MCDONALD v Il Migliore Pty Ltd and Anor (No.2)
[2014] FCCA 1110
•29 May 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MCDONALD v IL MIGLIORE PTY LTD & ANOR (No.2) | [2014] FCCA 1110 |
| Catchwords: INDUSTRIAL LAW – Small claims procedure – underpayment of minimum casual and overtime rates – consideration and application of relevant legislation, awards and case law – consideration of ‘set-off’ argument – previous orders for compensation set aside – contraventions of Fair Work Act 2009 (Cth), Workplace Relations Act 1996 (Cth), Biscuit (Victoria) Award 1998 [AP769690CRV B0435] and Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073] found – compensation plus interest awarded. |
| Legislation: Fair Work Act 2009 (Cth), ss.45, 547, 550 Federal Circuit Court Rules 2001 (Cth), r.16.05 Federal Court Rules 2011 (Cth) Workplace Relations Act 1996 (Cth), ss.179, 180, 181, 182, 722 Australia Pay and Conditions Scale |
| Australian Timber Workers’ Union v W Angliss & Co Pty Ltd (1924) 19 CAR 172 Re: Clothing Trades Award (1950) 68 CAR 597 Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd (2002) 121 IR 250 |
| Applicant: | KELLY MCDONALD |
| First Respondent: | IL MIGLIORE PTY LTD |
| Second Respondent: | PAULA LINDSAY |
| File Number: | MLG 745 of 2013 |
| Judgment of: | Judge Whelan |
| Hearing date: | 25 February 2014 |
| Date of Last Submission: | 25 February 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 29 May 2014 |
REPRESENTATION
| Counsel for the Applicant: | Applicant in person |
| Counsel for the First Respondent: | Mr Barker appearing as Director of the First Respondent |
| Counsel for the Second Respondent: | No appearance by or on behalf of the Second Respondent |
THE COURT DECLARES THAT:
The Respondents contravened s.182 of the Workplace Relations Act 1996 (Cth) and cl.22 of the Biscuit (Victoria) Award 1998 by failing to pay the Applicant the minimum casual rate for ordinary hours in accordance with the Australia Pay and Conditions Scale and by failing to pay the overtime penalty rate.
The Respondents contravened s.45 of the Fair Work Act 2009 (Cth) and:
(a)Clauses 13.1, 20.1(a) and Schedule A of the Food, Beverage and Tobacco Manufacturing Award 2010 by failing to pay the Applicant the minimum hourly casual rate; and
(b)Clause 33.1(a) and Schedule A of the Food, Beverage and Tobacco Manufacturing Award 2010 by failing to pay the Applicant the applicable overtime rate.
THE COURT ORDERS THAT:
Orders 3 and 4 of the Orders made 20 September 2013 be set aside.
In accordance with s.545(2) of the Fair Work Act 2009 (Cth),
the Respondents forthwith pay the Applicant the sum of $11,917.31 (“the sum”).
Pursuant to s.547(3) of the Fair Work Act 2009 (Cth), the Respondents pay the Applicant interest calculated on the sum as follows:
(a)For the period of 1 March 2012 until 30 June 2012, at a rate of 8.25%, being $328.62;
(b)For the period of 1 July 2012 until 31 December 2012, at a rate of 7.5%, being $450.57;
(c)For the period of 1 January 2013 until 30 June 2013, at a rate of 7%, being $413.67;
(d)For the period of 1 July 2013 until 31 December 2013, at a rate of 6.75%, being $405.51;
(e)For the period of 1 January 2014 until 29 May 2014, at a rate of 6.5%, being $316.21,
such interest totalling $1,914.58, to be paid concurrently with the sum referred to in Order 4 herein.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 745 of 2013
| KELLY MCDONALD |
Applicant
And
| IL MIGLIORE PTY LTD |
First Respondent
| PAULA LINDSAY |
Second Respondent
REASONS FOR JUDGMENT
On 28 May 2013, the Applicant, Ms KELLY MCDONALD
(“the Applicant”), made an application under the Small Claims provisions of the Fair Work Act 2009 (Cth) (“the Act”) in which she sought orders for payment by the First and Second Respondents,
IL MIGLIORE PTY LTD (“the First Respondent”) and
Ms PAULA LINDSAY (“the Second Respondent”) (collectively
“the Respondents”), for a failure to pay the minimum casual rate and the applicable overtime rate for the work performed by her.
