Maughan Thiem Auto Sales Pty Ltd v Cooper

Link copied
Case Copied 24 min read

FEDERAL COURT OF AUSTRALIA

Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94

Citation: Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94
Appeal from: Cooper v Maughan Thiem Auto Sales Pty Ltd [2012] SAIRC 51
Parties: MAUGHAN THIEM AUTO SALES PTY LTD v ADAM COOPER
File number: SAD 78 of 2014
Judges: GREENWOOD, BESANKO AND KATZMANN JJ
Date of judgment: 1 August 2014
Catchwords:

INDUSTRIAL LAW – whether employee entitled to redundancy pay and long service leave

STATUTORY INTERPRETATION – meaning of “base rate of pay” – Fair Work Act 2009 (Cth) s 16

STATUTORY INTERPRETATION – meaning of “applicable award-derived long service leave terms” – whether an employee is “entitled … to long service leave” under an award if employee’s entitlement to long service leave has not accrued – Fair Work Act 2009 (Cth) s 113

Legislation: Acts Interpretation Act 1901 (Cth), s 15AA
Fair Work Act 2009 (Cth) ss 16(1), ss 113, 117, 119, 570
Long Service Leave Act 1987 (SA), ss 3, 8
Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27
CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Jemena Asset Management (3) Pty Ltd v Coinvest Limited (2011) 244 CLR 508
Maughan Thiem Auto Sales Pty Ltd v Cooper (2013) 216 FCR 197
Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Date of hearing: Heard on the papers
Place: Adelaide
Division: FAIR WORK DIVISION
Category: Catchwords
Number of paragraphs: 59
Counsel for the Appellant: Dr C Bleby SC
Solicitor for the Appellant: Minter Ellison
Counsel for the Respondent: Mr R Manuel with Mr S Ridley
Solicitor for the Respondent: Rossi Legal

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

FAIR WORK DIVISION

SAD 78 of 2014
ON APPEAL FROM THE INDUSTRIAL RELATIONS COURT OF SOUTH AUSTRALIA
BETWEEN:

MAUGHAN THIEM AUTO SALES PTY LTD
Appellant
AND:

ADAM COOPER
Respondent

JUDGES:

GREENWOOD, BESANKO AND KATZMANN JJ

DATE OF ORDER:

1 AUGUST 2014

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

(1)The appeal be allowed.

(2)Order 2 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to redundancy pay be calculated on the basis of his base rate of pay, being his weekly salary as at 16 September 2011 less the 18% shift premium, namely $9,842.

(3)Order 4 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s claim in respect of long service leave be dismissed.

(4)Order 5 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to pre-judgment interest be $2,322.75.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Maughan Thiem Auto Sales Pty Ltd v Cooper and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2014] FCAFC 94
Decision Date

CaseChat Overview and Summary

In the case of Maughan Thiem Auto Sales Pty Ltd v Cooper, the primary dispute revolved around whether the employee, Mr Cooper, was entitled to redundancy pay and long service leave following his termination of employment. The matter was initially heard by an industrial magistrate and subsequently appealed to the court. The appeal raised two fundamental issues: firstly, whether the employee's weekly salary, as it stood at the date of termination, should be used to calculate his redundancy entitlement or if it should be adjusted by subtracting the shift premium; and secondly, whether Mr Cooper was entitled to long service leave under the applicable award terms, and if so, at what rate.

The court addressed these issues by interpreting relevant sections of the Fair Work Act 2009 (Cth), particularly focusing on the definition of "base rate of pay" and "applicable award-derived long service leave terms". The court found that the industrial magistrate had incorrectly interpreted the base rate of pay by including the shift premium in Mr Cooper's weekly salary. According to the statutory definition, the base rate should exclude separately identifiable amounts such as shift premiums. Consequently, the court ruled that the redundancy pay should be calculated based on Mr Cooper's weekly salary minus the 18% shift premium. Additionally, the court determined that Mr Cooper was not entitled to long service leave as his entitlement had not accrued at the time of termination.

The court's reasoning led to the conclusion that the appeal should be upheld. The court set aside the orders made by the industrial magistrate regarding the calculation of redundancy pay and the claim for long service leave. Instead, it ordered that the redundancy pay be recalculated using the correct base rate and dismissed the claim for long service leave. The appeal was allowed, and the orders were made accordingly, with Mr Cooper's entitlement to pre-judgment interest also being adjusted.

In summary, the court clarified the correct method for calculating redundancy pay by excluding shift premiums and dismissed the claim for long service leave. The final orders reflect these determinations, ensuring the correct application of the statutory provisions in the Fair Work Act.

