James Roberts v Elliniki Kouzina Pty. Limited
[2024] FWC 2069
•2 AUGUST 2024
| [2024] FWC 2069 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
James Roberts
v
Elliniki Kouzina Pty. Limited
(U2024/5075)
| COMMISSIONER CRAWFORD | SYDNEY, 2 AUGUST 2024 |
Application for an unfair dismissal remedy – jurisdictional objection – high income threshold – retention bonus payment – earnings below high income threshold – jurisdictional objection dismissed.
Background
James Roberts commenced employment with Elliniki Kouzina Pty. Limited (Elliniki) on 3 January 2022 as the Head Chef at its Ploos restaurant.
Mr Roberts was dismissed on 1 May 2024 because of alleged performance issues which had led Elliniki to lose confidence in his ability to perform the role of Head Chef.
On 4 May 2024, Mr Roberts filed a Form F2 unfair dismissal application in the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (FW Act).
On 20 May 2024, Elliniki filed a Form F3 employer response. The response identified a jurisdictional objection to Mr Roberts’ application on the basis that he was not a person protected from unfair dismissal because he earned more than the high income threshold of $167,500.00.
I issued directions for the filing of material concerning Elliniki’s jurisdictional objection and listed that issue for a determinative conference/hearing via video on 29 July 2024.
Mr Roberts represented himself at the determinative conference/hearing. I granted permission for Elliniki to be represented by a consultant, Steve Stephens, on the basis that would enable the matter to be dealt with more efficiently. Mr Roberts did not oppose permission being granted to Elliniki.
At the beginning of the proceeding, I indicated my provisional view was that I should conduct a determinative conference rather than a hearing, given Mr Roberts was representing himself. There was no opposition to this approach. I conducted a determinative conference.
Material filed
Elliniki
In addition to its Form F3 response, Elliniki relied on the following evidence in support of its jurisdictional objection:
· A payslip issued to Mr Roberts for the period of 26 February 2024 to 3 March 2024. I marked the payslip Exhibit R1.
· Various extracts of Commonwealth Bank account statements which show payments made by Elliniki to Mr Roberts. The statements show regular payments of $1,722.85 and $400.00 being made to Mr Roberts. I marked the statements R2, R3, R5, R6, R7 and R8.
· An excel spreadsheet that indicates Mr Roberts was paid the following amounts from 1 May 2023 to 28 April 2024:
-$129,807.90 in normal pay
-$40,466.93 in retention bonus payments
-$15,600.00 as a reportable fringe benefit for the hosting of a private party.
I marked the spreadsheet Exhibit R4.
Elliniki also filed a payslip for the period of 26 February 2024 to 3 March 2024. The payslip refers to “James Roberts Bonus Payment” and records a gross payment of $778.21 and a NET payment of $400. Mr Roberts objected to the admission of this document on the basis that he was not provided with a copy at the relevant time and questioned its veracity. Given no representative of Elliniki was present to provide evidence about the payslip, I adjourned the determinative conference to allow Mr Stephens to try and arrange for a representative to attend. Mr Stephens was not able to locate a suitable representative.
After hearing the parties, I decided not to admit the payslip into evidence. I did not consider it would be fair to rely on the payslip in circumstances where Mr Roberts stated he saw it for the first time when it was filed in the Commission and was not able to cross-examine any representative of Elliniki about the veracity of the document.
I also considered it would be problematic to rely on the payslip given no accompanying evidence was provided regarding how the gross figure of $778.21 was calculated, given the NET figure of $400. Those figures suggest a tax rate of around 48.5% was applied. Such a high tax rate would require some sort of explanation. Mr Stephens referred to the bonus payment being treated as payment for a second job. I am not satisfied that is a sufficient explanation without further evidence. It is also odd that this was apparently the only payslip that had ever been created by Elliniki in relation to the $400.00 weekly payments to Mr Roberts.
Although no representative of Elliniki attended the determinative conference to confirm the accuracy of the remaining documents, Mr Roberts indicated he only opposed the admission of the payslip referred to above. I decided to admit the remaining evidence filed by Elliniki.
Mr Stephens made oral closing submissions at the end of the determinative conference.
Mr Roberts
Mr Roberts relied on the following evidence in opposing Elliniki’s jurisdictional objection:
· Mr Roberts’ Form F2 application. Given there is no witness statement from Mr Roberts, and the application provides evidence about his employment and dismissal, I decided to mark the application and the attached summary document Exhibit A1. Mr Stephens did not oppose this.
