Joshua Austin v AGL Energy Limited

[2021] FWC 5910

[2021] FWC 5910

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Joshua Austin
v
AGL Energy Limited
(U2021/5863)

DEPUTY PRESIDENT LAKE BRISBANE, 14 SEPTEMBER 2021

Application for an unfair dismissal remedy – jurisdictional objection – high income threshold – jurisdictional objection upheld – application dismissed

[1] This decision concerns an application for an unfair dismissal remedy under s. 394 of the Fair Work Act 2009 (the Act) by Joshua Austin (the Applicant) arising out of the termination of his employment with AGL Energy Limited (the Respondent) on 30 June 2021.

[2] By way of background, the Applicant commenced employment with the Respondent on 27 November 2013. From 2 October 2019 until the time of his dismissal, he was employed as Surat Asset Site Supervisor at the Respondent’s Silver Springs gas storage facility in the Bowen Surat Basin in central Queensland.

[3] On 4 June 2021, the Respondent commenced an investigation into the Applicant’s conduct after a complaint was made against him by another employee. While the investigation was undertaken, the Applicant was stood down on full pay. On 18 June 2021, the Respondent concluded its investigation and found that four of the five allegations raised against the Applicant were substantiated. The evidence was inconclusive with respect to the remaining allegation. Consequently, on 30 June 2021, the Respondent terminated the Applicant’s employment for his misconduct.

[4] On 5 July 2021, the Applicant filed an application stating that he had been unfairly dismissed.

[5] On 3 August 2021, the Respondent filed an F4 Objection to the Application asserting that that the Applicant was not a person protected from unfair dismissal at the time of his termination because his total rate of remuneration in the 12 months prior to his termination exceeded the high-income threshold and he was not covered by a modern award or by an enterprise agreement. 1

[6] It was agreed between the parties that these jurisdictional issues should be determined prior to the substantive application. Accordingly, directions were provided for the filing of material.

[7] Both parties sought to be represented: the Applicant by Faheem Anwar instructed by Open Legal and the Respondent by James Tierney instructed by Corrs Chambers Westgard. Granting permission to be represented under s.596 requires the satisfaction of two elements. 2 The first pre-requisite: the presence of one of the criteria under s.596(2), does not immediately invoke the right to representation and establishing satisfaction “involves an evaluative judgment akin to the exercise of discretion.”3 Once that first step is satisfied, the second step “involves consideration as to whether in all of the circumstances the discretion should be exercised in favour of the party seeking permission.”4 In this matter, I was satisfied of the above and permission was granted to both parties.

[8] Neither party suggested that the Applicant was covered by an enterprise agreement. There were thus two issues before me at the hearing which took place on 24 August 2021. First, whether the Applicant’s earned more than the high income threshold at the time of his termination and second, whether he was covered by an Award or enterprise agreement.

Did the Applicant earn more than the high income threshold?

[9] Section 333 of the Act provides that the high income threshold is the amount prescribed by or worked out in the manner prescribed by the regulations. It is uncontentious that as at the day of the Applicant’s employment was terminated, the high income threshold was $153,600.00. What is in contention is what the Applicant’s earnings were at the time of his dismissal.

[10] Both parties agreed that, at the time of his dismissal, the Applicant received a base salary of $136,986.30 and annual “Hot Spot” allowance of $20,547.95. Together, these amounts total $157,534.25. These figures were exclusive of superannuation. Neither party suggested that the superannuation component should be included for the purpose of determining his earnings under s.332.

[11] Section 332 of the Act provides:

“(1) [Meaning of earnings]

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) [Excluded amounts]

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) [Meaning of non-monetary benefits]

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) [Extent to which subsection applies to superannuation contributions]

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.”

[12] On or about 29 January 2021, the Applicant received a letter from the Respondent indicated that he would receive a pay increase (Pay Increase Letter). That letter stated:

“Dear Josh,

In accordance with our verbal discussion today, this letter is to confirm changes to your remuneration package.

A review has been undertaken by AGL's People & Culture of the remuneration package for your role. The purpose of the review was to align your remuneration package within the market that your role operates, and to recognise the FIFO/remote conditions of your role.

Current remuneration

Your current TFR is $140,000.

