Higgins v Australian Commercial Catering Pty Ltd
[2015] FCCA 346
•20 February 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HIGGINS v AUSTRALIAN COMMERCIAL CATERING PTY LTD | [2015] FCCA 346 |
| Catchwords: INDUSTRIAL LAW – Overtime and redundancy entitlements – application of relevant Award and provisions on Contract. |
| Legislation: Fair Work Act 2009, ss.119, 547 Hospitality Industry (General) Award 2010 [MA000009], cls.17, 33 |
| Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410 MacMahon Mining Services (No.1) [2009] FMCA 511 Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1 Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321 |
| Applicant: | PAUL HIGGINS |
| Respondent: | AUSTRALIAN COMMERCIAL CATERING PTY LTD ACN 057 735 421 |
| File Number: | SYG 2297 of 2014 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 12 January 2015 |
| Date of Last Submission: | 13 January 2015 |
| Delivered at: | Sydney |
| Delivered on: | 20 February 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Robertson Saxon Primrose Dunn |
| Solicitors for the Respondent: | Konstantine Darmos & Associates |
ORDERS
Within seven (7) days, the parties are to submit to my Associate ([email protected]) an agreed Minute of Order reflecting the conclusions recited in these reasons, failing which the matter will be listed before me on 10 April 2015 to further consider the orders to be made.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2297 of 2014
| PAUL HIGGINS |
Applicant
And
| AUSTRALIAN COMMERCIAL CATERING PTY LTD ACN 057 735 421 |
Respondent
REASONS FOR JUDGMENT
Introduction and background
The dispute between the parties relates to overtime and redundancy payment.
The Applicant seeks the following orders:
a)The Respondent make payment to the Applicant for overtime in the amount of $26,883.65.
b)[In the alternative to order 1] The Respondent pay damages to the Applicant for breach of contract in the amount of $26,883.65.
c)The Respondent make payment to the Applicant for superannuation on the overtime in the amount of $2,780.06.
d)The Respondent make payment to the Applicant for redundancy pay of 7 weeks at ordinary time earnings, being a total of $5,586.00.
e)The Respondent make payment to the Applicant for interest from 29 November 2013 to Judgment pursuant to section 547 of the Fair Work Act 2009 (Cth) to be calculated by the Registrar.
f)The Respondent be given 28 days to pay the foregoing amounts.
The Respondent opposes those orders, but appeared to concede in evidence that the Applicant should be paid $6,441.55.
The Applicant relied on the following evidence:
·Application, filed 15 August 2014;
·Affidavit of Paul Higgins, sworn 10 August 2014; and
·Affidavit of Paul Higgins, sworn 15 December 2014.
The Respondent relied on the following evidence:
·Response, filed in Court on 12 January 2015; and
·Affidavit of Nicole Mighell, sworn/affirmed 5 January 2015.
The relationship between the Applicant as employee and Respondent as employer was governed by a Contract of Employment which was signed on 14 April 2010 on behalf of the Respondent, and 16 April 2010 by the Applicant. It is the only written agreement between the parties relating to the issues before the Court. It was not argued that any other document governed the terms of employment, other than the relevant award, being the Hospitality Industry (General) Award 2010 (hereafter referred to as ‘the Award’).
The overtime claim
Section 3 of the Contract of Employment provides:
Your pay rates are as follows:
Normal (M-F) $21.00 per hour (base rate)
Saturday $27.00 per hour
Sunday $30.00 per hour
Public Holiday $45.00 per hour
Your salary will be paid into a bank account nominated by you on a weekly basis.
From time to time additional hours are required to cover sickness or other causes over which the company has no control. The company’s policy is to offer any additional hours firstly to existing team members before calling out to external staff support. Additional hours offered and accepted by any existing team member is considered mutual consent and therefore paid at base rates, provided the additional hours DO NOT take the weekly total hours to 38 hours or greater. (NOTE: weekly hours equal to or greater than 38 hours are paid at overtime rates.)
The relevant sentence is in fact the final one extracted. The Applicant’s claim is:
a)to payment for overtime of all hours worked beyond 38 hours per week; and
b)for this to be calculated by reference to the hourly rate agreed to in the contract, i.e. $21.00 per hour increased by 50 per cent for the first two hours of overtime and 100 per cent thereafter, pursuant to clause 33.3 of the Award.
The Respondent contends that:
a)no overtime is payable pursuant to the Contract of Employment as the Applicant was salaried but that, in any event,
b)if overtime is payable, it is to be calculated strictly by reference to the Award, and not to the agreed hourly rate.
The Contract is clear in its terms. The Applicant was entitled to be paid at overtime rates when he worked in excess of 38 hours weekly. No alternative interpretation of the contract is feasible.