· A copy of a letter to Mr Roberts from Con Filis (Director) dated 30 April 2024. The letter refers to concerns with Mr Roberts’ performance and states he is being stood down effective immediately. The letter refers to Mr Roberts being stood down until a performance review meeting can be held. I marked the letter Exhibit A2.
· A copy of Mr Roberts’ termination letter dated 1 May 2024. The letter states Elliniki has lost confidence in Mr Roberts, and that his dismissal will take effect immediately. I marked the letter Exhibit A3.
· An email from Mr Roberts to the Commission dated 20 June 2024. The email contains evidence about Mr Roberts’ earnings. The email had two of Mr Roberts’ payslips attached, for the periods of 15 to 24 April 2024 and 22 to 28 April 2024. I marked the email Exhibit A4. I marked the payslips Exhibit A5 and Exhibit A6 respectively.
· A transaction history for Mr Roberts’ bank account for 13 October 2022. The statement shows a payment of $2,045.62 to Mr Roberts from Ploos. I marked this document Exhibit A7.
· A transaction history for Mr Roberts’ bank account for 6 November 2023. The statement shows payments of $490 and $400 to Mr Roberts from Ploos. I marked this document Exhibit A8.
· A copy of Mr Roberts’ income statement for the 2022/2023 financial year. The statement records gross payments of $127,566.45 from Elliniki to Mr Roberts for the financial year. I marked the statement Exhibit A9.
· A document prepared by Mr Roberts in response to material filed by Elliniki regarding his earnings. Mr Roberts indicates his total annual earnings were $150,607.90. comprising $129,807.90 in salary payments and $20,800 in retention bonus payments. I marked the document Exhibit A10.
· An unsigned copy of Mr Roberts’ Employment Agreement with Elliniki. I marked the contract Exhibit A11.
· A copy of Mr Roberts’ income statement for the 2023/2024 financial year. The statement records gross payments of $110,577.10 from Elliniki to Mr Roberts for the period of 1 July 2023 to 28 April 2024. I marked the statement Exhibit A12.
Mr Roberts was cross-examined in relation to his evidence.
Mr Roberts made oral closing submissions at the end of the determinative conference.
Statutory provisions – unfair dismissal and initial matters
Section 385 of the FW Act defines when a person has been “unfairly dismissed”. The definition states:
“A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.”
The matters listed in s.385 are not dealt with in the order they appear in that section. That is because of s.396 of the FW Act, which states:
“The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code (SBFDC);
(d) whether the dismissal was a case of genuine redundancy.
There is no dispute that Mr Roberts filed his unfair dismissal application within 21 days of his dismissal taking effect on 1 May 2024.
The SBFDC is not relevant because Elliniki had 26 full-time and six casual employees when Mr Roberts was dismissed.[1]
There is no suggestion Mr Roberts’ dismissal was a case of genuine redundancy, and it clearly was not.
As a result, the only issue that needs to be determined before the merits of Mr Roberts’ application are considered is whether Mr Roberts was protected from unfair dismissal in accordance with s.382 of the FW Act.
Mr Roberts had completed the minimum employment period of six months with Elliniki which means s.382(a) of the FW Act is satisfied.
Mr Roberts did not argue his employment with Elliniki was covered by a modern award or that an enterprise agreement applied to his employment. Although Elliniki operates in the restaurant industry, the highest relevant classification in the Restaurant Industry Award 2020 (Restaurant Award) is a Chef grade 3. That classification is directed at a chef de partie or equivalent. The roles of sous chef and head chef appear to be well understood within the industry to be superior to the role of chef de partie. I find the Restaurant Award did not cover Mr Roberts’ employment with Elliniki.
As a result, whether Mr Roberts is protected from unfair dismissal turns on whether the sum of his annual rate of earnings, and other relevant amounts, is less than the high income threshold at the time of his dismissal,[2] which was $167,500.00.[3]
Statutory provisions – high income threshold
When assessing whether an employee’s income falls below the high income threshold, the Commission is required to add the employee’s annual rate of “earnings” as defined s.332 of the FW Act to any other amounts relevantly specified in the Fair Work Regulations 2009 (FW Regulations).
The definition of “earnings” in s.332 of the FW Act is:
“Earnings
(1) An employee's earnings include:
(a) the employee's wages; and
(b) amounts applied or dealt with in any way on the employee's behalf or as the employee directs; and
(c) the agreed money value of non - monetary benefits; and
(d) amounts or benefits prescribed by the regulations.