On 20 September 2013, the matter came before the Court in the
small claims list. At that time, there was no appearance by or on behalf of either the First or Second Respondents. Correspondence had been received from a person purporting to act for the Respondents, seeking an adjournment of the proceedings. The Court dealt with that matter, and determined to proceed in the absence of the Respondents.
A declaration that the Respondents had contravened both the Workplace Relations Act 1996 (Cth) (“the WR Act”) and the Act was made and orders were made for the Respondents to pay the Applicant a specified amount plus interest.[1]
[1] Order of Judge Whelan made 20 September 2013.
On 11 October 2013, the Respondents lodged an application in a case seeking that the Orders made on 20 September 2013 be set aside pursuant to r.16.05 of the Federal Circuit Court Rules 2001 (Cth)
(“the Rules”). The application sought that the matter be reheard,
and that the Second Respondent be removed as a party to the proceedings. The application was supported by an affidavit of the Second Respondent,[2] which addressed the issues of the failure of the Respondents to be present at the hearing on 20 September 2013.
[2] Affidavit of Paula Lindsay filed 11 October 2013.
The matter was listed to hearing on 14 February 2014. On that day,
Mr RICHARD BARKER (“Mr Barker”), a company director of the First Respondent, sought to lodge an affidavit in Court in which he challenged the quantum of the amount ordered by the Court on
20 September 2013.[3] As a result of late service of that affidavit,
the matter was further adjourned until 25 February 2014 for hearing.[4]
[3] Affidavit of Richard Barker filed 14 February 2014.
[4] Order of Judge Whelan made 14 February 2014.
Rule 16.05 of the Rules
Rule 16.05(2) of the Rules provides as follows:
(2)The Court may vary or set aside its judgment or order after it has been entered if:
(a) the order is made in the absence of a party …
In SZIDH v Minister for Immigration and Citizenship [2007] FCA 369 (“SZIDH”), Jessup J considered the approach that the Court should take to dealing with an application under r.16.05(2)(a) of the Rules. In the matter before him, the Court, at first instance, had adopted a two-stage approach:
·First, the Court had considered whether the applicant had a legitimate excuse for not attending the trial when it was originally commenced; and
·
Second, the Court had considered whether the applicant's case,
on the merits, was fairly arguable.
His Honour considered that the Court, at first instance, had adopted the correct approach. His Honour stated as follows:
In Davies v Pagett, the Full Court referred to what was said by Lord Wright, in Evans v Bartlam [1937] A.C 473 at 489.
His Lordship said (as set out at p 229 of 10 FCR):
A discretion necessarily involves a latitude of individual choice according to the particular circumstances, and differs from a case where the decision follows ex debito justitiae once the facts are ascertained. In a case like the present there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set it aside should be exercised in his favour. The primary consideration is whether he has merits to which the Court should pay heed; if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication.
Having dealt with a number of other matters, the Full Court said (at p 231):
Since the decision of the House of Lords in Evans v Bartlam (supra), the settled course of authority in England and in this country has emphasised, as fundamental to the exercise of the judicial discretion to set aside a default judgment, the need for a defendant to show a prima facie defence on the merits. In the language of Lord Wright, in the passage cited by the learned judge, this is “the primary consideration”.[5]
[5] [2007] FCA 369 at para.8.
I have considered the affidavit of the Second Respondent lodged in support of the application in a case and I am not satisfied, on the basis of that affidavit and the material that was before the Court on
20 September 2013, that the First Respondent had a legitimate excuse for not attending the hearing. However, having heard from Mr Barker and having considered the documentary evidence before the Court,
I am satisfied that there were miscalculations in the amount calculated to be owing to the Applicant by the Respondents and, on that basis, there is merit in the application that the Orders should be set aside.
