the above authorities and observed:
“[37] We comment in this regard that consistent with the decision of the Full Bench of the Australian Industrial Relations Commission (as it then was) in Carpenter v Corona Manufacturing Pty Ltd, an own employee’s estimation of the quantification of their workload is not determinative of the classification, if any, in an award, into which they might fall. One reason for this (and there will be more) is that an employee might perform duties (where they are not closely supervised) which the employee prefers, or believes to be required, but which are not the duties the employee is necessarily directed (or employed) to perform. This is why the Full Bench articulated the task of ascertaining the principal purpose of the employment as requiring “an examination of the nature of the work [...] the employee is employed to do.”
[66] I will apply the principal purpose test in light of these authorities.
Principal purpose test
[67] With respect to Mr Thomas’s level of accountability and autonomy in decision making, control and supervision there was agreement between the parties about a number of the facts. It was common ground that Mr Thomas commenced employment with the Respondent on 19 October 2009 pursuant to a contract of employment. The contract of employment specified that Mr Thomas was initially appointed to the position of Interior Design Supervisor. Over the course of his employment, it appears that Mr Thomas’s job title changed to Designer and then, at least as at September 2017, to Senior Fitout Designer. Senior Fitout Designer was the job title contained in Mr Thomas’s email signature151 at that time, which was acknowledged by the Respondent, together with the title Designer, as being the title of Mr Thomas’s position.
[68] Mr Thomas’s employment contract contained three clauses of note – a non-competition clause, confidentiality clause and an entire agreement clause. The non-competition clause (clause 15) provides that Mr Thomas will not, whilst covered by the contract, engage in a business activity related to the design or construction of a yacht of 40m or more in length without the consent of the Employer. The clause does not extend to any period after employment with the Respondent ceases.
[69] The confidentiality clause (clause 14) requires Mr Thomas to keep completely secret any confidential information and must not reveal it to any third party either directly or directly. The clause applied in perpetuity during Mr Thomas’s employment and post-employment. Clause 29 of the contract is an Entire Agreement clause.
[70] The employment contract also specified that Mr Thomas’s responsibilities and duties were “completing projects and work as directed by the Employer from time to time”.152 Mr Thomas’s duties were stated to also include implementing the business plan as determined by the employer, reporting to and being accountable to persons nominated by the employer and carrying out lawful instructions.153 It was common ground that there was no position description for Mr Thomas’s role.
[71] Mr Thomas’s salary was $144,114.92 at the time of his dismissal. It had been increased to that amount on 30 May 2018 and was above the high income threshold. At the time of his dismissal, Mr Thomas was the eighth highest paid employee (out of approximately 163 employees). When Mr Thomas commenced employment with the business, Mr Thomas’s salary was higher than the high income threshold at that time. Mr Thomas’s salary was also significantly above the Award rate of pay for a Principal Technical Officer.
[72] As has been discussed earlier, Mr Thomas possessed a tertiary qualification.
[73] With respect to where Mr Thomas sat within the organisation, when Mr Thomas commenced employment, Mr Thomas seems to have reported to the Possner Way Fitout and Production Manager. It was a very flat organisation structure with Mr Thomas being one of 14 employees who reported directly to Mr Woods. As at October 2013, Mr Thomas had a Fitout Design team of one person.
[74] By March 2016, Mr Singh had been employed as COO reporting to Mr Woods. Mr Thomas, together with 11 employees, then reported to Mr Singh. There were then three employees in the design team. The June 2016 organisation chart showed the elevation of Mr Singh to the MD/COO role with Mr Woods as Director. Mr Thomas continued to report to Mr Singh together with 15 other employees. At this time, there were two employees in the Fitout Design team. With the November 2016 organisation chart, there does not appear to have been a change to Mr Thomas’s reporting line nor to the number of design team employees.
[75] A new position of Design Manager was created by April 2018 which reported to the GM/Director and the Commercial Director. Reporting to the Design Manager was Mr Thomas together with the four other design teams (structural, engineering, external fitout and electrical). Along with the Design Manager, four other employees reported directly to the GM/Director and Commercial Director – Production, Project, Finance, HR and Admin and Purchasing and Strategic Sourcing.
