Livingston v GMT Business Services P/L
[2011] QMC 35
•6 October 2011
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Livingston v GMT Business Services P/L [2011] QMC 35
PARTIES:
SALLY LIVINGSTON
(plaintiff)
v
GMT BUSINESS SERVICES PTY LTD TRADING AS GMT RECRUITMENT (ABN 29 089 615 083)
(defendant)
FILE NO/S:
M8647/11
DIVISION:
Magistrates Courts
PROCEEDING:
Employment Claim – Application to determine if the claim made is an employment claim
ORIGINATING COURT:
Magistrates Court at Brisbane
DELIVERED ON:
6 October 2011
DELIVERED AT:
Brisbane
HEARING DATE:
3 October 2011
MAGISTRATE:
Lee G
ORDER:
The plaintiff’s claim is not an employment claim within Part 5A of the Magistrates Courts Act 1921.
CATCHWORDS:
INDUSTRIAL LAW – QUEENSLAND – EMPLOYMENT CONTRACT – Employment Claim - contract of employment for less than a year – alleged breach of agreement by employer - provision for payment of a completion bonus at end of term – whether employment claim under Part 5A Magistrates Courts Act 1921 – meaning of “annual wages”
Magistrates Courts Act 1921(Qld), s 42A, s 42B, s
42CMagistrates Courts Regulation 2007 (Qld), r 3
Uniform Civil Procedure Rules 1999, r 10
O’Connor v Electroboard Administration Pty Ltd [2001] QIRComm 136; [2001] 168 QGIG 4 (23 August 2001) cited
O’Connor v Electroboard Administration Pty Ltd [2001] QIC 53; [2001] 168 QGIG 90 (20 September 2001) considered
O’Connor v Electroboard Administration Pty Ltd [2001] QIRComm 215; [2001] 168 QGIG 358 (26 November 2001) cited
COUNSEL:
M DeMarco (solicitor) for plaintiff
AR Chantler (managing director) for defendant
SOLICITORS:
McPherson & Kelly Lawyers for plaintiff
Defendant on own behalf
On 16 August 2011 the plaintiff instituted an “Employment claim” in this court pursuant to Part 5 A of the Magistrates Courts Act 1921 (the Act)[1] undoubtedly seeking to take advantage of the refined procedures for such claims provided for in section 42A of the Act for “low income employees against employers for breaches of contracts of employment”.
[1] Part 5A was inserted in to the Magistrates Courts Act 1921 by Part 6 of the Industrial Relations Act and Other Legislation Amendment Act 2007 (No 23 of 2007) with effect from 1 January 2008 (s 2(1));
By application filed 2 September 2011 pursuant to section 42C of the Act the defendant challenges the fact that the plaintiff’s claim is an “employment claim” as defined in section 42B of the Act. The application is opposed. The defendant’s material consists of an affidavit of Andrew Robert Chantler affirmed 1 September 2011. The plaintiff relies on her affidavit and the affidavit of her solicitor Mellissa Marie De Marco both sworn 3 October 2011 together with written submissions of that date.
The relevant provisions of the Act in Part 5 A are as follows[2]:
[2] Taken from Reprint No 6 reprinted as in force on 1 November 2010;
42B Application of pt 5A
(1) This part applies to a claim (an employment claim)—(a) made in a proceeding started under this part by a
person—
(i) who is or was an employee of an employer; and
(ii) whose annual wages at the time the breach of
contract mentioned in paragraph (b) happened are
not more than—
(A) if a regulation states an amount, or provides
a way for working out an amount, for this
subparagraph—that amount; or
(B) otherwise—$98200; and
(b) arising out of a breach of a contract of employment
between the employee and employer. (my emphasis)(2) ….
42C Decision of Magistrates Court about whether claim is an
employment claim(1) In a proceeding started under this part in a Magistrates Court,
the court may, on the application of a party to the proceeding,
decide whether the claim made in the proceeding is or is not
an employment claim. ……The first point to note is that section 42C of the Act makes provision for this issue to be determined on an application. The procedures in the Uniform Civil Procedure Rules 1999 (UCPR) apply. Rule 10 UCPR provides:
10 Application compulsory
A proceeding must be started by application if an Act or these
rules require or permit a person to apply to a court for an order
or another kind of relief and—(a) the Act or rules do not state the type of originating
process to be used; or
(b) a type of originating process (other than a claim or
application) is required or permitted under a law.
