John Milionis v Sinefa Pty Ltd

[2018] FWC 241

[2018] FWC 241

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

John Milionis
v
Sinefa Pty Ltd
(U2017/10550)

COMMISSIONER MCKINNON MELBOURNE, 11 JANUARY 2018

Application for relief from unfair dismissal - jurisdictional objection - applicant not covered by modern award - income in excess of high income threshold - application dismissed.

Introduction

[1] Mr John Milionis (Milionis) was employed by Sinefa Pty Ltd (Sinefa), a technology company that sells network software and hardware, in the role of “Sales Director”. He was employed from 9 September 2014 until 11 September 2017. From 4 August 2017 to 11 September 2017, his role was purportedly changed to that of “Strategic Business Development”.

[2] Milionis was paid a gross annual salary of $160,000 together with significant share options and superannuation. The value of options held at the time of dismissal was estimated by Sinefa as at least $208,332. 1

[3] On 28 September 2017, Milionis applied for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (Act). Sinefa objected to the application on the basis that Milionis was not a person protected from unfair dismissal.

[4] Section 382 of the Act provides that a person is protected from unfair dismissal if, at that time, they have completed at least the minimum employment period and they are covered by a modern award and/or an enterprise agreement applied in relation to their employment and/or their annual rate of earnings is less than the high income threshold.

[5] At the time of Milionis’ dismissal, the annual high income threshold was $142,000. There is no dispute that Milionis’s annual rate of earnings at the time of his dismissal exceeded this amount. Nor is it in dispute that Milionis had completed the minimum employment period and that no enterprise agreement applied in relation to his employment.

[6] The issue in dispute is whether a modern award (specifically, the Commercial Sales Award 2010 (CS Award)), covered Milionis at the time of dismissal. No other relevant modern award was said to cover Milionis and I have proceeded on that basis. For the reasons that follow, I find that the CS Award did not cover Milionis at the relevant time.

Relevant law

[7] Milionis said he was covered by the CS Award as a “Commercial Traveller”. There was no suggestion that he was employed as a “Merchandiser” or as an “Advertising Sales Representative” within the meaning of the CS Award.

[8] Under section 48 of the Act, a modern award covers an employee if the award is expressed to cover the employee.

[9] The CS Award is an occupational award that covers:

“…employers throughout Australia with respect to Commercial Travellers, Merchandisers and Advertising Sales Representatives and those employees unless any other modern award contains classifications that apply to such persons, in which case the other modern award prevails.” 2

[10] A “Commercial Traveller” is defined in clause 3.1 of the CS Award as follows:

“Commercial Traveller means a person employed, substantially away from the employer’s place of business, for the purposes of soliciting orders for, or selling articles, goods, wares or merchandise or material for wholesale sale, for resale, or for use in or in connection with the production and/or preparation and/or distribution of commodities for sale by the customer.”

[11] The ‘principal purpose test’ applies in assessing whether an employee is covered by a modern award. This test was summarised in Carpenter v Corona Manufacturing 3as 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.”

[12] The principal purpose test has been reaffirmed by Full Benches of this Commission on a number of occasions, including as it applies to modern awards. 4

Consideration

[13] Sinefa is a small start-up technology company established in 2011 and “commercialised in 2015”. 5

[14] Milionis has run his own business consultancy, Strategic Capital Partners, since 2004.

[15] In or around 2014, Milionis was introduced to Sinefa by a mutual friend. He saw opportunity in the business but considered it needed a significant amount of work. Together with his business partner, Milionis decided to back Sinefa by investing in, and working with, it to grow the business.

[16] According to Milionis, Sinefa had technology expertise but essentially no sales capacity. It had very few customers. He saw an opportunity to change that, and negotiated an arrangement that saw him embedded into the business he was “passionate about”. As Sinefa could not afford to pay market salaries or executive rates, he agreed to a base salary together with options “in recognition of all the other work” he and his business consultancy partner were doing for Sinefa.

[17] At the time Milionis commenced employment, he was one of five employees. 6 He described himself as “Head of Sales” and as part of the “Executive team”;7 as a “senior executive” of Sinefa.

[18] His Job Description identified Milionis’ duties as follows: 8

“Your duties will include, but not necessarily be limited to, the following:

(a) Achieve sales targets

(b) Convert enquiries into sales

(c) Maintain customer relationships

(d) Create and implement annual sales plans

(e) Report sales performance relative to plan

(f) Maintain and improve an appropriate sales system

(g) Other duties as may be reasonably requested from time to time.”

[19] On 4 August 2017, his role description was simplified following the shift to a Strategic Business Development Role, to “take the 6 accounts we’ve identified, create an account plan for each and get revenue flowing as soon as possible”. 9

[20] On the material before me, Milionis’ written job descriptions significantly understated the nature of Milionis’ role, which required him to develop and lead a commercial growth strategy for the business, creating brand awareness and generating revenue through strategic relationships and managing other sales employees.