[76] Therefore, at the time of his dismissal, Mr Thomas occupied a position that was two levels below the GM/Director and Commercial Director (executive level). Amongst the employees who reported directly to the executive level was the Design Manager (to whom Mr Thomas reported). The next level down was the level occupied by Mr Thomas and the other design areas.
[77] The fundamental dispute between the parties concerned whether or not Mr Thomas was a key management employee of the Respondent. The Respondent submitted that Mr Thomas was employed to lead, manage and run the Internal Fitout Design team and that that was the principal purpose for which he was employed.
[78] On the other hand, the Applicant contended that, whilst Mr Thomas was a key employee in the business, Mr Thomas was not a key management employee. The principal purpose for which Mr Thomas was employed was said to have been to create and produce manufacturing drawings and fitouts for large vessels. This was said to involve coordination of the work of the design team and any contractors.
Nature of Mr Thomas’s work
[79] There is not a great deal of evidence before the Commission about the nature of the work that Mr Thomas performed. Attached to Mr Thomas’s application was a list of tasks that Mr Thomas contended that he performed. These were repeated in the Applicant’s Outline of Submissions in Reply154 and in Mr Thomas’s witness statement155 and included the following:
● interpret designs supplied by client and clients’ designers to create manufacturing drawings;
● produce manufacturing drawings;
● ensure the interior fitout is compliant with applicable regulations;
● supervise the manufacturing and installation to ensure quality and correctness of work;
● approve materials;
● supervise contractors; and
● specify manufacturing supplies and materials.
[80] It appears to have been common ground between Mr Woods and Mr Thomas that part of Mr Thomas’s role involved the coordination and resourcing of employees on various projects. There does not seem to be any evidence from the Respondent which disputed that the tasks set out in the paragraph above were performed by Mr Thomas. However, the parties disagreed about whether or not this was the primary purpose for which Mr Thomas was employed.
Mr Thomas’s level of responsibility in decision making, control and supervision
[81] With respect to the level of accountability and autonomy in decision making, control and supervision which Mr Thomas possessed, there was no agreement between the parties about the nature or level of Mr Thomas’s responsibilities. It was contended by the Respondent that Mr Thomas’s managerial functions included the following:
● performed pay and performance reviews of his team members subject to ultimate Director approval;
● responsibility for resourcing the team including budgets and utilisation of hours;
● responsibility for what the team would be working on and how the hours were utilised within his team;
● Specifying material purchases for the Internal Fitout Design team which required frequent overseas trips to inspect and recommend such purchases; and
● Responsibility for hiring and firing within the Internal Fitout Design team.
Pay and performance reviews
[82] In terms of undertaking pay and performance reviews of his team members, it was the Applicant’s evidence that he provided feedback/recommendations on his team members’ performance in relation to salary increases. Mr Thomas stated that his recommendations were verified by the Design Manager and then forwarded for final determination by the Director. I find that Mr Thomas was responsible for making recommendations regarding salary increases for his team members. The recommendations were forwarded to Mr O’Shea for verification and then to Mr Woods for the final decision.
Resourcing the Interior Fitout Design team
[83] The Respondent submitted that Mr Thomas was responsible for resourcing the Interior Fitout Design team which included submitting a budget for the Interior Fitout Design team. Reference was made to the Resourcing spreadsheet156 which was said to show that Mr Thomas was responsible for the resourcing of his team and that he had referenced his own title as ‘Department Manager’.
[84] On the other hand, it was contended that the Resourcing spreadsheet template had been developed by the Respondent and that Mr Thomas’s input was simply the total number of hours it would take for the completion of the internal fitout design for a specific project. Mr Thomas’s evidence was also that he had never referred to himself as “Department Manager”.
[85] The Resourcing document provided by the Respondent appears to estimate the number of people required, by month, on three projects, between November 2017 and January 2020.
