MC Innes v Aegis AC Pty Ltd
[2020] FCCA 1142
•13 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MC INNES v AEGIS AC PTY LTD | [2020] FCCA 1142 |
| Catchwords: INDUSTRIAL LAW – Awards – interaction between contractual payments and award obligations – whether nature of contractual payments met obligations under award – nature of industrial law ‘set off’ – effect of payment of profit share component – profit share component not in the nature of a payment of an award entitlement. |
| Legislation: Fair Work Act 2009 (Cth), ss.45, 539, 545 Building and Construction Award 2010 |
| Cases cited: Kent v Tal & Ors [2018] FCCA 3218 Ray v Radano [1967] AR (NSW) 471 Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; 3 FCR 503 (194) 9 IR 469 Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4; (1999) 94 IR 218 Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406 |
| Applicant: | ANDREW PETER MC INNES |
| Respondent: | AEGIS AC PTY LTD |
| File Number: | LNG 23 of 2019 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 14 November 2019 |
| Date of Last Submission: | 14 November 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 13 May 2020 |
| Orders pronounced on: | 14 May 2020 |
REPRESENTATION
| The Applicant appeared in person. |
| The Respondent appeared in person. |
ORDERS
Within 30 days the Respondent pay the Applicant the amount of $20,000.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
LNG 23 of 2019
| ANDREW PETER MC INNES |
Applicant
And
| AEGIS AC PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant claims that a contravention of the Building and Construction Award 2010 (‘the Award’) occurred during the term of his employment as an asbestos removalist for the respondent, alleging the respondent failed to him pay various entitlements.
The applicant seeks relief in the sum of $19,989.85 (made up of $426.47 in wages; $2,554.27 in overtime rates, $15,876.95 in allowances, $105.74 in public holiday pay and $1,026.42 in leave loading) on the basis that he was a Level 7 employee under the Award and pursuant to sections 45, 539 and 545 the Fair Work Act 2009 (Cth) (‘the Act’).
The respondent disputes that the applicant qualified as a Level 7 category employee under the Award, and submits that the hourly rate of pay in the employment agreement was all-encompassing to include all entitlements of wages, penalties and allowances. The respondent further submits that the applicant was paid additional wages in the form of a Profit Share. He denies any liability for outstanding wages or entitlements.
Background
The applicant commenced employment with the respondent as an Asbestos Removalist. During the term of his employment the applicant was at various times a casual employee and at other times a permanent employee pursuant to several contracts made throughout the duration of his employment:
a)From 11 June 2014 to 15 February 2016 he was a casual employee.
b)On 16 February 2016 to 9 May 2017 the applicant was a full time (permanent) employee. The applicant resigned on this end date
c)The applicant was re-engaged as a casual on 24 July 2017 until 30 June 2018, at which point he resigned on a final basis.
On 23 April 2018 the applicant said he noticed the casual over time rate had been reduced and casual loading removed from his pay calculations. He emailed the respondent requesting a copy of the Award, but says he did not receive a response.
The applicant obtained a copy of the Award from the Fair Work Ombudsman himself and advised the respondent he was employed under that Award and should be classified as a Level 7 (CW/ECW7) employee. The applicant considered the Award rates (from 24 July 2018 – 30 June 2018) were $24.89 (plus casual loading) per hour, coming to an hourly rate of $31.11, which is the hourly rate for a Level 7 award. The applicant then investigated the Award rates for his historical contract arrangements during the term of his employment with the respondent.
Upon this research the applicant argues that the following Award allowances he was entitled to had not been paid by the respondent. He notified the respondent by email on 23 April 2018 that he claims an entitlement to many different allowances:
a)Confined Space (Clause 22.2(d)(i)(ii)), various dates
b)Asbestos awareness (Clause 22.2(k)), various dates
c)Asbestos eradication (Clause 22.2(l)) various dates
d)Meal allowance (Clause 20.2(a)) various dates
e)First aid (Clause 21.10(a)) various dates
f)Site allowance (Clause 25.2(a)(b)), various dates
g)Insulation allowance (Clause 22.2(a)) various dates
h)Annual leave loading (Clause 38.2)
i)Clauses that were not paid at the correct rate
j)Overtime (Clause 36.2)
k)Saturday overtime (Clause 37.1)
l)Public holiday (Clause 37.9)
m)Minimum work hours (Clause 14.4) various dates
n)Weekend callout (Clause 36.15) on 18 March 2018
o)Casual overtime loading
The applicant filed a fair work claim on 14 May 2018 regarding both his casual and permanent employment.