(2) However, an employee's earnings do not include the following:
(a) payments the amount of which cannot be determined in advance;
(b) reimbursements;
(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;
(d) amounts prescribed by the regulations.
Note: Some examples of payments covered by paragraph (a) are commissions, incentive - based payments and bonuses, and overtime (unless the overtime is guaranteed).
(3) Non - monetary benefits are benefits other than an entitlement to a payment of money:
(a) to which the employee is entitled in return for the performance of work; and
(b) for which a reasonable money value has been agreed by the employee and the employer;
but does not include a benefit prescribed by the regulations.
(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:
(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;
(b) the employer is required to contribute to the fund for the employee's benefit in relation to a defined benefit interest (within the meaning of section 291 - 175 of the Income Tax Assessment Act 1997 ) of the employee;
(c) the employer is required to contribute to the fund for the employee's benefit under a law of the Commonwealth, a State or a Territory.”
Given Mr Roberts was not paid piece rates, it is only Reg 3.05 of the FW Regulations that needs to be considered to determine if any amount should be added to his “annual rate of earnings”. Reg 3.05 states:
“Benefits other than payment of money
(6) If:
(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person's employer; and
(b) the benefit is not an entitlement to a payment of money and is not a non - monetary benefit within the meaning of subsection 332(3) of the Act; and
(c) the FWC is satisfied, having regard to the circumstances, that:
(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and
(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and
(iii) the FWC can estimate a real or notional money value of the benefit;
the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”
Consideration – high income threshold
Annual salary payments
The parties agreed that Mr Roberts’ annual rate of earnings included salary payments totalling $129,807.90. I am prepared to accept that position, given it was not contested. Although I note Mr Roberts’ contract and pay slips refer to an annual salary rate of $125,000.00 excluding superannuation.
I find Mr Roberts’ “annual rate of earnings” for the purposes of s.382(b)(iii) of the FW Act includes an amount of $129,807.90 in regular salary or wage payments.
Retention Bonus Payments
The primary point of contention between the parties is the degree to which “Retention Bonus Payments” made by Elliniki to Mr Roberts should be included as “earnings”.
Mr Roberts’ contract with Elliniki refers to a “weekly Retention Bonus Payment of $400.00”. The contract refers to this entitlement as a “conditional bonus”. The condition attached to the payment is that Mr Roberts remains employed until at least 1 July 2024. Although the payment is made weekly, there is scope for Elliniki to recover payments made where Mr Roberts resigns prior to 1 July 2024 “for reasons other than mental health, illness or circumstances agreed by the parties to be beyond the employee's control”. There is also an ability to recover payments made if Mr Roberts is dismissed without notice prior to 1 July 2024 for “serious or deliberate misconduct”.
There is no dispute between the parties that weekly payments of $400.00 were made by Elliniki to Mr Roberts in accordance with the contract. Although Mr Roberts indicated the payments were often late and made at varying intervals.
Elliniki submitted the $400.00 per week payment was a NET payment and that the value assigned to the Retention Bonus Payment for the purposes of calculating Mr Roberts’ earnings should be a gross figure of $778.21 per week or $40,466.92 per year. When that figure is added to Mr Roberts’ salary payments, his annual rate of “earnings” is above the high income threshold.
Mr Roberts argued that the Retention Bonus Payments are excluded from the definition of “earnings” because the amount of the payments “cannot be determined in advance”. Mr Roberts referred to the Full Bench decision in Jenny Craig[4] in support of his argument.
I do not consider the Full Bench decision in Jenny Craig provides much support to Mr Roberts’ argument. The reason the Full Bench determined the relevant bonus payments should not be included in that case was because the employer had a unilateral right under the contract to alter or discontinue the payments at any time. Mr Roberts’ contract with Elliniki does not contain that type of provision. The Retention Bonus Payment is contingent in that it is linked to Mr Roberts remaining employed until 1 July 2024. However, the contingencies are largely within Mr Roberts’ control, given he only must repay the weekly amounts if he resigns in certain circumstances or is dismissed for serious or deliberate misconduct. I consider that distinguishes the Retention Bonus Payment from the bonuses considered by the Full Bench in Jenny Craig.
I am satisfied that the Retention Bonus Payment was capable of being determined in advance and that the exclusion from the definition of “earnings” which appears in s.332(2)(a) is not applicable. I find the Retention Bonus Payment can be characterised as part of Mr Roberts’ wages and hence his “earnings” under s.332(1) of the FW Act.