[86] As the Senior Fitout Designer, it would seem to be a normal part of that role to be requested to estimate, for budget planning purposes, the manpower required at each stage of a project. With respect to the assertion that Mr Thomas had referenced himself in the spreadsheet as Department Manager, it is noted that it was the Respondent who developed the form. It is also noted that the Resources column specified Dept Mgr, Project Lead (Dept Mgr) and Fitout Designers. It is not clear as to who the resource was that was labelled Project Lead (Dept Mgr) and what the difference was between the Dept Mgr resource and the Project Lead (Dept Mgr) resource. Mr Thomas has indicated strongly that he did not identify as a Department Manager and that he never referred to himself as Department Manager. On the basis of one reference in a document to Mr Thomas as Department Manager, I have not been persuaded that the spreadsheet establishes that Mr Thomas was a Department Manager.
Responsibility for the Interior Fitout Design team’s work
[87] With respect to its contention that Mr Thomas was responsible for what the Internal Fitout Design team was working on at any point, the Respondent relied on the email chain between Mr O’Shea and Mr Thomas157 where Mr Thomas set out the work priorities for that week. For his part, Mr Thomas stated that he was required to email Mr O’Shea fortnightly the details of the team’s workload and likely allocation of hours. It was indicated that, following Mr O’Shea’s appointment, Mr Thomas was required to report to Mr O’Shea regarding all works and projects being performed by the Internal Fitout Design team.
[88] The emails referred to by the Respondent started with an email to Mr Thomas and two other employees reminding them that he had not received the weekly priority list. Mr O’Shea’s email indicated that, if he did not receive the lists, he would have to issue the weekly priority list without the team’s input. The email chain seems to reveal two things. The first is the implication that Mr Thomas and the other recipients of the email were responsible for being fully conversant with the work of the teams and for deciding the work priorities. Secondly, it appears that Mr O’Shea was responsible for issuing the design teams’ priority work list and that he was capable of issuing such a list without input from the design teams. What follows logically from this was that Mr O’Shea was performing managerial duties consistent with the position of manager of the design teams. In terms of the work of the Internal Fitout Design team itself, I find that Mr Thomas was responsible to Mr O’Shea for coordinating and managing the work of that team.
Sourcing materials from suppliers
[89] It was common ground that Mr Thomas was responsible for sourcing materials from suppliers to satisfy client specifications and requests. The parties parted ways on the degree of autonomy and responsibility with which Mr Thomas performed this function. The Applicant gave evidence that he was often directed by the Owner as well as by the Strategic Purchasing Officer to locate the cheapest material. This was said to require overseas travel as such materials were significantly cheaper overseas. Mr Thomas categorically denied that he specified material purchases for the team or made recommendations for purchases.
Hiring and firing of Internal Fitout Design team employees
[90] The Respondent contended that Mr Thomas was responsible for hiring and firing within the Internal Fitout Design team. The Respondent noted that this responsibility was subject to Director approval and argued that this was normal business practice. The events surrounding MY, as set out in the email chain between Mr Thomas and MY,158 were highlighted by the company as support for this contention.
[91] For his part, the Applicant stated that he did not have autonomy to recruit or hire staff. It was Mr Thomas’s evidence that, as he did not have visibility in relation to future works or contracts, his advice on resourcing was only sought on isolated occasions. With respect to the specific example regarding MY, Mr Thomas explained that there was a discussion with Mr Woods, around September 2017, during which Mr Woods directed him to contact MY regarding an employment opportunity. Prior to this conversation, it was recalled by Mr Thomas that he had not identified or indicated a need for additional staff. Following Mr Woods’s direction, Mr Thomas had met with MY and had provided feedback that MY appeared to be a good fit. It was stated by Mr Thomas that he had no further involvement in MY’s recruitment.