The sole issue in this application is whether or not the plaintiff meets the criteria in subsection 42B(1)(a)(ii)(B), namely, that her “annual wages at the time of the breach of the contract .. are not more than $98,200”. Alternatively, the criteria in subsection 42B(1)(a)(ii)(A) are not met, namely that the plaintiff’s annual wages at the time of the breach of the contract are no more than $101,300 as prescribed by the Magistrates Courts Regulation 2007 (the regulations)(r 3).
By “Deed of Employment Agreement” dated 20 September 2010[3], the plaintiff was employed as a “Transition and Training Analyst” for a fixed term from 4 October 2010 to 1 July 2011, a period just short of nine months. Her base rate was $600 per day plus 9% superannuation of $54 totalling $654. In that agreement, she was described as “employee” her work being described as “contract services” and the defendant described as the “employer”. The agreement provided for payment of a completion bonus of $12,000 at the end of the term of employment[4] which it is alleged the employer has failed to pay and this constitutes the breach of contract on
1 July 2011.
[3] Exhibit “SL1” to the affidavit of Sally Livingstone sworn 3 October 2011;
[4] See Item 9 “Special Conditions” in Schedule 1 of the Deed of Employment Agreement calculated at 20 days at $600 per day; pleaded in paragraph 4 of the “Employment Claim”;
There is no dispute that the plaintiff was paid a total of $98,100 based on $600 per day for the period of her employment i.e. 4 October 2010 to 1 July 2011 and that this figure excludes employer’s superannuation contributions. It appears $9,900 of that amount was paid after 1 July 2011 for services provided before 1 July 2011. In my view, the time of payment does not matter. The concept of “annual wages” in section 42B(1)(a)(ii) is not limited by references to financial years or calendar years for that matter. For example, the concept of “annual wages” is not limited by such notions to an employee who is employed for a fixed term from say 1 March 2010 for 12 months encompassing two financial years for tax purposes.
The defendant submits that in order to ascertain the plaintiff’s annual wages as at the date of the alleged breach of contract (1 July 2011), the daily rate has to be annualised to ascertain the plaintiff’s “annual wages” in accordance with subsection 42B(1)(a)(ii) of the Act. It adopted three suggested methods of doing so. The first method is by taking a five day week at $600 per day for 52 weeks of the year which comes to $156,000. This is the least favourable for the plaintiff. The second method is to deduct annual leave etc giving a total of 220 work days. At $600 per day this comes to $132,000. The third method is to derive a monthly figure by dividing the actual amount paid of $98,100 by nine giving $10,900 and then multiplying that by 12 to give an annual figure of $130,800.
It is clear that the figures derived from all those methods exceed the amounts provided for in subsections 42B(1)(a)(ii)A & B i.e. $101, 300 and $98,200 respectively. The ultimate question is whether the legislation contemplates annualising those wages by whatever method as at 1 July 2011 even though the plaintiff was only employed for less than nine months.
On the other hand the plaintiff’s written submissions on this point are as follows.
6.At the time the Plaintiff alleges the breach of the contract occurred (as at 1 July 2011), she was paid annual wages of $88,200 (gross) (i.e. a total of $96,138 for annual remuneration). (my emphasis)
7.A further sum of $9,900 (gross) in wages was paid to the Plaintiff for the year ending 30 June 2012. If this further amount is taken into consideration when determining annual wages at that time of the breach of contract, the Plaintiff earned a total of $98,100 (gross). (my emphasis)
8.The term “wages” is not defined in the [Act].
9.In the Industrial Court of Queensland, President Hall in O’Connor v The Electroboard Administration Pty Ltd [2001] QIC 53, when interpreting a similar section of the Industrial Relations Act 1999 held that the term “wages” should be given its ordinary and natural meaning and that a payment made pursuant to a statutory obligation, such as the payment of superannuation contributions, cannot be included in the calculation of “annual wages”.
10.Accordingly, the Plaintiff falls within the jurisdictional threshold for an employment claim.