The respondent advised the applicant on 18 May 2018 that they were seeking advice from the Tasmanian Chamber of Commerce and Industry in relation to which Award was relevant to the applicant, indicating that advice was expected to be received by 22 May 2018. The applicant received an email from the respondent on 16 May 2018 “thanking [him] for [his] patience” and notifying him there is a “final meeting with the TCCI so the TCCI can confirm the calculations done by AEGIS.”
The applicant received copies of spread sheets from the respondent on 19 June 2018 regarding his permanent and casual employment and containing ‘offsets’. The respondent claimed that the applicant was paid the incorrect base rate over all of his contracts, the applicant says this was the first indication from the respondent that incorrect payments were made and being told he was in fact ‘overpaid’. The applicant used the figures in these spreadsheets provided to him to calculate his proposed figures.
On the same date, 19 June 2018 the applicant received notice from the respondent indicating an amount would be paid to him regarding his casual claim, the applicant received two meal allowances, and asked the respondent why and was advised it was, “approved for the long shifts [he] did last week”. The applicant replied on 20 June 2018 and was advised by the respondent that they were “prepared to ‘waiver’ their calculated overpayment while [he] was a permanent employee.”
On 25 June 2018 the applicant received a letter from the respondent indicating the amount to be paid by the respondent in relation to the casual claim. The applicant submits the figure differed from that provided on 19 June 2019 (now $15,068.09 instead of $11,062.89).
Part payment of the claim was made on 4 July 2018. The applicant followed up with an email on 5 July 2018 in relation to his permanent employment claim, he said he did not receive a response.
The parties were unable to resolve their differences. The applicant received correspondence on 20 July 2018 that the respondent would not have paid his casual claim if they were aware he was to continue with his permanent employment claim and if the applicant did so, the respondent would treat the original calculation of the permanent claim as an overpayment, and categorise it as a loan and charge interest. The applicant resigned on 27 July 2018.
Negotiations
Both parties presented well and engaged reasonably and respectfully at the hearing, despite the depth of their dispute. I found both witnesses impressive. I am not persuaded that the negotiations that the parties entered into provide any real assistance in resolving the matter as it appears that they were genuine attempts to resolve their differences. I am also persuaded that the various rates of pay or contract terms were not informed by any clear understanding of the Award. I accept that the respondent believed that the payments were sufficient to satisfy the Award, and maintained a profit share arrangement whereby profits of the business were shared with employees. The respondent had consulted the Department of Employment in 2015 and been advised in writing that the contract he was using for employees was compliant with the Building Code 2013.
The contract of employment and relevant Award
There is no dispute that the relevant Award that applies to the employment arrangements between the parties in this case is the Building and Construction Award 2010.
The contracts of employment in this case are a series of brief written contracts outlining the main terms of the parties’ agreements.
The first contract, dated 10 June 2014 is for a ‘casual position’ as an ‘Asbestos Removalist’. The contract provides for a probation period (cl.4) regular remuneration reviews (cl.9), a restraint of trade clause (cl.10 and 13) and 2 weeks’ notice in the event of termination (cl.16). The contract expressly refers to the award, saying:
2. Relevance of Award
Where there is inconsistency between provisions of this contract (whether express or implied) and provisions contained in any relevant State or Federal legislation the latter shall prevail to the extent of the particular inconsistency.
Whilst the contract refers to a position description in cl.5, none appears in the documents. The remuneration is set out in cl.9a as:
9a Your remuneration is $28/hour (Base rate of $22.40/hr plus a loading of 25%) plus superannuation as per the Superannuation Guarantee Charge Definition.
The second contract is dated 24 September 2015 and is in substantially the same terms, save that the hourly rate is set at $29.70.
The third contract is dated 16 February 2016. Whilst it is a contract for permanent work (rather than casual work) it is again in substantially the same terms as the earlier contracts, save that the hourly rate is set at $31.93 and it makes provision for annual leave.