Interpretation of the Biscuit (Victoria) Award 1998 and the Food, Beverage and Tobacco Manufacturing Award 2010
In order to determine what the Applicant ought to have been paid, it is necessary to consider the terms of Biscuit (Victoria) Award 1998
[AP769690CRV B0435] (“the Biscuit Award”) and the
Food, Beverage and Tobacco Manufacturing Award 2010[MA000073] (“the Modern Award”). The Applicant's employment, prior to the passage of the Act, was governed by the terms of the WR Act.
Under the provisions of s.182 of the WR Act, an employee was entitled to be paid the appropriate basic periodic rate of pay in relation to their hours of work. Under the provisions of ss.179, 180 and 181 of the
WR Act, the appropriate periodic rate of pay was to be determined by reference to what is referred to as a ‘pre-reform wage instrument’.
With respect to the Applicant in this matter, that instrument was the Biscuit Award. From 1 January 2010, in accordance with the provisions of the Act, the Applicant's employment was covered by the
Modern Award.
It is not disputed that, in this case, the Applicant was a casual employee in accordance with the terms of both Awards. She was, therefore, entitled to be paid at the rate of a casual employee as set by the terms of those Awards and, prior to January 2010, the Australia Pay and Conditions Scale (“the APCS”). In this matter, the Respondents dispute that the Applicant was entitled to paid overtime and they also dispute the classification level which she claims to be the appropriate level for the work performed by her.
The principles governing the constructions of awards have been the consideration of courts and tribunals over a long period of time.
From the authorities, the following principles may be distilled:
·If the terms of an industrial instrument are clear and unambiguous, then the instrument must be interpreted in accordance with that clear and unambiguous meaning;[6]
[6] Re: Clothing Trades Award (1950) 68 CAR 597.
·Words used in an industrial instrument should not be interpreted in a strict, technical fashion as they are often drafted by laypersons drafting words, in the context of the custom and practice within an industry, or a particular enterprise;[7]
[7] George A Bond & Co Ltd (In Liquidation) v McKenzie [1929] AR (NSW) 498.
·Words should be given their ordinary meaning unless to do so would provide an irrational, inconsistent or absurd result: words should be held to mean what they say;
·
Each clause should be interpreted within its context, that is,
the meaning of particular words should be read in the context of the instrument as a whole;[8]
·The court or tribunal should strive to give effect to the intention of the authority which made the instrument, provided that the words can be reasonably interpreted to mean that which the authority or parties intended them to mean;[9]
·The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘… the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘… ideas that gave rise to an expression in a document from which it has been taken’– Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J);[10] and
·
It is of course necessary, in the construction of an award,
to remember, as a contextual consideration, that it is an award under consideration: its words must not be “interpreted in a vacuum divorced from industry realities”.[11]
[8] Australian Workers’ Union v Abbey (1939) 40 CAR 494.
[9] Australian Timber Workers’ Union v W Angliss & Co Pty Ltd (1924) 19 CAR 172.
[10] City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union (2006) 153 IR 426 at para.53.
[11] City of Wanneroo v Holmes (1989) 30 IR 362 at 378.
The first issue is whether the provisions of the Biscuit Award, with respect to the payment of overtime, had application to the Applicant as a casual employee.
Clause 11.2 of the Biscuit Award defines casual employment:
11.2.1 A casual employee is an employee engaged as such.
11.2.2A casual employee shall be paid per hour at the rate of 1/38 of the weekly rate prescribed for the class of work performed, plus an additional loading of 25% for all hours worked. Subject to 20.10 of this award, casual employees shall also be entitled to shift penalties, weekend and public holiday penalties.
Clause 20 of the Biscuit Award deals with shift work. Clause 20.10 deals with what is commonly referred to as ‘no penalty on a penalty’.
It states:
20.10There shall be no compounding of penalties prescribed in any of the clauses herein. The higher penalty prescribed will be in lieu of and not in addition to any lower penalty or penalties.
Clause 22 of the Biscuit Award deals with the issue of overtime.
It states:
22.1Overtime in excess of ordinary hours as determined shall be paid at the rate of time and a half for the first three hours and double time thereafter.