New remuneration

1. Your TFR will increase by $10,000 per annum to $150,000 from 1 February 2020; and

2. You will receive a 'Hot Spot' Allowance of $22,500 per annum from 1 February 2020(Please note this amount is gross, paid in equal monthly instalments, and subject to superannuation and tax withholding, if required, at the time of payment).

You remain eligible for the 2020 (and future) annual remuneration review, subject to AGL's Remuneration Guidelines.

The Hot Spot Allowance will be reviewed annually to determine if it remains relevant. The amount of the Allowance will be adjusted accordingly (or removed) at AGL's sole discretion.

The Hot Spot Allowance will not be included in incentive calculations. Your current incentive remains unchanged.

All other terms and conditions of your employment remain unchanged.

Josh, I would like to thank you for your contribution, and I look forward to working with you in the future.”

Respondent’s material

[13] The Respondent submits that the Applicant earned more than the high income threshold on the basis that the Applicant’s base salary and Hot Spot allowance (set out above), which were both exclusive of superannuation contributions, put his annual earnings over the high income threshold.

[14] Burk McCaul, the Respondent’s Head of Gas Operations, gave evidence that the “Hot Spot” allowance recognised the fly-in and fly-out and remote conditions of the Site Supervisors’ role. It is paid to four Site Supervisors across the Respondent’s gas operations sites in central Queensland in recognition of their leadership roles and to ensure their remuneration package aligned within market in which that role operates. The Respondent’s evidence was that both the base salary and Hot Spot allowance were gross amounts, paid in equal monthly instalments, and subject to superannuation and tax withholding at the time of payment.

[15] The Respondent submits that the Hot Spot allowance was a set amount that was paid to the four site supervisors. Though it was reviewed annually, once defined in the remuneration, the amount was set. It was not the case that the payment was dependent on the Applicant or the Site meeting measurable targets. Thus, the Respondent says that once set and communicated to the site supervisors, the Hot Spot allowance was able to be determined in advance.

[16] The Respondent thus asserts that when the Applicant’s base salary and the Hot Spot Allowance are taken together, his total salary was $157,534.25, this amount being exclusive of superannuation. On that basis, the Respondent submits the Applicant does not fall within s.382(b)(iii).

Applicant’s material

[17] The Applicant submitted that his income was less than the high income threshold on the final date of his employment. Importantly, the Applicant asserts, that the inquiry under s 382(b)(iii) requires the Commission to ascertain the annual rate of earnings at the time of the person’s termination, not the person’s annual earnings to that time (that is, not the amount earned in the previous 12 months). 5 Accordingly, the Applicant’s earnings in the 12 months prior to his termination is irrelevant to determining whether his earnings were less than the high income threshold at the time of dismissal.

[18] The Applicant asserts that, pursuant to s.332 of the Act, the Commission must disregard any contingent payments the Respondent had the right to modify or discontinue when considering the Applicant’s annual rate of earnings. The Applicant also submits that the Commission should also disregard any contributions made to a superannuation fund.

[19] The Applicant asserts that the Hot Spot allowance is a contingent payment that the Respondent has the right to modify or discontinue. The basis for that submission is a letter sent by the Respondent to the Applicant, dated 29 January 2020, which stated that, “the Hot Spot Allowance will be reviewed annually to determine if it remains relevant. The Amount of the Allowance will be adjusted accordingly (or removed) at AGL’s sole discretion.”

[20] The Applicant contends states that the language of this section clearly shows that the allowance is a contingent payment that the Respondent can modify or discontinue at any time. Further, the Applicant’s argument continues, after his dismissal, when the Respondent paid him his accrued annual leave, it did so based on his salary and not incorporating the allowance. The Applicant submits that is demonstrative of the fact that the Respondent had the ability to, and did in fact, exercise its right to discontinue the allowance.

[21] On that basis, the Applicant contends that the Allowance is a contingent payment in that that “management reserves the right to modify or discontinue them” and thus fall within the ambit of payments which cannot be determined in advance. By applying the reasoning of the Full Bench in Jenny Craig Weight Loss Centres Pty Ltd v Margolina, the Applicant submits that the Commission should disregard the allowance component when determining his annual rate of earnings for the purpose of s382(b)(iii). 6 Once the allowance is disregarded, it is clear that the Applicant’s earnings are below the high income threshold.

Consideration

[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. 7 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.

Was the Applicant covered by a modern award?

