Joshua Austin v AGL Energy Limited
[2021] FWCFB 6058
•1 DECEMBER 2021
| [2021] FWCFB 6058 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Joshua Austin
v
AGL Energy Limited
(C2021/6600)
| VICE PRESIDENT CATANZARITI | SYDNEY, 1 DECEMBER 2021 |
Appeal against decision [2021] FWC 5910 of Deputy President Lake at Brisbane on 14 September 2021 in matter U2021/5863 – whether earnings above the high-income threshold – whether covered by modern award – permission to appeal refused.
On 14 September 2021, Deputy President Lake dismissed[1] an unfair dismissal remedy application under s.394 of the Fair Work Act 2009 (Act) by Mr Joshua Austin, former Surat Asset Shift Supervisor of the Silver Springs gas storage facility of AGL Energy Limited (AGL) in central Queensland. Mr Austin’s employment was terminated by AGL on 30 June 2021.
Mr Austin seeks permission to appeal and appeals the Decision. We consider that it is not in the public interest to grant permission to appeal. These are our reasons.
The Decision
The Deputy President found that Mr Austin was not protected from unfair dismissal because he was not covered by the Hydrocarbons Industry Upstream Award 2020 (the Award) and his annual rate of earnings was more than the high‑income threshold of $153,600 (the Decision).
The issue in relation to Mr Austin’s annual rate of earnings was whether a ‘hot spot allowance’ payable to Mr Austin at the time of dismissal counted as earnings for the purposes of the Act. The relevant findings of the Deputy President are at paragraphs [22] – [25] of the Decision:
“[22] In essence, whether the Applicant’s annual earnings exceed the high income threshold turns on whether the payments were able to be determined in advance. Variable performance bonuses are specifically referenced as not being able to be ascertainable in advance. That is because of the construction of this species of bonus generally involves specific operational or performance targets to be achieved in order for a payment to be made, further the payment outcome is frequently variable based upon the level of achievement As such there is a high degree of variability and a consequent inability to determine the quantum in advance. The Applicant advanced the view that the Hot Spot allowance was a payment that was reviewable and thus ultimately at the discretion of the Respondent. Consequently, the Applicant could not be certain of its payment in advance and, therefore it should not be included in the calculations of his annual earnings. If that were correct, the Applicant would be under the threshold.
[23] By contrast, the Respondent submits that once the amount of the allowance was set for the year, it was a payment that would be made to each of the Site Supervisors. It did not operate as a variable or performance bonus but rather was a fixed amount agreed to 12 months in advance and therefore fully capable of being determined in advance.
[24] Based on the evidence before me, I favour the Respondent’s characterisation of the payment. It seems clear to me that amount of the Hot Spot Allowance was of $22,500 was a gross amount, that was paid in equal monthly instalments and subject to superannuation and tax and able to be determined for at least a 12-month period and was not a variable performance arrangement, but a fixed amount paid as the result of a competitive salary survey. I thus conclude that the Hot Spot allowance constitutes “earnings” within the meaning of the Act.
[25] Accordingly, the Applicant’s total earnings must be calculated by combining the two base salary and the allowance. The Applicant’s annual rate of earnings at the time of his dismissal therefore exceeded the high income threshold and thus the Applicant does not fall within s.382(b)(iii) of the Act.”
In relation to award coverage, the Deputy President applied the principal purpose test and found that Mr Austin’s role was not covered by the Award. The relevant findings are set out at paragraphs [40] – [44] of the Decision:
“[40] It is uncontroversial that the Applicant was employed in the hydrocarbons industry. What is in dispute is whether he was covered by the Award.
[41] Having considered all the evidence and submissions provided by both parties in writing and at the hearing, and taking into account the authorities set out above, I am satisfied that the principal purpose of the Applicant’s role was to supervise the site with the assistance of the other shift supervisor who covered the hours that the Applicant was not on site (as the plant was a 24 hour operation). Whilst he was on duty, he was the most senior person on site and was accountable for the entire operation of the plant, its staff and contractors. In other words, the principal purpose of his role was to ensure the asset and the employees operated safely and efficiently and that production at the facility matched the operational plan.