[92] The email chain does suggest that Mr Thomas had a degree of authority, in relation to MY at least, for the recruitment of employees. However, if the situation came about as the result of a direction from Mr Woods (which does not appear to have been disputed), this puts the email chain in a different light to that contended by the Respondent. One the basis of this evidence alone, I am not satisfied that Mr Thomas had responsibility, subject to Director approval, to hire and fire Interior Fitout Design team employees. It would be expected that, as Senior Fitout Designer, Mr Thomas would have had involvement in the selection of the most suitable employee. However, that involvement does not result in Mr Thomas having responsibility for doing so (subject to Director approval). In addition, on the basis of Mr Thomas’ evidence, it would appear that he was not in a position to act managerially and recommend the recruitment/firing of team members as he did not have visibility regarding future work.
Other indicators/factors
[93] In addition to Mr Thomas’s level of responsibility and seniority in the company, the Respondent submitted that there were other indicators/factors that Mr Thomas was a key management employee. These included Mr Thomas being advised, as one of 12 key management employees, of the strategic partnership in July 2017; being offered a discretionary retention bonus; being invited to present the Respondent’s business to prospective strategic partners (including on 18 October 2016 to key executives) and having dinner with Mr Kan in Hong Kong in August 2017.
Discretionary retention bonus
[94] It was common ground that Mr Thomas was offered a discretionary retention bonus in September 2017. However, the parties disagreed about the reason Mr Thomas was offered the bonus. The Respondent argued that it reflected the fact that Mr Thomas was a key management employee whilst the Applicant contended that its purpose was to encourage him to remain with the company so as to protect the Respondent’s expertise and intellectual property.
[95] The letter from the Respondent to Mr Thomas, dated 5 September 2017, regarding the retention bonus, stated that the bonus was being offered to Mr Thomas, together with the conditions for receiving it, to “encourage you to continue in your position at the Company.”159 The letter further stated that the company would like to take the opportunity to professionalise the organisation and, to that end, to further protect the company’s know-how and intellectual property.160 The conditions for receipt of the bonus were agreement to amendments to Mr Thomas’s contract of employment in relation to confidential information and intellectual property. Therefore, it would seem that the purpose of offering Mr Thomas the discretionary retention bonus was to retain Mr Thomas as an employee in the business and secondly, to strengthen Mr Thomas’s obligations under his employment contract in relation to confidential information and intellectual property. It is noted that Mr Thomas was one of twelve employees whom the business considered it important to retain.
Dinner with Mr Kan
[96] The parties also agreed that, as a matter of fact, Mr Thomas and Mr Kan (the Commercial Director) had dinner together in Hong Kong in August 2017. The parties disagreed about the significance of this event. The Respondent argued that the dinner reflected Mr Thomas’s status as a key management employee whilst it was Mr Thomas’s evidence that it was a coincidental alignment of his itinerary and Mr Kan’s diary. The company was not a large company and Mr Thomas was a relatively long serving employee and a Senior Fitout Designer. Therefore, it would be unremarkable for Mr Thomas and Mr Kan to have dinner when Mr Thomas had a stopover in Hong Kong.
Advance advice of the strategic partnership
[97] With respect to the Respondent’s contention that Mr Thomas was advised of the strategic partnership on a strictly confidential basis in July 2017, the Applicant’s evidence was that, prior to receipt of the retention bonus letter, he had not been appraised of the strategic partnership and that almost no confidential information was shared with him until Mr Woods publicly announced the strategic partnership. Further, it was stated by the Applicant that, in August 2013, when all of the positions in the Internal Fitout Design team were made redundant except for his, he had not been consulted about this decision and was advised of the restructure when it was announced at a whole staff meeting. On the balance of probability, it is likely that Mr Thomas was not advised of the strategic partnership prior to its public announcement. Mr Thomas had not previously been consulted about a major restructure in 2013 and Mr Thomas does not appear generally to have been involved in strategic business discussions during his employment.
Presentation to prospective strategic partners
[98] It was common ground between the parties that, on occasion, Mr Thomas presented with other senior designers to potential strategic partners. However, it was denied by Mr Thomas that he was ever required to present to strategic partners as a nomination of the Respondent’s management team.
Not the intention to be Award covered
[99] The Respondent submitted that it was never intended that Mr Thomas would be covered by the Award. It was stated that the Respondent’s intention was that the enterprise agreement applied to those employees covered by the Award and not those who were not covered.