On 18 July 2016 a fourth contract (dated 1 July 2016) was entered into by the parties. In this contract the heading set out that it was permanent, but the contract was for a fixed period ending on 30 June 2017: see cl.3. Importantly, the position was now as, ‘Supervisor asbestos removalist’. The rate of remuneration was set at $32.57 per hour, but otherwise the contract was in substantially the same terms as the previous contract.
The fifth contract is dated 24 July 2017. This contract provides for casual employment as an ‘Asbestos Removalist’, and is for a fixed period ending on 30 June 2018. The contract provided for casual employment at an hourly rate of $31.11. Otherwise, the relevant parts of the contract for these proceedings are substantially the same as earlier contracts.
None of the contracts expressly address any of the various entitlements under the award beyond hourly rates, leave and superannuation.
The award classification level for the applicant’s role
The central dispute between the parties in this matter relates to the nature of the applicant’s duties and which level of the Award applied accordingly. The determination of level applicable has flow on effects to the rates of pay owed to the applicant under the Award.
The applicant says that he performed duties that place him at level 7 of the Award levels. The respondent submitted the applicant should have been paid a Level 5 wage. The relevant definitions from the Award are contained in Schedule B ‘Classifications Definitions’ and provide as follows:
B.2.5 Construction worker level 5/Engineering construction worker level 5 (Special class engineering construction tradesperson level I and Engineering construction technician level II) (CW/ECW 5)
(a) A CW/ECW 5 works in one or more skill streams contained within this award. A CW/ECW 5 will:
(i) have successfully completed the relevant structured training in addition to the requirements of CW/ECW 4; or
(ii) have successfully completed, in accordance with RPL principles, a Skills Test equivalent to the requirements,
either of which will qualify the employee for a CW/ECW 5; or a
·Special class engineering construction tradesperson (electrical/electronic) level 1;
·Special class engineering construction tradesperson (mechanical) level 1; or
·Special class engineering construction tradesperson (fabrication) level 1;
who has completed the following training requirements:
·six appropriate modules in addition to the training requirements of CW/ECW 3 level; or
·six appropriate modules towards an Advanced Certificate; or
·six appropriate modules towards an Associate Diploma; or
·any training which a registered provider (e.g. TAFE) or State training authority has recognised as equivalent to an accredited course which the appropriate industry training board recognises for this level. This can include advanced standing through recognition of prior learning and/or overseas qualifications; or
·will have skills equivalent to the above gained through work experience subject to competency testing to the prescribed standards.
(b) Skills and duties
(i) An employee at this level performs work to the extent of their skills, competence and training. Employees will acquire skills both formal and informal over time and with experience, and will undertake indicative tasks and duties within the scope of skills they possess.
(ii) An employee at this level may be part of a self-directed WAT, and may be required to perform a range of duties across the skill streams contained in this award.
(iii) An employee at this level:
· exercises skills attained through satisfactory completion of the training/work experience prescribed for this classification;
· exercises discretion within the scope of this grade;
· provides trades guidance and assistance as part of a work team;
· assists in the provision of training in conjunction with supervisors and trainers;
· understand and implements quality control techniques;
· works under limited supervision either individually or in a team environment;
· assists in the provision of training in conjunction with supervisors.
(c) Indicative tasks which an employee may perform at this level include the following:
· exercises precision trade and/or operative skills using various materials and specialised techniques at a higher level than CW/ECW 4;
· operates, and maintains complex plant and machinery;
· is able to plan complex construction sequencing;
· performs operations on a Computer-Aided Design and Computer Aided Manufacturing (CAD/CAM) terminal in the performance of routine modifications to the Numeric Control/Computer Numeric Control (NC/CNC) programs;
· installs, repairs and maintains, tests, modifies, commissions and/or fault finds on complex machinery and equipment which utilises hydraulic and/or pneumatic principles and in the course of such work, is required to read and understand hydraulic and pneumatic circuitry which controls fluid power systems;
· works on complex or intricate circuitry which involves examining, diagnosing and modifying systems comprising inter-connected circuits.