Orders

Orders of the court

(1) The appeal be allowed.

(2) Order 2 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to redundancy pay be calculated on the basis of his base rate of pay, being his weekly salary as at 16 September 2011 less the 18% shift premium, namely $9,842.

(3) Order 4 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s claim in respect of long service leave be dismissed.

(4) Order 5 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to pre-judgment interest be $2,322.75.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

As I observed in my earlier reasons for judgment, in substance the appeal raises two broad issues:(a)Should Mr Cooper’s weekly salary as at the date of termination be used as the base rate for calculating his redundancy entitlement (as the industrial magistrate determined) or should his entitlement be measured by his weekly salary minus the shift premium (as Maughan contended) (ground 1)?; and(b)Was Mr Cooper entitled to long service leave under the State Act and, if so, at what rate (grounds 2–6)?THE FACTS Before considering these issues it is necessary to record the salient facts. Mr Cooper worked for Maughan from 28 October 2002 until 19 September 2011. He was first employed on a full-time permanent basis, working five days a week, starting at 8.00 am each day. In January 2008 Maughan introduced an afternoon shift to its service department and asked Mr Cooper to work permanently on that shift over four longer days instead of five. Under the new arrangement Mr Cooper worked from Monday to Thursday, starting work each day at noon and finishing at 10.00 pm. The parties entered into a new contract recording his annual remuneration and noted that it included an 18% “penalty rate” for the afternoon shift. Mr Cooper worked in accordance with the new arrangement for about nine months at which point the hours of the afternoon shift were changed to 5.00 pm until 3.00 am. Mr Cooper worked these hours for the ensuing three years until his employment came to an end after Maughan decided to do away with the afternoon shift. Maughan told the shift workers that alternative positions would be offered within the day shift but that their salary would be reduced by the removal of the shift premium. Mr Cooper considered this proposal unacceptable and refused to work on this basis. He considered that he had been made redundant. He asked Maughan for 14 weeks’ redundancy pay and four weeks’ pay in lieu of notice in accordance with ss 119 and 117 of the FW Act respectively. The industrial magistrate found that Mr Cooper had been given only one week’s pay in lieu of notice and hence that he was entitled to three additional weeks’ pay. It was agreed that at the time his employment came to an end Mr Cooper had completed at least eight years of continuous service within the meaning of the State Act. REDUNDANCYThe relevant legislative provisions Section 119(2) of the FW Act relevantly provides:The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work: The critical words are “the employee’s base rate of pay”.What is the base rate for calculating the redundancy entitlement? The industrial magistrate held (at [30]) that the base rate for Mr Cooper’s ordinary hours of work was his weekly salary as of 16 September 2011. He did not explain why. It is common ground that Mr Cooper’s weekly salary at the time included an 18% shift premium. Clause 2.1 of his contract of employment provided for an annual salary of $43,136.08 before tax but added:This amount is inclusive of an 18% penalty rate for afternoon shift work.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The industrial magistrate noted that Mr Cooper’s contract “notionally” included a shift premium but found that Mr Cooper’s ordinary rate of pay nevertheless included that premium because “no specific shift loading or premium was calculated and paid on top of a set weekly wage”. His Honour said that s 3(2) did not require “an artificial dissection of the stated annual remuneration”. But, as Maughan submitted, that is to ask the wrong question. The correct question is: what is the weekly rate of pay exclusive of overtime, shift premiums and penalty rates? As I have already observed, the contract discloses the payment of a shift premium or penalty rate. The State Act requires that it be excluded from the calculation of the employee’s entitlement. The industrial magistrate erred in determining otherwise.Conclusion I would therefore answer the questions posed at [8] above in this way: (a)The “base rate of pay” for the purpose of calculating the redundancy entitlement is not Mr Cooper’s weekly salary as at the date he last worked, as the industrial magistrate decided, but his weekly salary minus the 18% “penalty rate” for afternoon shift work, that 18% being a “separately identifiable amount” within s 16(1) of the FW Act.(b)Mr Cooper was not entitled to long service leave. It follows that the appeal should be upheld and the orders Maughan seeks should be made. Mr Cooper does not quarrel with the calculations in those orders or the form of them. There was no application for costs. The orders I propose, then, are:(1)The appeal be allowed.(2)Order 2 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to redundancy pay be calculated on the basis of his base rate of pay, being his weekly salary as at 16 September 2011 less the 18% shift premium, namely $9,842.(3)Order 4 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s claim in respect of long service leave be dismissed.(4)Order 5 made by the industrial magistrate on 14 April 2014 be set aside and the respondent’s entitlement to pre-judgment interest be $2,322.75.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.