[100] The Respondent’s argument that the parties never intended that Mr Thomas would be covered by the Award is noted. However, it is not open to any party to contract out of award coverage if the employer and the position concerned are covered by a modern award and its classifications. Therefore, the real issue to be determined is whether or not Mr Thomas was covered by the classification of Principal Technical Officer under the Award.
Design Manager position
[101] On behalf of the Applicant, it was contended that, once Mr O’Shea was appointed, Mr Thomas became subject to directives from Mr O’Shea in relation to work and/or project process. It was Mr Thomas’s evidence that, as his superior, Mr O’Shea assumed the ultimate responsibility for the effective running of the team and all team and work-related decisions. Mr Thomas stated that he had no ability to make any unilateral decisions regarding his own work or that of any of the employees in the Internal Fitout Design team.
[102] For its part, the Respondent argued that the additional reporting line through the Design Manager did not affect the nature of Mr Thomas’s work.
[103] For the position of Design Manager to have any work to do, it is logical to expect that Mr O’Shea would be responsible for the work of all of the design teams who reported to him. The natural corollary of the Respondent’s argument that the additional reporting line did not affect the nature of Mr Thomas’s work is that Mr Thomas was not undertaking management functions prior to the appointment of Mr O’Shea. Therefore, I am inclined to accept the Applicant’s contention that Mr O’Shea was responsible, in a management sense, for the senior designers and the design teams who reported to him.
[104] Bringing all of this discussion together regarding the factors pertinent to the principal purpose test, I find that, at the time of Mr Thomas’s dismissal:
● Mr Thomas’s job title was ‘Senior Fitout Designer’.
● Mr Thomas was the eighth highest paid employee and his salary was significantly above the Principal Technical Officer classification wage rate in the Award.
● Mr Thomas was located in the third level of the organisation and so there was a level between himself and the executive level. Mr Thomas did not report directly to the GM/Director and Commercial Director but to the next level down. Therefore, it cannot be said that Mr Thomas was engaged at the senior level of the company as there was a level between his level and the executive level.
● Mr Thomas was tertiary qualified.
● Mr Thomas was responsible for creating and producing manufacturing drawings based on interpreting client designs. Mr Thomas was then responsible for ensuring the quality of the manufacturing and that it was in accordance with the approved designs.
● Mr Thomas was responsible for the coordination and resourcing of workers engaged on various projects, including contractors.
● Mr Thomas did not have the authority to make autonomous decisions regarding his work or that of the Internal Fitout Design team.
● Mr Thomas made recommendations to his supervisor regarding salary increases for the Interior Fitout Design team members. Mr Woods held the ultimate authority for approving salary increases.
● Mr Thomas did not have authority to hire and fire team members.
● Mr Thomas was responsible for providing the data regarding the resourcing of projects.
● There is no evidence that Mr Thomas participated in key managerial decision-making.
● With the creation of the Design Manager position any general managerial functions that Mr Thomas might have exercised seemed to have become part of Mr O’Shea’s remit.
[105] Therefore, I find that the principal purpose of Mr Thomas’s position of Senior Fitout Designer was to use his technical design skills, expertise and experience to create manufacturing drawings by interpreting clients’ designs and then to ensure the correct and quality manufacture of the internal fitout. This necessitated Mr Thomas coordinating the work of the Interior Fitout Design team and contractors.
[106] It is accepted that, from a design perspective, Mr Thomas was a key employee of the Respondent. However, I have not been persuaded that Mr Thomas was a management employee (key or otherwise) and that the principal purpose of Mr Thomas’s position was the management of the Internal Fitout Design team. As per his employment contract, Mr Thomas did not appear to have participated in key management decision making. Indeed, Mr Thomas worked “completing projects and working as directed” as per his contract. Mr Thomas was not involved in the creation of the business plan but was directed to implement a plan that was determined by others. Further, Mr Thomas’s involvement with prospective strategic partners was in relation to his discipline – interior fitout design – only and not because he was a key manager.