The remaining issue to be determined is the appropriate value of the Retention Bonus Payment. Having considered all the evidence, I find that the appropriate value of the Retention Bonus Payment is $400.00 per week or $20,800.00 per year. I consider the following factors weigh in favour of finding the appropriate value is $400.00 per week:
(i)Clause 3.2 of Mr Roberts’ contract states he will be paid “a salary of $125,000 (excluding superannuation), less applicable tax.” There is no reference in clause 3.4 of the contract to tax being applicable to the Retention Bonus Payment, the contract states Mr Roberts: “will receive a weekly Retention Bonus Payment of $400 (four hundred dollars), payable weekly.” There is no indication in the contract that tax will be paid by Mr Roberts or Elliniki in relation to the Retention Bonus Payment.
(ii)Mr Roberts’ annual income statements filed with the Australian Taxation Office (ATO) for the 2022/2023 and 2023/2024 financial years do not include the Retention Bonus Payments as part of the gross amounts paid to Mr Roberts by Elliniki.
(iii)Given I decided not to allow Elliniki to rely on the payslip that Mr Roberts said he never received, there is no evidence before me to indicate that the $400.00 weekly payments were ever recorded on a payslip. Even if the contentious payslip had been admitted, taken at its highest that would only indicate Elliniki included the Retention Bonus Payment on one payslip throughout the course of Mr Roberts’ employment.
(iv)Elliniki was not able to provide any logical basis to justify why the gross amount of $778.21 per week should be used to determine the value of the Retention Bonus Payment. Leaving aside Elliniki’s arguments about tips or additional payments to Mr Roberts, the application of such a high tax rate in calculating the gross value had the potential to put Mr Roberts above the high income threshold in circumstances where that would not have been the case if a more standard tax rate of around 30% was used.
(v)Mr Roberts presented as a credible witness during the determinative conference. Mr Roberts was adamant that tax on the Retention Bonus Payment was never discussed or paid.
For these reasons, I find Mr Roberts’ “annual rate of earnings” for the purposes of s.382(b)(iii) of the FW Act includes an amount of $20,800.00 as annual Retention Bonus Payments.
Other amounts
Elliniki’s Form F3 response refers in part 2.2 to “revenue bonus and tips of $12,481.00.”
In the spreadsheet marked as Exhibit R4, Elliniki referred to an amount of $15,600.00 with the notation: “James Roberts Private Party 60 Pax Private Dining.”
I have no further evidence about these payments. There is no reference in the employment contract to these payments, they have not been included on income statements provided to the ATO, and they have not been included on any payslips.
Mr Roberts accepted he did receive tips while working for Elliniki. However, Mr Roberts argued these are payments that cannot be determined in advance and are hence excluded from the definition of “earnings” via s.332(2)(a) of the FW Act. I accept that submission.
I do not consider Elliniki has provided evidence that establishes any additional amounts should be included when assessing Mr Roberts’ “annual rate of earnings”.
Benefits other than money
Neither party referred to any benefits other than money that could be relevant for assessing whether Mr Roberts’ income falls below the high income threshold. I find there are no additional amounts that need to be included for the purposes of Reg 3.05 of the FW Regulations.
Conclusion
I find Mr Roberts’ annual “earnings” for the purposes of s.332 of the FW Act are:
(i)$129,807.90 in regular salary or wage payments.
(ii)$20,800.00 in Retention Bonus Payments.
TOTAL = $150,607.90.
I find Mr Roberts’ annual earnings were less than the high income threshold of $167,500.00.
I find Mr Roberts was a person protected from unfair dismissal in accordance with s.382 of the FW Act.
I dismiss the jurisdiction objection raised by Elliniki.
Mr Roberts’ application will continue being dealt with by the Commission and will initially be the subject of conciliation.
COMMISSIONER
Appearances:
Mr Roberts representing himself.
Mr Stephens on behalf of Elliniki.
Determinative conference details:
2024.
Sydney (by video via Microsoft Teams).
29 July.
[1] Form F3.
[2] Zappia v Universal Music Australia Pty Ltd (2012) 225 IR 122, 125 [9].
[3] The high income threshold increased to $175,000 on 1 July 2024.
[4] Jenny Craig Weight Loss Centres Pty Ltd v I Margolina [2011] FWAFB 9137.
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