[42] I reject the Applicant’s assertion that his work matched that of a Level 3 employee because much of the plant operation was routine and run according to processes and instructions that were set by the Respondent and that the Applicant had limited autonomy. This is not unusual in the Oil and Gas industry where the asset value of stand alone plants are significant. The Respondent necessarily would have had policies and procedures in place which governed much of what the Applicant did but when looked at wholistically it is clear he had autonomy and responsibility that went beyond an employee classified under the Award. As was aptly put by the Respondent, the Applicant “was the captain of the ship”. He may have simply been one captain in the Respondent’s large fleet, yet that does not diminish the significance, responsibility or principal purpose of his role.
[43] While some of his work may have occasionally fit under that which would be expected of someone who was classified within Level 3, the principal purpose of his employment cannot be said to fall within that category or indeed, the more senior category of Level 4. Though not determinative on my decision, it certainly seems incongruous that the most senior person on site does not fall within the most senior category under the relevant modern Award. The Applicant was plainly more senior and held more responsibility than any person who could properly be characterised as being covered by the Award.
[44] Having regard to the principal purpose of the Applicant’s role and the relevant classification structure in the Award, I am satisfied that his employment was not covered by a modern Award. Given that I have already found that his annual rate of earnings exceeded the high income threshold, it follows that the Applicant is not protected from unfair dismissal under s.382 of the Act.”
Permission to appeal
An appeal under section 604 of the Act is an appeal by way of rehearing.[2] An appeal may only be made with the permission of the Commission.
This appeal is one to which section 400 of the Act also applies. Under section 400, the Commission must not grant permission to appeal from a decision made by the Commission in relation to unfair dismissal unless it considers it in the public interest to do so. An appeal of an unfair dismissal decision involving a question of fact can only be made on the ground that the decision involved a significant error of fact.
The test under section 400 is “a stringent one”.[3] The task of assessing whether the public interest test is met is discretionary and involves a broad value judgment[4]. In GlaxoSmithKline Australia Pty Ltd v Makin[5] a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.”
It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[6]
An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.[7] However, it is necessary to engage with the appeal grounds to consider whether they raise an arguable case of appealable error.
Grounds of appeal
Mr Austin appeals on two grounds. Firstly, Mr Austin submits that the Deputy President was wrong to find that the hot spot allowance counts as earnings for the purposes of the high‑income threshold, because it is a contingent payment that cannot be determined in advance. Secondly, Mr Austin submits that the Deputy President was wrong to find that he was not covered by the Award when the principal purpose test is properly applied. It is not in dispute that no enterprise agreement applied to Mr Austin’s employment. The alleged errors are matters of significance because if Mr Austin succeeds on either ground of appeal, he is eligible to apply for an unfair dismissal remedy.
The correctness standard applies to the questions on appeal because there can only be one legally correct answer to each question.[8] If permission is granted to Mr Austin to appeal, his task is to establish that the conclusions reached in the Decision, either in relation to the annual rate of earnings or award coverage or both, are wrong. It is not enough that Mr Austin might establish some error in the reasoning process of the Deputy President.[9]
The high-income threshold
Mr Austin’s contract of employment for the position of Surat Asset Shift Supervisor is dated 18 September 2019. Under the contract, Mr Austin had a “total fixed remuneration” of $140,000 per year, inclusive of superannuation as well as access to a performance-based Individual Incentive Plan (with potential for earnings up to an additional 8.5% of total fixed remuneration). The agreed salary is expressed to be in satisfaction of any applicable award entitlements to wages, allowances, overtime and penalty rates and annual leave loading.
The contract of employment was varied on 29 January 2020 by way of a letter to Mr Austin “to confirm changes to your remuneration package”. The changes were these:
An increase in the total fixed remuneration of $10,000, to $150,000 from 1 February 2020; and
Payment of a hot spot allowance of $22,500 gross per year from 1 February 2020, payable in equal monthly instalments and subject to applicable superannuation and tax withholding at the time. The hot spot allowance was to “be reviewed annually” to determine if it remains relevant and adjusted or removed accordingly at AGL’s sole discretion. The allowance was not included in incentive calculations.
It can be assumed that the changes were accepted by Mr Austin and took effect as a contract variation on and from 1 February 2020 when the changes commenced. There is no dispute that the changes applied on 30 June 2021 when the employment came to an end.
We see no arguable case of appealable error in the Deputy President’s finding that Mr Austin’s annual rate of earnings at the time of dismissal was more than the high-income threshold. The hot spot allowance was a fixed amount that was able to be determined in advance of the entitlement to payment each year. To the extent that it was a discretionary payment, the discretion was only exercisable on an annual basis in advance, as part of an ‘annual review’. At the time of dismissal, the amount was payable to Mr Austin in accordance with his contract for the year already reviewed. It constituted earnings for the purposes of section 332 of the Act because it was a reward for his work as an employee of AGL and the amount of the allowance could be, and was, determined in advance.