[107] The Respondent’s contention that Mr Thomas’s role did not change with the creation of the Design Manager role would seem to confirm the Applicant’s view that the principal purpose of his job was that of interior fitout design – the creation of manufacturing drawings based on interpreting clients’ designs and then ensuring the correct and quality production of the interior fitout. For, if Mr Thomas’s job did not change, what then was Mr O’Shea’s role in terms of the Interior Fitout Design team? There was no evidence before the Commission that the Design Manager was involved in any design work himself. Rather, on the basis of Mr Thomas’s evidence, Mr O’Shea’s job appears to have been management of the work of all of the design teams.
[108] Further, there appear to have been times during Mr Thomas’s employment when Mr Thomas was either the only person employed in Interior Fitout Design or was employed together with one to three other employees. At the time of his dismissal there were three employees in the Interior Fitout Design team. If the principal purpose of Mr Thomas’s position was management of the work of the Interior Fitout Design team, it would seem that Mr Thomas was being, and had always been, extremely well paid to perform managerial functions in relation to a team of three employees.
Does the Principal Technical Officer classification apply to Mr Thomas?
[109] Clause B.3.16 (a) (i) and (ii) of Schedule B are the relevant parts of this clause. Applying the work undertaken by Mr Thomas and the principal purpose of his job, I am satisfied that the Principal Technical Officer classification applies to Mr Thomas.
Conclusion
[110] Consequently, I find that Mr Thomas was covered by the Award and, as a result, the requirements of section 382(b) of the Act have been met. As it was not disputed that Mr Thomas has met the requirements of section 382(a), I therefore find that Mr Thomas is a person protected from unfair dismissal.
[111] The jurisdictional objection raised by the Respondent under section 382(b) of the Act is therefore dismissed. An order 161 to this effect will be issued separately.
[112] Mr Thomas’s application will be referred for conciliation.
Appearances:
K. Walawski for the Applicant;
A. Mossop for the Respondent.
Hearing details:
2018
Melbourne (Perth via VC)