I agree with the submission that employer superannuation contributions and amounts paid by way of allowances are not to be included as “wages” as outlined in O’Connor. However, that is not the point in this case. In undertaking the exercise of calculating an annual wage for the plaintiff the defendant has not included the employer’s superannuation contributions.
O’Connor was an application for reinstatement under the Industrial Relations Act 1999. One issue was whether she was excluded from doing so because her annual wages exceeded $64,000[5]. Base salary in her employment agreement was described as $35,000 per annum paid by fortnightly instalments although only employed from 15 May 2000 to 10 November 2000. In O’Connor v Electroboard Administration Pty Ltd [2001] QIRComm 136; 168 QGIG 4 Commissioner Fisher stated a case to the Industrial Court the central question being whether commissions earned during the period of employment plus projected commissions calculated on sales figures that she notionally would have earned had she been with the employer for a year (totalling $45,036.24) ought to be added to her base salary ($35,000) giving total “annual wages” of $80,036.24. At [2001] QIC 53; 168 QGIG 90, Hall P concluded that commissions, employer’s superannuation contributions and payment of allowances do not fall “within the ordinary concept of ‘wages’”. Upon remittal to the Queensland Industrial Relations Commission, in excluding commissions etc, Commissioner Fisher concluded that O’Connor’s annual wages were less than the $64,000, namely her base salary of $35,000: O’Connor v Electroboard Administration Pty Ltd [2001] QIRComm 215; 168 QGIG 358.
[5] Section 72(1)(e)(iii) Industrial Relations Act 1999 (Qld);
The central issue in O’Connor was ascertaining the meaning of “wages” and whether other payments made by the employer e.g. commissions, superannuation contributions and allowances should be included as wages. In answering Question 1 that commission should not be included in the calculation of annual wages, Hall P expressly found it unnecessary to answer Question 3 of the case stated:
3. If the answer to Question 1 is ‘yes’, how should annual wages be calculated where an employee has worked for less than one year? Should projected commissions (i.e. commissions expected to be earned but not yet earned nor paid) be included in the calculation?
As it turned out, that case was not directly concerned with the question to be decided here, namely, whether the amount of $98,100 paid to the plaintiff as at 1 July 2011[6] (the time of the alleged breach of contract) is said to be her “annual wages” for the nine month period she worked or whether this should be converted into an annual figure. In describing either $88,200 or $98,100 at paragraphs [6] & [7] of the plaintiff’s submissions cited above as “annual wages” begs the very question to be determined. Further, the proposition relied on in O’Connor at paragraph [9] of the plaintiff’s submissions i.e. that a payment made pursuant to a statutory obligation cannot be included in wages is not to the point in this case. Superannuation payments have not been included.
[6] Although recognising $9,900 was actually paid after 1 July 2011 for services provided before 1 July 2011;
I note however, that in arriving at O’Connor’s “annual wage”, on remittal Commissioner Fisher determined it to be $35,000 per annum even though O’Connor was only employed for about six months. Indeed, even prior to remittal to the Industrial Court there was no issue that the $35,000 figure should be included in determining “annual wage” nor was there any suggestion that it should be apportioned to a figure attributable only to the period of employment i.e. 15 May 2000 to
10 November 2000. It was not determined in O’Connor, as is agitated for the plaintiff in this application, that annual wages were on the basis of what she was actually paid at the end of the contract or, as is contended for in this case, at the time of the breach of contract.
There is no definition of “wage”, “annual wage” or derivatives thereof in the Act. The Explanatory Notes to the Bill culminating in the Industrial Relations Act and Other Legislation Amendment Act 2007 introducing Part 5A of the Act do not assist. They simply reflect the wording of Part 5A.
In that event, the meaning of “annual wage” should be given its ordinary and natural meaning although bearing in mind that the meaning may be influenced by the context in which it is used.
The Shorter Oxford Dictionary defines “wage” as:
A payment to a person for service rendered; now esp the amount paid periodically for the labour or service of a workman or servant. ….
The Macquarie Concise Dictionary relevantly defines “wage” as:
…that which is paid for work or services, as by the day or week; hire; pay.
These are not in contention here. Hall P had referred to these definitions in O’Connor. Of importance in this case is the meaning of “annual wages”.
The Shorter Oxford Dictionary relevantly defines “annual”, “reckon” and “reckoning” respectively as follows:
Of, belonging to, or reckoned by, the year; yearly
To count, so as to ascertain the number or amount of; to ascertain (a number, quantity, etc) by counting or calculating; to compute.