The ordinary hours of work are defined in cl.19.1 of the Biscuit Award. Clause 19.1.1 states:
Ordinary working hours shall be 38 hours per week to be worked in one of the following ways …
Subclauses 19.1.1(a) to (e) of the Biscuit Award set out the various ways in which ordinary hours may be worked. Clause 19.1.2 states:
A full time employee shall be required to work an average of 38 hours per week. Where ordinary hours are to exceed eight per day, such manner of working shall be determined by agreement through the mechanism provided for in clause 8 – Enterprise flexibility provisions, of this award.
The Respondents contend that the overtime provisions do not apply to casual employees because cl.11.2.2 of the Biscuit Award provides that the hourly rate, plus the 25% loading, applies to “all hours worked”. The Respondents also point out that the provisions of the
Modern Award contain a different definition of casual employment.
Clause 13 of the Modern Award defines casual employment as follows:
13.1A casual employee is one engaged and paid as such.
A casual employee for working ordinary time must be paid an hourly rate calculated on the basis of 1/38th of the minimum weekly wage prescribed in clause 20.1(a) for the work being performed plus a casual loading of 25%. The loading constitutes part of the casual employee’s all purpose rate.
I do not think that the variation in wording between the two Award provisions can be relied upon to distinguish the entitlements under the Biscuit Award and the Modern Award. The Modern Award brought together several different awards in which different language was used. The change in language may only reflect the use of language from one of the other antecedent awards and a desire to make the provision clearer. The overtime clause in the Biscuit Award does not exclude casual employees. The provisions of cl.11.2.2 of the Biscuit Award provide that the 25% loading applies to all hours except those that are subject to cl.20.10 of the Biscuit Award. In other words, all other loadings or penalties are applied to the hourly rate, plus 25%, except the shift work loading, where the 25%, or the shift loading, applies, whichever is the higher rate. I am satisfied that, under the
Biscuit Award, a casual employee whose hours exceeded 38 per week, or eight hours per day, would be entitled to be paid overtime.
The Respondents also sought to rely on the provisions of cl.19 of the Biscuit Award and cl.30 of the Modern Award to submit that the Applicant's hours could be averaged over a 28-day period and only if, over that period, the hours exceeded 152 hours, would she be eligible for overtime. The Applicant, however, was not employed to work a
38-hour week. She was not a full-time employee who could be required to work an average of 38 hours per week, but a casual employee.
The provisions of cl.19.1 of the Biscuit Award applied to employees engaged as full-time workers. Further, the provisions of cl.30 of the Modern Award make it clear that methods for arranging ordinary hours of work require that the arrangement of ordinary hours must be by agreement between the employer and the majority of employees in the enterprise, or part of the enterprise, concerned. There was no evidence, in this case, of such agreement.
For a period of time during 2011, the Applicant worked on some days, usually a Monday, from 1.00 p.m. until 9.00 p.m. Under the provisions of cl.30 of the Modern Award, ordinary hours worked after 6.00 p.m. by a day worker, being a person who is not a shift worker, must be paid at overtime rates.
The other issue in contention between the parties was the classification level which the work performed by the Applicant attracted.
In December 2008, the Applicant completed an Advanced Diploma in Hospitality Management. In February 2009, the Applicant became a kitchen supervisor. At that time, her rate of pay was increased by $2.00 per hour. In October 2010, the Applicant became the assistant kitchen manager and again, her rate of pay was increased by $2.00 per hour.
The Applicant maintains that, in February 2009, she moved from a Level 2 to a Level 3 under the Biscuit Award and that, in October 2010, she moved from a Level 3 to a Level 4 under the Modern Award.
The Respondents maintain that, at all times, the appropriate classification level was Level 2.
The Applicant's evidence was that, upon her promotion to kitchen supervisor, she took on the following additional duties:
·Staff supervision;
·Training of new staff;
·Shop duties;
·Customer service;
·Cash register operation;
·Gift wrapping;
·EFTPOS machine use;
·Producing seasonal produce including jams, relishes and oils;
·Writing the cleaning roster;
·Transporting stock to the warehouse; and
·Laundry.