(d) The CW/ECW 5 classification incorporates the following broadbanded award classifications:
· Carver
· Compactor— from 48 kW (65 hp),
· Crawler loader (above 15, 000 kg mass, up to and including 60, 000 kg mass)
· Crawler tractor using power operated attachments class 7, 8 and 9
· Dragline/shovel excavator— up to but not exceeding 3.0 metre capacity
· Dumper, rear and bottom (above 30 cubic metres, up to and including 120 cubic metres struck capacity)
· Dumper— up to but not exceeding 100 ton
· Excavator above 0.5 cubic metres
· Excavator— hydraulic telescopic boom type
· Floating crane— over 10 but not exceeding 100 ton
· Forklift— from 48 kW (65 hp) up to but not exceeding 220 kW (295 hp)
· Geotextile/geomembrane worker level 5
· Grader
· Grader— from 96 kW (130 hp) up to but not exceeding 148 kW (200 hp)
· Loader— front end and overhead, from 48 kW (65 hp) up to but not exceeding 370 kW (500 hp)
· Locomotive (carrying passengers)
· Mobile crane— over 10 but not exceeding 100 ton
· Operator, drilling machine, over 230 mm diameter
· Operator, pneumatic tyred loader (over 105 kW, up to and including 500 kW net engine power)
· Operator, pneumatic tyred tractor using power operated attachments in excess of 110 kW brake power
· Operator, tunnel boring machine; operator, tunnel excavating machine
· Other cranes— over 15 but not exceeding 100 ton
· Refractory bricklayer
· Scraper, self-powered over 10 cubic metres struck capacity
· Side boom/pipe layer— up to but not exceeding 220 kW (295 hp)
· Skid steer tractor— from 48 kW (65 hp)
· Special class trades
· Tractor— from 48 kW (65 hp) up to but not exceeding 370 kW (500 hp)
· Trainee dogger/crane hand (fixed cranes)
· Trenching machine (greater than 2.4 metres depth and 450 mm width) and bucketwheel trencher with equivalent capacity in cubic metres per hour
(e) Engineering Construction Technician Level II
An Engineering construction technician level II is an employee who has equivalent level of training and/or experience to an Engineering construction tradesperson special class level I but is engaged in detail draughting or planning or technical work which requires the exercise of judgment and skill in excess of that required of an employee at CW/ECW 4 under the supervision of technical staff.
(f) An employee at this level may be undergoing training so as to qualify as a CW/ECW 6.
B.2.6 Construction worker level 6/Engineering construction worker level 6 (Special class engineering construction tradesperson level II and Engineering construction technician level III ) (CW/ECW 6)
(a) A CW/ECW 6 works in one or more skill streams contained within this award. A CW/ECW 6 will:
(i) have successfully completed the relevant structured training in addition to the requirements of CW/ECW 6; or
(ii) have successfully completed, in accordance with RPL principles, a Construction Skills Test equivalent to the requirements of this level,
either of which will qualify the employee for a CW/ECW 6; or a
· Special class engineering construction tradesperson (electrical/ electronic) level II; or
· Special class engineering construction tradesperson (mechanical) level II; or
· Special class engineering construction tradesperson (fabrication) level II;
who has completed the following training requirements:
· nine appropriate modules in addition to the requirements of CW/ECW 3 level; or
· nine appropriate modules towards an Advanced Certificate; or
· nine appropriate modules towards an Associate Diploma; or
· any training which a registered provider (e.g. TAFE) or State training authority has recognised as equivalent to an accredited course which the appropriate industry training board recognises for this level. This can include advanced standing through recognition of prior learning and/or overseas qualifications; or
· will have skills equivalent to the above gained through work experience subject to competency testing to the prescribed standards.
(b) Skills and duties
(i) An employee at this level performs work to the extent of their skills, competence and training. Employees will acquire skills both formal and informal over time and with experience, and will undertake indicative tasks and duties within the scope of skills they possess.
(ii) An employee at this level may be part of a self-directed WAT, and may be required to perform a range of duties across the skill streams contained within this award.
(iii) An employee at this level:
· exercises skills attained through satisfactory completion of the training/work experience prescribed for this classification;
· exercises discretion within the scope of this grade;
· provides trades guidance and assistance as part of a work team;
· provides training in conjunction with supervisors and trainers;
· works under limited supervision either individually or in a team environment;
· understands and implements quality control techniques.