[26] An applicant who asserts that they are covered by a modern award must relevantly establish that they are employed in a classification in the award. 8 That question is determined by reference to the “principal purpose” test.9 The principal purpose test requires the assessment of the principal purpose or primary function for which the employee was employed.

[27] In Carpenter v Corona Manufacturing Pty Ltd, the Full Bench of the Commission made it clear that this analysis is more than a quantitative assessment of the time an employee spends carrying out particular duties. It requires a holistic examination of the nature of the work performed by the employee and the circumstances in which the employee is employed. 10 This may involve a consideration of the organisational structure within the employee works, as well as the quality of the different types of work done by the employee.¹¹

[28] In Zheng v Poten & Partners (Australia) Pty Ltd, the Full Bench again considered the application of the proper purpose test, making clear that:

“…the test requires an examination of the nature of the work of the employee in question and the circumstances in which the employee is employed to do the work for the purpose of ascertaining the principal purpose for which the employee is employed. This is a question of fact. Once that is done, the principal purpose as identified must be compared to the classification descriptor in order to determine whether it falls within the scope of that descriptor.”  12

[29] In the decision of Zheng, the Full Bench made abundantly clear that the starting point is an analysis of the actual work performed by the employee and its purpose. An employee’s own estimation of their scope of duties is not determinative; rather, the focus remains on the principal purpose.  13 Only once the principal purpose of the employment has been ascertained, can one compare it to the relevant Award classification.

[30] With those authorities in mind, I turn now to the parties’ submissions.

Applicant’s material

[31] The Applicant submitted that his employment was covered by the Award. Clause 4.1 of the Award provides that it covers “employers throughout Australia in the hydrocarbons industry and their employees in the classifications listed in Schedule A— Classification and Structure.” Clause 4.2(c) of the Award provides that the hydrocarbons industry means “the extraction, separation, production and processing, piping, storage, distribution and transport (including handling or loading facilities) of hydrocarbons”. The Applicant submits that the Respondent was an employer in the hydrocarbons industry and that he fell within the classifications. While the initial application stated that the Applicant fell within the Level 4 classification, by the time of the hearing, the Applicant contended that he was in fact a Level 3 employee.

[32] That classification read as follows:

“A.4.4 Level 3—Competent

(a) An employee at this level will have been assessed as being competent to apply skills and knowledge in complex but routine situations where discretion and judgment are involved. The skills and knowledge are acquired through the completion of a trade certificate, or through practical experience, which has equipped the employee with an equivalent level of skills and knowledge.

(b) An employee at this level can plan tasks, select equipment and appropriate procedures from known alternatives and takes responsibility for the work of others. An employee at this level requires only limited supervision or guidance.

(c) An employee at this level understands and applies quality control techniques; exercises discretion within the scope of this level; performs work under limited supervision; operates all equipment incidental to the work; and assists in the provision of on-the-job training.

(d) This level applies to the following classification groups:

•  Hydrocarbons Industry Onshore Drilling; Hydrocarbons Industry Offshore Drilling; Hydrocarbons Industry Operations and Processing; Hydrocarbons Industry Modification and Maintenance Trades.”

[33] The Applicant submits that in his capacity as the Shift Supervisor, he exercised skills and judgment in several complex areas (including, the day to day operation of the plant and equipment, activity planning, issuing permits and authorities, site inductions and so on). However, he was only authorized to act autonomously in routine situations. In non-routine situations, he required authorization from his immediate superior and, sometimes, the Respondent’s operational engineers. Further, the Applicant stated that he did “plan task” such as the 30, 60 and 90 day plans. As envisaged by clause A.4.4.(b) and (c), the Applicant submits that he supervised, and was responsible for, the work completed by two teams, assisted in the training of new operators, was often the most senior person on site and generally operated autonomously with limited supervision (albeit in close consultation with his superior). Given the duties performed by the Applicant as outlined above, the Applicant submits he should be classified as a Level 3 employee under the Award.

Respondent’s material

[34] The Respondent accepts that parts of the Respondent’s business is covered by the Award, including the operations at Silver Springs where the Applicant performed work. However, it rejects the submission that the Applicant himself was covered by the Award.