Upon her promotion to assistant kitchen manager, the Applicant’s evidence was that, in addition to the previous duties she had undertaken, she was responsible for:
·Stock ordering of all ingredients, dairy, paper and cleaning products;
·Answering the telephone;
·Taking wholesale orders;
·Hamper making;
·Balancing the cash register;
·Opening and closing of the shop on several occasions;
·Opening the kitchen on several occasions to set up for the day;
·Being in charge of the kitchen and production if the kitchen manager was absent sick;
·Writing the monthly cleaning rosters;
·Product suggestion and input;
·Stocking the shop with products; and
·Being solely in charge of shifts in 2011 where she was responsible for three to six staff from 5.00 p.m. to 9.00 p.m.
The Applicant also gave evidence that she was given her own key to the shop.
In cross-examination, the Applicant stated that, in February 2009, there were no other supervisors, only the kitchen manager. There were six or seven employees in the bakery on a day-to-day basis. The Applicant agreed that she worked under the supervision of the kitchen manager. When asked what happened when she became the assistant manager, the Applicant gave the names of two employees who became supervisors. She stated that, when she became the assistant kitchen manager, she undertook stock ordering. The Applicant wrote what the stock levels were and would then call the company to order directly through them. She would count the stock and write down what would have to be ordered. The Applicant denied that the level had been set by the kitchen manager, stating that it changed; at the start of the year it would be less than at the end of the year and she would take that into consideration. The Applicant stated that she would instruct the staff that she was working with, and that, on occasions, she would be solely in charge, either because the kitchen manager was absent or because she was working after 5.00 p.m.
The classification definitions for a biscuit industry employee are set out in cl.14.3 of the Biscuit Award. The relevant provisions are as follows:
Level 2
Definition
An employee appointed to this level works under direct supervision and undertakes a range of tasks and works within established routines, methods and procedures.
Skills/duties
· Responsible for the quality of his/her own work under supervision.
· Work in a team environment and/or under supervision.
· Undertake duties in a safe and responsible manner.
· Operation of all appropriate materials handling equipment and trained to operate machinery and equipment required to perform at this level.
· Undertaking duties consistent with hygiene standards.
· Assists in on the job training.
Indicative of the tasks which employees at this level may perform are the following:
1. Operates auxiliary equipment.
2. Biscuit Packer.
3. Raking off gas fired oven.
4. Loading and unloading oven.
5. General cleaning duties.
6. General duties.
…
8. Customer Relations (retail).
Level 3
Definition
An employee appointed to this level works under routine supervision, undertakes a range of duties, and has all the appropriate skills of a Level 2.
Skills/duties
· Responsible for the quality of his/her own work under supervision.
· Work in a team environment and/or under supervision.
· Undertake duties in a safe and responsible manner.
· Operation of all appropriate materials handling equipment and trained to operate machinery and equipment required to perform at this level.
· Undertaking duties consistent with hygiene standards.
· Assists in on the job training.
Indicative of the tasks which an employee at this level may perform are the following:
1. Operation of biscuit forming, mixing, baking, wrapping and creaming machinery.
…
3. Customer relations (in conjunction with other duties).
The classification structure and definitions in the Modern Award are set out in Schedule B:
B.2.2 Level 2 (82% relativity to the tradesperson)
(a) An employee at Level 2 is an employee who has either:
(i)completed a structured induction program over three months or for such shorter period as is necessary to reach the required level of competency for appointment to Level 2; or
(ii)has recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 2.
(b) Competencies
An employee at Level 2 performs a range of general duties essentially of a manual nature and to the level of the employee’s competency, and:
(i) exercises limited judgment;
(ii) works under direct supervision;
(iii)is undertaking structured training to enable the employee to work at Level 3.
B.2.3 Level 3 (87.4% relativity to the tradesperson)
(a) An employee at Level 3 is an employee who has either:
(i)completed an Australian Qualifications Framework (AQF) Certificate 1in Food Processing; or
(ii)has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 3.