Award coverage
A modern award covers an employee if the award is expressed to cover the employee.[10] In other words, Mr Austin must fall within one of the classifications in the Award. To determine whether this was the case, it was necessary for the Deputy President to apply the principal purpose test, which is well settled and was summarised in Carpenter v Corona Manufacturing[11]:
“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.”
The principal purpose test directs attention to the nature of a person’s role and the circumstances in which the person is employed to work as well as to the nature of work covered by the Award.[12] The Award covers employers throughout Australia in the hydrocarbons industry and their employees in the classifications listed in Schedule A—Classification and Structure to the Award. There is no dispute that AGL is an employer in the hydrocarbons industry and that it is covered by the Award. None of the exclusions from coverage in clause 4 of the Award are relevant to Mr Austin’s employment.
The classification structure in Schedule A to the Award provides for five classification groups: industry services, onshore drilling, offshore drilling, operations and processing and modification and maintenance trades. Employees are employed in each of those groups according to their level of skill, experience and responsibility. There are seven classification levels, from Introductory (level 1) to dual trade instrument technician (level 7).
The case put by Mr Austin was that he was employed as a level 3 or 4 employee in the operations and processing classification group in the Award. An employee in this group is designated as such by their employer and performs tasks as directed, including but not limited to: operating and adjusting all hydrocarbons plant equipment (and associated control panels) utilised in hydrocarbons industry extraction, separation, production and processing, piping, storage, distribution and delivery; maintaining plant productivity; and laboratory technicians providing services on such plant. Before his appointment to the role of Shift Supervisor for the facility, Mr Austin was a level 3 employee, otherwise known as an ‘Operator’.
Level 3 employees are classified in the Award as “Competent”. They have been assessed as competent in applying skills and knowledge (acquired either by completion of a trade or practical experience) in complex but routine situations where discretion and judgment are involved. They can plan tasks, select equipment and procedures from known alternatives and take responsibility for the work of others. They require only limited supervision or guidance. They understand and apply quality control techniques, exercise discretion within the scope of the level, perform work under limited supervision, operate all equipment incidental to the work and assist in the provision of on-the-job training.
Level 4 employees are classified as “Advanced”. They will have met the requirements for level 3 and been assessed as competent to perform tasks that require in depth skill or knowledge or having the integration of a broad range of skills. The skill or knowledge level involved requires the completion of post trade training or the acquisition of equivalent practical skills and knowledge. A level 4 employee provides guidance, assists others and may supervise lower classifications.
Our own review of the materials suggests that the principal purpose of Mr Austin’s role was to oversee and manage the overall day to day running of the Silver Springs facility, including operations, budget adherence, people management and safety. This is work of a different nature to that contemplated by the Award, which in the operations and processing group involves working with, or providing services on, plant and equipment or supervising that work in a manner more confined than the scope of Mr Austin’s role. We discern no arguable case of appealable error in the analysis undertaken by the Deputy President in applying the principal purpose test to the facts of the case. We also consider that the conclusion reached was correct.
Should permission to appeal be granted?
Mr Austin submits that it is in the public interest for permission to appeal to be granted because:
Corporations should abide fairly by workplace laws and workers should be able to expect their employees will get a fair go. AGL has contravened both the Act and the Work Health and Safety Act 2011 (WHS Act) by:
a.Not notifying Mr Austin that he was not covered by a modern award before or when giving him a guarantee of annual earnings, and
b.Mr Austin’s supervisor, Mr McCaul, not upholding his duties under the WHS Act and instead transferring these to Mr Austin.
Witnesses should not be excluded when considering whether a person is covered by a modern award.
Workers who try to do the right thing under the WHS Act face increasing risk to their jobs.
AGL acted contrary to the public interest by dismissing Mr Austin after he met his responsibilities under the WHS Act, as accepted by his supervisor at the time.
AGL has acted unfairly in relation to Mr Austin’s contract of employment, its handling of a complaint about Mr Austin that led to his dismissal and this application.
Mr Austin did not act contrary to AGL’s policies and procedures as it alleged.
The outcome of dismissal was disproportionate to the conduct alleged.