[35] The Respondent submits that the principal purpose of the Applicant’s employment, as the Surat Asset Shift Supervisor at Silver Springs, was to be the senior manager of that facility. He was responsible for co-ordinating and managing the day-to-day operation of the facility and oversaw a multidisciplinary team, which consisted of employees working in operations, engineering, maintenance, civil work, rigging and administration. As a designated Site Safety Manager as defined under the Petroleum and Gas (Production and Safety) Act 2004 (Qld), he was responsible for overseeing health and safety at the site and had power to suspend someone from work in the event of an accident and start and stop work on site. He was also responsible for managing the 10 site employees who reported to him and coordinated the duties of contractors on site. Together with the other Shift Supervisor, the Applicant was responsible for people management, which involved regular performance reviews and the implementation of development and performance plans for staff. He was also accountable for all fly in, fly out employees housed at the linked accommodation camp. His role required him to sure safe and environmentally compliant practices in consultation with Surat Assets Superintendent, deliver operational performance and ensure asset reliability and liaise with the Respondent’s wholesale markets and ensuring the gas portfolio requirements are met, on a short-term and long-term basis.

[36] In short, the Respondent submits that the Applicant was not merely responsible for the day-to-day management of the facility and its employees and contractors but was responsible for the facility as a whole, including health and safety, budget and asset protection and operations. He had primary on-site responsibility for ensuring that the overall strategic objectives of the Silver Springs project were met. The Applicant was employed in a senior, managerial role that was broad in scope and strategic importance. This seniority and level of responsibility was reflected in the Applicant’s remuneration which far exceeded the minimum weekly rate for Level 4 employees (the highest classification under the Award) of $936.30 (acknowledging that, had the Applicant been employed under the Award, some allowances may have also applied).

[37] Having considered the principal purpose of the Applicant’s role, the Respondent submits that it is clear that his role did not fall within any of the classifications in the Award. The Award contains a narrow range of classifications which do not encapsulate the Applicant.

[38] The Respondent rejected the assertion that the Applicant’s role fell within the Level 3 classification. Further, the Respondent submitted even the highest classification contemplated in the Award – being Level 4 Advanced – did not include a position of management or general authority. Rather, the Level 4 role describes an employee with more advanced skills working in an operations or trade capacity and who maybe tasked with supervising lower-level operations and trades employees. The Respondent asserted that it is not a classification that encompasses the duties of an employee tasked with general oversight of an entire facility and the health and safety therein, or who is responsible for overseeing people management and meeting budget and production targets.

[39] The Respondent further contends that the Applicant’s role involved a high level of discretion and the exercise of independent judgment. He was required to deal with unpredictable and, at times, complex situations. He was performing work of a kind not historically covered by a modern award.

Consideration

[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.

[45] Accordingly, the Respondent’s jurisdictional objection should be upheld.

[46] I order that Applicant’s application be dismissed.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR733782>

 1   Fair Work Act 2009 (Cth) s.382.

 2   Wellparks Holdings Pty Ltd t/as ERGT Australia v Mr Kevin Govender[2021] FWCFB 268

 3   Asciano Services Pty Ltd v Zak Hadfield [2015] FWCFB 2618

 4   Wellparks Holdings Pty Ltd t/as ERGT Australia v Mr Kevin Govender[2021] FWCFB 268 at [48].

 5   Zappia v Universal Music Australia Pty Ltd[2012] FWAFB 6108 at [9]; Paul Dirkis v Staffing and Office Solutions Pty Ltd T/A SOS Recruitment[2021] FWCFB 154 at [49].

 6   Jenny Craig Weight Loss Centres Pty Ltd v Margolina[2011] FWAFB 9137 at [19].

 7   Fair Work Act 2009 (Cth) s.332(a).

 8   Halasagi v George Weston Foods [2010] FWA 6503, [24].

 9   Brand v APIR Systems Ltd[2003] AIRC 1161, [10]-[11].

 10   Carpenter v Corona Manufacturing Pty Ltd (2002) 122 IR 387, [9]; Foulsham v JJ Corbett Plumbing and Gasfitting Pty Ltd [2015] FCCA 1290 per Jones J.

11 Joyce v Christoffersen (1990) 26 FCR 261; Ware v O’Donnell Griffin Television Services Pty Ltd (1971) AR (NSW) 18.

 12   Zheng v Poten & Partners (Australia) Pty Ltd[2021] FWCFB 3478, [47].

 13   Zheng v Poten & Partners (Australia) Pty Ltd[2021] FWCFB 3478, [47].