As the contract is silent about the calculation and quantification of overtime rates, the Award must apply. Clause 33 of the Award provides:
33. Overtime
33.1 Reasonable overtime
(a) Subject to clause 33.1(b) an employer may require an employee other than a casual employee to work reasonable overtime at overtime rates.
(b) An employee may refuse to work overtime in circumstances where the working of such overtime would result in the employee working hours which are unreasonable having regard to:
(i) any risk to the employee’s health and safety;
(ii) the employee’s personal circumstances including any family responsibilities;
(iii) the needs of the workplace or enterprise;
(iv) the notice (if any) given by the employer of the overtime and by the employee of their intention to refuse it;and
(v) any other relevant matter.
33.2 Entitlement to overtime rates
(a) A full-time employee is paid at overtime rates for any work done outside of the hours set out in clause 29—Ordinary hours of work.
(b) A part-time employee is paid at overtime rates in the circumstances specified in clause 12.7.
33.3 Overtime rates
(a) The following overtime rates are payable to an employee,depending on the time at which the overtime is worked:
(i) Monday to Friday:150% of their normal rate of pay for the first two hours of overtime;and twice their normal rate of pay for the rest of the overtime.
(ii) Between midnight Friday and midnight Sunday:twice their normal rate of pay for any work done.
(iii) On a rostered day off:twice their normal rate of pay for any work done. An employee must be paid for at least four hours even if they work for less than four hours.
(b) The four hour minimum payment does not apply to work which is part of the normal roster which began the day before the rostered day off;or when overtime worked is continuous from the previous day’s duty.
(c) Overtime stands alone
Overtime worked on any day stands alone.
Clause 33.3(a) thus means that the first two hours of overtime is paid at 150 per cent of the Applicant’s “normal rate of pay”, and thereafter at 200 per cent of the same.
The Applicant contends that his normal rate of pay was $21.00 per hour, based on the contract.
The Respondent contends that the normal rate of pay is based on this Award.
It is well established authority that the Award applies to the Applicant’s employment as a matter of law, but only provides minimum rates and entitlements: Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410 at 421 per Chief Justice Brennan, and Justices Dawson and Toohey. The contract payment provides an over-award hourly rate to the employee. That is not inconsistent with s.61 of the Fair Work Act 2009 (hereafter referred to as ‘the Act’) which sets out minimum standards, or safety net entitlements for employees.
It is equally well-established that the expression “ordinary time rate of pay” refers to a rate fixed by an industrial award and did not cover a rate fixed by an individual employment contract: Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1 at 6 per Chief Justice Mason and Justices Brennan, Dawson, Toohey and McHugh.
The Respondent’s contention is therefore correct.
The issue becomes what is the Award hourly rate for the Applicant? The classifications are found in Schedule A to the Award. The Applicant contends that he is a Cook Grade 5, possibly Grade 4. The Respondent contends the Applicant could not no higher than a Grade 4. Based on the Applicant’s own evidence about the nature of his duties, the Court finds he could be no higher than a Grade 4, i.e. Cook (tradesperson) grade 4. This means that in 2010 his hourly rate pursuant to the Award was $18.56, in 2011 it was $19.19, in 2012 it was $19.74 and in 2013 it was $20.26. Overtime should be calculated accordingly.
The redundancy issue
The Applicant claims that he was made redundant. The Respondent contends that he voluntarily resigned.
Before considering the evidence it is important to set out what the Contract of Employment states about redundancy. At section 23 it states:
“Redundancy” means the loss of employment due to the employer no longer requiring the job the employee has been doing to be performed by anyone, but shall not include dismissals arising from the loss or termination of a contract held by ACC.
In the event redundancy is applicable, redundancy payments will be based on the Hospitality Industry (General) Award 2010.
Should your position become redundant, every attempt will be made to transfer you to another position within ACC. Should you choose not to except [sic] the alternative position a claim for redundancy payment will not be made.
In relation to redundancy the Award relevantly states:
17.1 Redundancy pay is provided for in the NES.
17.2 Transfer to lower paid duties
Where an employee is transferred to lower paid duties by reason of redundancy the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may,at the employer’s option,make payment instead of an amount equal to the difference between the former ordinary time rate of pay and the new ordinary time rate for the number of weeks of notice still owing.
17.3 Employee leaving during notice period
An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of notice. The employee will be entitled to receive the benefits and payments they would have received under this clause had they remained in employment until the expiry of the notice,but will not be entitled to payment instead of notice.
The reference to NES means National Employment Standards. Section 119 of the Act states in this regard:
119 Redundancy pay
Entitlement to redundancy pay
(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.