[21] As the business grew, so did its sales team and for a period until 4 August 2017, Milionis also managed a small sales team of two employees in Australia and one in the United States of America. 10 From 4 August 2017, responsibility for managing the sales team was transferred to other senior executives pending the employment of a new Sales Manager.

[22] In my view, the principal purpose of Milionis’s employment was to commercialise and grow Sinefa’s business. While he did have sales responsibilities, his role was much more than soliciting orders or making sales. He was a member of the executive team and he had significant input into strategic business and management decisions as well as autonomy over how, when and where he worked. He was a managerial employee and Sinefa relied on him to “open doors” to new commercial relationships. This remained the case even after 4 August 2017, when he ceased to have responsibility for managing the sales team but continued to be part of the executive team with strategic responsibility for opening doors to new client relationships until he was dismissed.

[23] It follows that Milionis was not employed “for the purposes of soliciting orders for, or selling articles, goods, wares or merchandise or material for wholesale sale, for resale, or for use in or in connection with the production and/or preparation and/or distribution of commodities for sale by the customer.”

[24] I am also not satisfied that Milionis was “employed, substantially away” from Sinefa’s place of business as would be required for him to fall within the definition of Commercial Traveller under the CS Award.

[25] At the time of his employment, Sinefa’s place of business was 79 Manningham Road, Bulleen, Victoria and Milionis’ specified place of work was “Bulleen or such other place(s) as the Company may reasonably require from time to time”. 11 On employment, it was also made clear that he “may be required to travel and work elsewhere in Australia and overseas” to perform his duties.12 In December 2016, Sinefa relocated its offices to Abbotsford, Victoria.

[26] The material before me establishes that Milionis had assigned office space and access to specialised online systems at Sinefa’s place of business to facilitate his work from there. He attended regular board and executive meetings there, although as a senior executive, he had significant discretion over where and when he worked.

[27] According to Milionis, he attended the office on “most days” when he was not travelling, although not always for the entire day. Milionis explained at that at the time of his dismissal, Sinefa had more than 200 partners scattered across Australia and the globe. It was common for him to come in to the office, have a debrief with the founders, talk about strategy and then go off seeing partners, demonstrating Sinefa’s technology and selling its merits. The evidence also establishes that he worked from Sinefa’s office on a regular basis.

[28] Milionis travelled to build relationships with existing and prospective customers locally, interstate and overseas. While not comprehensive, his records indicate that this travel took him away from home for 162 days (including weekends) out of a total of 747 days employed (21.68%). 13 A list of out of office meetings and web sessions prepared by Milionis for the month of February 2017 shows an indicative 15% of required hours spent out of the office or working from home (24.5 hours of a total 160 hours, disregarding days spent “travelling” on that list to avoid double counting).14 In my view, this figure reflects the significant flexibility and discretion given to Milionis about where and when he worked, to assist him manage competing demands including his continuing involvement in his consultancy business, his caring responsibilities, overseas time zones and a preference to reduce travel time between work and home. It does not demonstrate that he was employed on the basis that his work would be carried out “substantially away” from Sinefa’s place of business and even on a mere quantitative assessment, the figures do not support such a finding.

[29] On balance, I am not satisfied that Milionis was “employed, substantially away” from Sinefa’s place of business.

Conclusion

[30] For the reasons given above, Milionis was not covered by the CS Award during his employment.

[31] While Milionis completed the minimum employment period, no enterprise agreement applied in relation to his employment, and his annual rate of earnings exceeded the high income threshold.

[32] Milionis is not a person protected from unfair dismissal. The application is dismissed.

COMMISSIONER

Appearances:

J McKenna of Counsel for the Applicant.

A Farr for the Respondent.

Hearing details:

2017.

Melbourne:

December 8.

 1   Exhibit 1.

 2   Commercial Sales Award 2010 [MA000083], clause 4.

 3 122 IR 387 (AIRC, 17 December 2002) at [9].

 4   See, for example, Graham v Globus Medical Australia Pty Ltd[2016] FWCFB 5495; McMenemy v Thomas Duryea Consulting Pty Ltd [2012] FWAFB 7184; Layton v North Goonyella Coal Mines Pty Ltd [2007] AIRCFB 713.

 5   Form F2, Annexure H.

 6   Exhibit 2 .

 7   Exhibit 2, Attachment JM-6.

 8   Exhibit 2, Attachment JM-1.

 9   Exhibit 2, Attachment JM-6.

 10   Exhibit 1.

 11   Exhibit 2, Attachment JM-2.

 12   Exhibit 2, Attachment JM-1.

 13   Exhibit 2, Attachment JM-2.

 14   Exhibit 2, Attachment JM-3.

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