(c) Indicative tasks which an employee may perform at this level include the following:
· operates plant and equipment at a higher level of skill than CW/ECW 5;
· exercises high precision trade and/or operative skills using various materials and specialised techniques at a higher level than CW/ECW 5;
· implements quality control techniques;
· plans complex construction sequencing;
· works on machines or equipment which utilise complex mechanic or hydraulic and/or pneumatic circuitry and controls or a combination thereof;
· works on machinery or equipment which utilises complex electrical/ electronic circuitry and controls;
· works on instruments which make up a complex control system which utilises some combination of electrical/electronic, mechanical or fluid power principles;
· applies advanced computer numerical control techniques in machining or cutting or welding or fabrication;
· exercises intermediate CAD/CAM skills in the performance of routine modifications to programs;
· works on complex or intricate interconnected electrical circuits at a level above CW/ECW 5;
· works on complex radio/communication equipment.
(d) The CW/ECW 6 classification incorporates the following broadbanded award classifications:
· Dumper— from 100 ton struck capacity
· Electronics tradesperson
· Instrumentation and control tradesperson
· Loader— front end and overhead, from 370 kW (500 hp) up to but not exceeding 450 kW (600 hp)
· Mobile crane with lifting capacity in excess of 100 ton and not exceeding 140 ton
· Operator (dragline/shovel excavator— from 3 cubic metres, side boom/pipe layer— from 220 kW (295 hp)
· Operator of mobile crane with lifting capacity in excess of 140 ton and not exceeding 180 ton
· Tractor— from 370 kW (500 hp) up to but not exceeding 450 kW (600 hp)
(e) Engineering Construction Technician Level III
An Engineering construction technician level III is an employee who has equivalent level of training and/or experience to an Engineering construction tradesperson special class level II but is engaged in one of the following areas:
· detail draughting or planning or technical duties requiring judgement and skill in excess of that required of a Technician at CW/ECW 5 level under the supervision of Technical Staff; or
· possesses a level of training and/or experience at CW/ECW 6 level and exercises cross skilling in technical fields as defined.
(f) An employee at this level may be undergoing training so as to qualify as a CW/ECW 7.
B.2.7 Construction worker level 7/Engineering construction worker level 7 (Special class engineering construction tradesperson level III) (CW/ECW 7)
(a) A CW/ECW 7 works in one or more skill streams contained within this award. A CW/ECW 7 will:
(i) have successfully completed the relevant structured training in addition to the requirements of CW/ECW 6; or
(ii) have successfully completed, in accordance with RPL principles, a Construction Skills Test equivalent to the requirements of this level,
either of which will qualify the employee for a CW/ECW 7; or is a
· Special class engineering construction tradesperson Level III is a:
· Special class engineering construction tradesperson (electrical/ electronic) Level III; or
· Special class engineering construction tradesperson (mechanical) level III; or
· Special class engineering construction tradesperson (fabrication) level III;
who has completed:
· ten and a half appropriate modules of an Advanced Certificate; or
· ten and a half appropriate modules of an Associate Diploma; or
· ten and a half appropriate modules in addition to the requirements of ECW3
· any training which a registered provider (e.g. TAFE) or State training authority has recognised as equivalent to an accredited course which the appropriate industry training board recognises for this level. This can include advanced standing through recognition of prior learning and/or overseas qualifications; or
· will have skills equivalent to the above gained through work experience subject to competency testing to the prescribed standards.
(b) Skills and duties
(i) An employee at this level performs work to the extent of their skills, competence and training. Employees will acquire skills both formal and informal over time and with experience, and will undertake indicative tasks and duties within the scope of skills they possess.
(ii) An employee at this level may be part of a self-directed WAT and may be required to perform a range of duties across the skill streams contained within this award.
(iii) An employee at this level:
· exercises skills attained through satisfactory completion of the training prescribed for this classification;
· exercises discretion within the scope of this grade;
· provides training in conjunction with supervisors and trainers;
· understand and applies quality control techniques;
· prepares complex reports;
· contributes to the design of work, and the application of labour;
· assists in the supervision or organisation of WATs;
· is able to provide trade guidance and assistance as part of a work team; and
· works under limited supervision either individually or in a team environment.