9 October
Printed by authority of the Commonwealth Government Printer
<PR703543>
1 Exhibit R2
2 Transcript PN 25 and 41
3 Exhibit A2 at paragraph 2.1
4 Ibid. at paragraph 2.2
5 Ibid.
6 Transcript PN 5 – 7
7 Exhibit R2 at paragraph 7
8 Ibid. at paragraph 8
9 Ibid. at paragraph 9
10 Ibid. at paragraphs 10 – 11
11 Ibid. at paragraph 12
12 Ibid. at paragraph 13
13 Exhibit R1 at attachment DW – 3
14 Exhibit R1 at paragraphs 19 – 21
15 Exhibit R1 at paragraph 22 and attachment DW – 4, at page 1.
16 Ibid. at page 2
17 Ibid. at page 3
18 Ibid. at page 4
19 Ibid. at page 5
20 Ibid. at page 6
21 Ibid. at paragraph 23
22 Ibid. at paragraph 24
23 Ibid. at paragraph 26
24 Ibid. at paragraphs 27 and 29
25 Ibid. at paragraph 28
26 Transcript PN 78 – 81
27 Transcript PN 89 – 91
28 Exhibit A1 at paragraphs 12 – 13
29 Ibid. at paragraph 14
30 Ibid. at paragraph 15
31 Exhibit R1 at attachment DW – 7
32 Exhibit A1 at paragraph 15
33 Ibid. at paragraph 19
34 Ibid. at paragraph 20
35 Ibid. at paragraph 21
36 Ibid. at paragraph 22
37 Ibid.
38 Ibid. at paragraphs 23 – 24
39 Ibid. at paragraph 25
40 Ibid. at paragraph 26
41 Ibid. at paragraph 27
42 Ibid. at paragraph 29
43 Ibid. at paragraphs 30 – 31
44 Ibid. at paragraphs 32 – 33
45 Ibid. at paragraph 34
46 Ibid. at paragraph 35
47 Ibid. at paragraph 38
48 Ibid. at paragraph 39
49 Ibid. at paragraph 40
50 Ibid. at paragraphs 41 – 42
51 Ibid. at paragraph 44
52 Ibid. at paragraph 45
53 Ibid. at paragraph 46
54 Ibid. at paragraphs 47 – 49
55 Ibid. at paragraph 50
56 Ibid. at paragraph 51
57 Ibid. at paragraph 52
58 Ibid. at paragraph 53 – 54
59 Ibid. at paragraph 55
60 Ibid. at paragraphs 56 and 58
61 Ibid. at paragraph 57
62 Ibid. at paragraph 59
63 Ibid. at paragraph 60
64 Ibid. at paragraph 61 – 62
65 Ibid. at paragraphs 63 – 64
66 Ibid. at paragraph 65 – 66
67 Ibid. at paragraph 67
68 Ibid. at paragraph 69 – 70
69 Transcript PN 98 – 99 and 112 and 209 and Exhibit R3 at paragraph 21
70 Ibid. 99 and 208
71 Ibid. 99
72 Ibid. 99 and 210
73 Ibid. 100
74 Ibid. 101 -102
75 Ibid. 101
76 Ibid. 209
77 Ibid. 102 – 103
78 Ibid. 104
79 Ibid. 126 and Exhibit R3 at paragraph 27
80 Transcript PN 132
81 Ibid. 105
82 Ibid. 107 – 108
83 Ibid. 110
84 Ibid. 111
85 Ibid. 113 – 114
86 Ibid. 115 – 118
87 Ibid. 120
88 Ibid.
89 Ibid. 120 – 122
90 Ibid. 123
91 Ibid. 124
92 Exhibit R1 at attachment DW 6
93 Transcript PN 133 – 136
94 Ibid. 154
95 Exhibit R1 at attachment DW 7
96 Transcript PN 155 – 156
97 Ibid. 157
98 Ibid. 158
99 Ibid. 159
100 Ibid. 161 – 162
101 Ibid. 163
102 [2011] FWA 1767
103 Transcript PN 163 – 164
104 Ibid. 170 – 178 and 183-190
105 Ibid. 181 – 182
106 Ibid. 191 – 193
107 [2012] FWAFB 7184
108 [2012] FWA 1864
109 [2015] FWC 4355
110 Transcript PN 194 – 195 and 206 and 299-301
111 Ibid. 196
112 Ibid. 197 – 199
113 Ibid. 205
114 Ibid. 207
115 Ibid. 304 – 306
116 Ibid. 307
117 Ibid. 308
118 Ibid. 215 and 217
119 Ibid. 216
120 Ibid. 219 – 220
121 Ibid. 221
122 Ibid. 222
123 Ibid. 223 - 224
124 Ibid. 225 – 227
125 Ibid. 228
126 Ibid. 229
127 Ibid. 230 – 231
128 Ibid. 232
129 Ibid. 233
130 Ibid. 225 and 234
131 Exhibit A2 at paragraph 4
132 Transcript PN 233 and 236 – 237
133 Ibid. 238 and 282
134 Ibid. 238 and 270
135 Ibid. 239 and 270
136 Ibid. 239 – 241
137 Ibid. 242
138 Ibid. 243 – 246
139 Ibid. 248 – 249
140 Ibid. 250
141 Ibid. 251 – 257
142 Ibid. 263
143 Ibid. 265 – 266
144 Ibid. 267 – 273
145 Ibid. 274 – 275
146 Ibid. 276 – 277
147 Ibid. 277 – 281
148 Ibid. 284 – 287
149 Ibid. 288
150 Ibid. 289 – 290
151 Exhibit R1 at attachment DW 6
152 Ibid. at attachment DW 3
153 Ibid.
154 Exhibit A2 at paragraph 4.9
155 Exhibit A1 at paragraphs 19 – 21
156 Exhibit R1 at attachment DW 7
157 Ibid. at attachment DW 8
158 Ibid. at attachment DW6
159 Ibid. at attachment DW 5
160 Ibid.
161 PR703549
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