The action of RECKON ..; enumeration, calculation, computation . ..The process or result of (one’s) counting…
The Macquarie Concise Dictionary relevantly defines “annual” and “pertain” respectively as:
…of, for, or pertaining to a year; yearly
..to have reference or relation; relate
In my view, the use of the word “annual” in section 42B(1)(a)(ii) of the Act means what it says. It is an amount “belonging to” or “reckoned by” a year. It matters not that an employee is employed for a period shorter than a year. It is the rate at which an employee is paid that is important and that the annual wage is to be “reckoned” by doing the sums as the defendant has in this case. It is the amount of wages that an employee would be entitled to be paid for a year if employed for that long. In my view, the actual amounts paid to the plaintiff representing services provided for the nine months i.e. $98,100 do not represent her “annual wages”. The amount simply represents payment for work done over nine months.
While this issue was not decided in O’Connor, that case provides some support for this conclusion in that the base salary of $35,000 per annum was found to be the “annual wages” despite O’Connor’s employment for six months. I would reject any submission that O’Connor is distinguishable because the employment agreement expressed base salary in terms of an annual amount ($35,000) to be paid fortnightly as opposed to the current case of the salary expressed in terms of $600 per day: see Item 4 Payment Rates in Schedule 1 of the agreement. This is the “agreed rate” which the defendant as employer has agreed to remunerate the plaintiff as employee (clause 4.1) which converts to an annual wage by the methods outlined earlier.
Further, having regard to the object of Part 5A i.e. to reduce the cost of proceedings for low income earners, it would be unlikely in my view that it was the legislature’s intention to enable short term employees with a relatively high rate of earnings converting to annual earnings in excess of the earnings of “low income employees” to fall within the objects of Part 5A. In this case, the plaintiff was paid $600 per day or $3,000 for a five day week. This could hardly be categorised low income contemplated by Part 5A.
During oral submissions emphasis was placed on the plaintiff’s behalf in the words “at the time the breach of contract … happened” (section 42B(1)(a)(ii)), which in this case is alleged to be 1 July 2011. The point was that at that time the plaintiff was paid $88,200 or alternatively $98,100 if the subsequent payment of $9,900 is taken into account. In my view, this misses point. It is true that at that time the plaintiff had been paid either of those amounts. It is also true that at that time she was being paid at a rate of $600 per day which converts or “reckons” to annual wages exceeding the level of annual wages provided for in section 42B(1)(a)(ii). The amounts actually paid referable to services provided by the plaintiff up to 1 July 2011 cannot be said to be “annual wages” in my view.
The application seeks that the “employment claim” be dismissed. Having regard to the terms of section 42C I do not think I can make such an order although, in view of my findings, that may be the practical effect. Section 42C relevantly provides:
42C Decision of Magistrates Court about whether claim is an
employment claim
(1) In a proceeding started under this part in a Magistrates Court,
the court may, on the application of a party to the proceeding,
decide whether the claim made in the proceeding is or is not
an employment claim.
(2) Subsection (3) applies if—(a) a Magistrates Court decides a claim is not an
employment claim because of section 42B(2); and
(b) the plaintiff discontinues or withdraws the proceeding in
the Magistrates Court; and
(c) the plaintiff later starts a proceeding based on the claim
in the industrial relations commission.
(3) For the Industrial Relations Act 1999—
(a) if there is a time limit under that Act for starting the
proceeding mentioned in subsection (2)(c), the period
starting on the day the proceeding was started in the
Magistrates Court and ending on the day the court’s
decision is made must be disregarded; and
(b) any conciliation of the dispute under this part is taken to
be conciliation of the dispute by the industrial relations
commission.
Subsection 42C(1) provides that upon application the court may decide whether or not the claim is an employment claim. Subsections 42C(2) & (3) then deal with limitation periods for commencing proceedings in the Industrial Relations Commission provided that three conditions in subsection 42C(2) are met. One of those is contingent upon the plaintiff discontinuing. In my view, the appropriate order is that I find that the plaintiff’s claim is not an employment claim. The defendant was successful in its application. It was not represented by a lawyer. I make no order as to costs.
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