(c) Indicative tasks which an employee may perform at this level include the following:
· works on plant and equipment at a higher level of skill than CW/ECW 6;
· exercises high precision trade and/or operative skills using various materials and specialised techniques at a higher level than CW/ECW 6;
· implements quality control techniques;
· plans complex construction sequencing;
· works on machines or equipment which utilise complex mechanic or hydraulic and/or pneumatic circuitry and controls or a combination thereof;
· works on machinery or equipment which utilises complex electrical/ electronic circuitry and controls;
· works on instruments which make up a complex control system which utilises some combination of electrical/electronic mechanical or fluid power principles;
· applies advanced computer numerical control techniques in machining or cutting or welding or fabrication;
· exercises intermediate CAD/CAM skills in the performance of routine modifications to programs;
· working on complex or intricate interconnected electrical circuits at a level above CW/ECW6;
· working on complex radio/communication equipment.
(d) The CW/ECW 7 classification incorporates the following broadbanded award classifications:
·Dogger-crane hand (fixed cranes)
·Mobile crane with lifting capacity in excess of 180 ton and not exceeding 220 ton
·Operator, tower crane driver, operator of tractor— from 450 kW (600 hp)
·Operator, mobile crane with lifting capacity in excess of 220 ton)
·Sub-foreperson
(e) An employee at this level may be undergoing training so as to qualify as a CW/ECW 8.
These long definitions make it difficult to see clear differences in the different levels within the Award. However, it appears that a qualitative difference between the lower levels and Level 7 that are relevant in this context can be seen in the factors that:
a)Different levels of education and training
b)Distinguish between implementing and applying quality control techniques;
c)Preparation of complex reports;
d)Contributing to the design of work and application of labour; and
e)Assisting in supervising and organising WATs (presumably work as a team groups).
The applicant points to his pay rate in the July 2017 contract, which is the same as the rate for a Level 7 employee at the time. The respondent says that many of his employees are paid at rates slightly above the Award minimums to ensure that employees were no worse off after considering possible Award allowances and penalties. There is no reference in the contracts to an Award level.
The applicant has certificates permitting him to work as both a, A Class and B Class asbestos removalist. The difference in the A and B Class certificates relates to whether the materials contain friable or non-friable asbestos. When working with friable asbestos, the applicant pointed out that workers must, ‘wear full-face respirators which are air powered’. The applicant gave evidence that some of the jobs he worked on required an A class certificate. He also pointed out that he was working as the supervisor when work was carried out on a sub floor in one building (the Royal). The respondent accepted that the applicant had done removals requiring an A class certificate. However, there is no direct reference in the Award to the A or B class certificates or work types. There is not sufficient evidence to enable these certificates to be compared with Certificate II, III, or IV courses. I also note that there are significant other payments under the award for additional payments to workers working with asbestos.
The applicant does not appear to hold any other relevant trade skills.
With respect to the skills identified above:
a)The applicant maintained that he provided training to new staff as part of his supervision role.
b)The relevance of quality control techniques is difficult to assess. At Level 5 an employee would ‘understand and implements quality control techniques’. However, this requirement is absent at Level 6, but reappears in Level 7 as ‘understand and applies quality control techniques.’ The applicant ensured that ‘safety bubbles’ were constructed to meet the substantive requirements for asbestos removal, which indicates a level of.
c)The applicant was often the supervisor on a particular job, managing a work team and the interactions with other tradespeople on work sites.
d)The applicant agreed that he has not prepared complex reports as any part of his employment roles.
The Award provides for a broad range of different tasks that employees may undertake in the building industry. As a result many of the items listed in the definitions are not relevant in particular cases: for example Computer Aided Design or Manufacturing are not relevant here.
When stepping back and considering the various lengthy definitions in the context of the material before the Court in the present dispute, it appears that the role of the applicant is more appropriately described as a Level 5 position than either a Level 6 or Level 7 position.
Award Entitlements
In this matter the applicant prepared spreadsheets, which were shared with the respondent, calculating his entitlements under the award. This is fortunate as the terms of the Award are extensive and complex: the Ombudsman’s pay guide alone (listing the rates for the various positions and allowances) occupies 103 pages.
I accept the accuracy of those calculations, save for the limited point set out below.