Amount of redundancy pay
(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:
Redundancy pay period
Employee’s period of continuous service with the employer on termination
Redundancy pay period
1
At least 1 year but less than 2 years
4 weeks
2
At least 2 years but less than 3 years
6 weeks
3
At least 3 years but less than 4 years
7 weeks
4
At least 4 years but less than 5 years
8 weeks
5
At least 5 years but less than 6 years
10 weeks
6
At least 6 years but less than 7 years
11 weeks
7
At least 7 years but less than 8 years
13 weeks
8
At least 8 years but less than 9 years
14 weeks
9
At least 9 years but less than 10 years
16 weeks
10
At least 10 years
12 weeks
The Applicant’s evidence about redundancy is contained in his affidavits. He asserts that the Managing Director of the Respondent, Mr Peter Darmos, who was also the Solicitor representing the Respondent, agreed with him that he was to be made redundant and thus entitled to a redundancy payment. This is the only evidence before the Court about this particular point. Mr Darmos chose not to give any evidence, let alone evidence contrary to the Applicant’s assertion that there was an agreement about redundancy.
Mr Darmos cross-examined the Applicant but did not suggest to him that there was no such agreement about redundancy. However, in cross-examination the Applicant conceded that once the Respondent found a replacement for him, he would receive a redundancy package. It is common ground that the Applicant kept working, albeit on reduced hours, for a substantial period, and that a replacement for him was never found. By way of letter dated 26 September 2014 the Applicant resigned, effective 10 October 2014. The site at which the Respondent employed the Applicant closed on 20 December 2014. The evidence does not indicate whether, and if so how, the Respondent serviced the site in question.
The Respondent contends that the Applicant resigned of his own accord, and so there is no redundancy. The Applicant contends that what occurred was a redundancy, and that the Applicant’s resignation does not detract from this. The Court accepts the Applicant’s contention for the following reasons.
The starting point is section 23 of the Contract of Employment. The evidence indicates that “the employer no longer [required] the job the employee [had] been doing to the performed by anyone …” The following words do not apply because there was no dismissal of the employee. He was merely seeing out the period of notice of termination in circumstances of redundancy. Whilst the parties had agreed that he would continue to work until a replacement was found for him, no replacement was found during an extended period. It would be unreasonable to read into the agreement between the parties any implied term that the Applicant continue to work indefinitely to, in effect, earn his redundancy, or alternatively resign and thus lose his redundancy. The situation is, in reality, that contemplated by clause 17.3 of the Award, which applies because the Contract was silent on this issue. Clause 17.3 makes it clear that a resignation during a period of notice of redundancy does not disentitle an employee to redundancy payments, but it does disentitle him to payment instead of notice.
The Applicant is thus entitled to redundancy payments in accordance with the Award and s.119 of the Act and, for reasons previously articulated, these entitlements must be calculated by reference to award rates, not contract rates.
Other issues
A number of other issues were raised by the Respondent, often merely in passing, that can be dealt with briefly.
To the extent that the Respondent argued tacitly that it was entitled to set-off any over-award payments to the Applicant so as to extinguish any other liability it has towards him, that is clearly incorrect: Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321 (30 November 2010). It is not possible to contract out of a statutory entitlement.
To the extent that the Respondent argued that the Applicant is estopped from claiming overtime in circumstances where he was aware, or should have been aware that his statutory rights were greater than his contractual rights, over a period of several years, and where the Respondent employer acted to its detriment, this argument has no basis. Estoppel cannot defeat the statutory obligation not to breach the Award, and an obligation arising from the Act: MacMahon Mining Services (No.1) [2009] FMCA 511 (28 May 2009) especially the cases cited at [71].
Conclusion
The Applicant is to be paid overtime calculated in accordance with the Award, and on the basis that he is classified as a Cook (Tradesperson) Grade 4. The relevant rate is the Award rate, not the Contract rate.
It must follow that the Applicant is entitled to be paid superannuation on the overtime as calculated above.
The Applicant is also entitled to be paid redundancy in accordance with the Award and calculated having regard to the Award and not the Contract rate.
The Applicant is also entitled to be paid interest pursuant to s.547 of the Act, from the time the cause of action accrued, which is his last day of work, i.e. 10 October 2014.
It is appropriate to allow the Respondent time to pay. The period of 28 days will be allowed following on the making of an order reflecting these conclusions, but noting that interest continues to accrue until payment.
Whilst both parties tendered schedules of calculations in support of their respective contentions, the conclusions in these reasons are not consistent with these schedules. It is appropriate in these circumstances to require the parties to recalculate the Applicant’s entitlements, having regard to these reasons, and submit an appropriate order, preferably by agreement.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 20 February 2015
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