In relation to public interest ground 1, we do not accept that AGL contravened the Act in relation to the guarantee of annual earnings, or the WHS Act in relation to the duties of officers and employees. We agree that Mr Austin did not have a guarantee of annual earnings for the purposes of section 328 and 329 of the Act. There was therefore no requirement to notify him of the consequences of such a guarantee in relation to his employment. Matters arising under the WHS Act are for the Queensland workplace safety regulator and for the courts. Even if the Commission had jurisdiction to deal with them, the case was not put on this basis below and a more sound evidentiary basis would be required for us to conclude that AGL’s conduct toward Mr Austin during his employment was both contrary to the WHS Act and a matter of public interest. In any event, those issues are not relevant to the question of whether Mr Austin was protected from unfair dismissal at the time of his dismissal by AGL.
In relation to public interest ground 2, Mr Austin submits that because a person who may have been able to give relevant evidence about Mr Austin’s duties did not do so, and was instead ‘excluded’, it was not in the public interest for award coverage to be considered in a way that was not holistic. We do not agree that any witnesses were excluded from the hearing. In the ordinary way, the parties put forward their case and the Deputy President dealt with it on the materials before him. There is no obligation on a party to bring forward every person who may have knowledge of a matter in issue. There was also no need to in this case, because the issue in dispute was Mr Austin’s role. Mr Austin was best placed to describe the nature of his role and did so, and this was supported by evidentiary materials including his position description. Mr Austin had the option of seeking orders for the attendance of additional witnesses if he felt either they were being excluded, or that additional evidence was required. He did not do so. On the materials, it is not clear to us that a Jones v Dunkel inference might appropriately have been drawn in the circumstances. No issue of public interest arises.
Finally, the conduct of AGL in relation to the dismissal and the events leading to dismissal raised in public interest grounds 3, 4, 5, 6 and 7, are matters that go to the merits of the case. These are matters between Mr Austin and AGL, and to the extent that they raise public policy issues about the operation of the WHS Act they are matters for the legislature. They do not demonstrate that it would be in the public interest to allow the appeal to proceed. This is because the merits of the case only arise for consideration if the Commission has jurisdiction to deal with the case. Given the conclusions we have reached, no jurisdiction exists in this case. To the extent that public interest grounds 3 – 7 raise issues about AGL’s handling of the case before the Commission, it is beyond the scope of the application for permission to appeal.
An appeal may attract the public interest where it raises issues of importance and general application or where appellate guidance is appropriate because of a diversity of decisions at first instance. Other cases where the public interest may be enlivened include a decision that manifests an injustice, delivers a counter-intuitive result or relies on legal principles that appear disharmonious with other recent and similar decisions.[13] In each case it is a matter of broad value judgement.
In our view, this case turns on its particular facts and circumstances. There is no relevant diversity of decisions at first instance such that appellate guidance would either be necessary or appropriate. Here, the legal principles in relation to the principal purpose test are well settled. Mr Austin is likely aggrieved by the Decision, but that does not mean relevant injustice has been done or that the result is counter-intuitive. The Decision is the result of the orthodox application of law to the relevant facts and as we have stated, reached the correct conclusion. It discloses no arguable case of appealable error.
For these reasons, we are not persuaded that it is in the public interest to grant permission to appeal. Accordingly, permission must not be granted.
Permission to appeal is refused.
VICE PRESIDENT
[1] Austin v AGL Energy Limited [2021] FWC 5910
[2] This is so because on appeal the Commission has power to receive further evidence, pursuant to section 607(2); see Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
[3] Coal & Allied Mining Services Pty Ltd v Lawler and others (Buchanan, Marshall and Cowdroy JJ) (2011) 192 FCR 78 at [43]
[4] O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; (2011) 192 FCR 78 at [44] -[46]
[5] [2010] FWAFB 5343, 197 IR 266 at [27]
[6] Wan v AIRC (2001) 116 FCR 481 at [30]
[7] Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]
[8] Minister for Immigration and Border Protection v SZVFW [2018] 264 CLR 541 at [49] per Gageler J
[9] Hempel v Northern Territory Air Services Pty Ltd[2021] FWCFB 3707 (Hatcher VP, Cross DP, Lee C) at [27]
[10] FW Act s.48
[11] 122 IR 387 (AIRC, 17 December 2002) at [9].
[12] Zheng v Poten & Partners (Australia) Pty Ltd [2021] FWCFB 3478
[13] GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343, 197 IR 266 at [24] – [27]
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