Interaction between Payments and Award
In this case the parties entered into contracts of employment that provided for hourly rates. Often those rates were above the Award minimum per hour. The applicant has an entitlement to be paid in accordance with the contract (a contractual right). Separate from the contractual rights and obligations there are statutory obligations arising under the Act including a statutory obligation to comply with the terms of any applicable modern Award: see section 45 of the Act. Enforcement of the terms of an Award is a statutory remedy under sections 539 and 545 of the Act, which is independent of the terms of the contract of employment.
The interactions between often-simplistic contracts entered into between employers and employees, and the complexity of the minimum payment requirements imposed by the many and varied modern Awards present many difficulties. Disputes commonly arise with respect to relatively simple contracts (such as those in this case) when the employer has in mind a simple flat rate and the employee assumes that the rate set is only the base rate and that the other entitlements under an Award will also be payable (such as time and a half for over-time): for example, see Kent v Tal & Ors [2018] FCCA 3218 where the contract made no mention of overtime or weekend work and Fair Work Ombudsman v Lindsay F. Nelson Manufacturing Pty Limited & Anor [2019] FCCA 2151 where there was no discussion of annual leave. Here, it is fair to say that the applicant probably did not consider the terms of the Award at all at the time of contracting, whereas the respondent appears to have had in mind that the flat rate would be a payment applicable to all Award entitlements.
As the purpose of the statutory scheme regulating wages is to impose a minimum rate of payments, the courts have been reticent to assume that simple agreements setting an hourly rate (even if at a rate higher than the relevant Award minimum) also meet the employer’s obligation to pay additional allowances in modern Awards: see, for example, Ray v Radano [1967] AR (NSW) 471; Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; 3 FCR 503 (194) 9 IR 469; Poletti v Ecob (No.2) [1989] FCA 779; (1989) 31 IR 321; Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4; (1999) 94 IR 218; Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406. It is, of course, possible for a term to be placed in the employment contract which would ensure that both parties understood the terms of the engagement and whether the rate was intended to cover all Award entitlements (a so called ‘all in’ rate). However, such a clause needs to be drafted with particular care (see, for example, Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99), although it is not impossible: see, for example, Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400.
In this case the terms of the employment contracts do not set out that the hourly rate is intended to also discharge other entitlements under the award. As a result the law prevents the above Award payments for ordinary hours being relied upon for the purpose of showing that the other Award entitlements have, in substance, been paid.
The respondent also made payments to employees, including the applicant, by way of a bonus based upon a profit sharing plan. In Pacific Publications Pty Ltd v Cantlon [1983] AR (NSW) 423; (1983) 4 IR 415 a journalist was paid a ‘special gratuity’ of $4,000 when retrenched. It later transpired that the retrenchment pay was wrongly calculated, however the court did not permit the employer to rely upon the gratuity to show that sufficient had been paid to meet the retrenchment obligation. The same conclusions were reached in Wall v Kingbuilt Homes Pty Ltd & Anor [2019] FCCA 2355 with respect to a payment made as a ‘goodwill gesture’. These cases appear to proceed on the basis that the categorisation by the employer of the payment prevents it from being relied upon as a discharge of an Award entitlement, although this explanation does not sit easily with James Turner Roofing Pty Ltd v Peters [2003] WASCA 28. In the present proceedings, however, it appears that the profit share payment is best described as an incentive to employees, not dissimilar to the way in which a Christmas bonus is given in modern times. As such, the bonus payment is clearly not intended to be part of the payments to employees to meet their Award entitlements. As a result I must find that the respondent cannot rely upon this payment as a partial discharge of the Award obligations.
Conclusions
In this matter the parties had a series of contracts of employment setting various fixed hourly rates. On the material before the Court the applicant appeared to be performing the duties of a Level 5 employee, and therefore should be remunerated as such under the Award. The hourly rates (to the extent that they are above Award rates) cannot be used to offset other Award entitlements, nor can the ‘profit share’ payments. As a result the claim by the applicant must succeed.
The parties have exchanged spreadsheets setting out the calculations. There is one small point of difference, relating to site allowances. There is little evidence before me on this point, and the dispute in this respect relates to a little over $300. On the evidence I am not satisfied that the applicant has established the greater entitlement to a site allowance.
I will hear from the parties briefly on the quantum based upon their spreadsheet calculations, before fixing an amount for the judgment.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 13 May 2020
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