(b) Competencies
An employee at Level 3 performs a range of duties including specialised work, and:
(i) may exercise judgment within defined procedures;
(ii) works under general supervision;
(iii)may undertake structured training to enable the employee to work at Level 4;
(iv)is responsible for the quality of the employee's own work within the limits of Level 3;
(v)assists in the provision of on-the-job training in conjunction with tradespersons and supervisor/trainers or an accredited training provider.
B.2.4 Level 4 (92.4% relativity to the tradesperson)
(a) An employee at Level 4 is an employee who has either:
(i)completed an AQF Certificate 2 in Food Processing; or
(ii)has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 4.
(b) Competencies
An employee at Level 4 performs work above and beyond the competencies of a Level 3 employee, and:
(i) exercises judgment;
(ii) works under general supervision;
(iii)may undertake structured training to enable the employee to work at Level 5 level;
(iv)is responsible for assuring the quality of the employee's own work;
(v)assists in the provision of on-the-job training in conjunction with tradespersons and supervisor/trainers or an accredited training provider.
The Level 2 under both Awards is the base level for any employee with more than three months experience. The language used in the
Biscuit Award refers to a Level 2 working under ‘direct’ supervision while a Level 3 works under ‘routine’ supervision. A Level 2 employee would not be responsible for supervising other employees, although they might assist in on-the-job training. A Level 2 employee might be engaged only in retail sales work, while a Level 3 employee may be engaged in serving customers in conjunction with other duties.
A Level 2 employee under the Biscuit Award is not a biscuit-maker as such, but may be engaged only in loading and unloading ovens, packing biscuits and cleaning duties.
I am satisfied that, when the Applicant became a kitchen supervisor, her duties were commensurate with those of a Level 3 employee under the Biscuit Award.
At the time of her promotion to assistant kitchen manager,
the provisions of the Modern Award applied. Under the terms of the Modern Award, a Level 2 employee exercises limited judgment, performs a range of general duties, essentially of a manual nature,
and works under direct supervision. A Level 3 employee performs a range of duties, may exercise judgment within defined procedures, works under general supervision and is responsible for the quality of their own work. A Level 4 employee performs work above and beyond the competencies of a Level 3 employee, exercises judgment, works under general supervision and is responsible for assuring the quality of their own work.
While some of the duties undertaken by the Applicant as assistant kitchen manager required the exercise of judgment within defined procedures, she was required to exercise initiative and was, at times, solely responsible for the work of others. The Applicant was given the responsibility of opening and closing the shop and also of opening the kitchen to set up for the day. The pay increase she was given at the time indicates that the Respondents regarded her as taking on responsibilities and duties beyond that of a kitchen supervisor.
Her Diploma in Hospitality Management was also a higher qualification than an AQF Certificate 2.
I am satisfied that the appropriate classification level for the Applicant on her appointment as assistant kitchen manager was Level 4.
The set-off argument
The Applicant agreed that, on most days, she worked from 8.45 a.m. until 5.00 p.m. and had a 45-minute break for lunch. The Applicant’s hours were recorded in what appears to be an exercise book where she wrote her start and finish times and the total hours. Typically, a period of 8.45 a.m. until 5.00 p.m. was recorded as eight hours. It was put to the Applicant that 8.45 a.m. to 5.00 p.m. was eight and a quarter hours, which, with a break of 45 minutes, would mean seven and a half hours of work. On this basis, it was submitted that the Applicant had, in fact, been overpaid and that this overpayment should be off-set against any award underpayment.
The Applicant stated that her timesheets were approved by the
Second Respondent and her payslips reflected that she was paid for
eight hours. She stated that this was how the Second Respondent chose to pay all of her employees: it was an employment entitlement. I accept that the Applicant was paid for 30 minutes per day when she was not expected to work and was, in fact, entitled to take an unpaid break.
The fact, however, that the employer chose to provide the employees with a paid break cannot simply be off-set against the failure to pay the award rate or to pay overtime. It has been well established that it is not possible to contract out of award rights and obligations.[12]
The principles applicable to determining whether payments made by an employer to an employee can be off-set against payments due under an award have been considered in a number of authorities. These authorities are discussed by Goldberg J in Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd (2002) 121 IR 250.
After considering some five previous decisions his Honour concluded:
These authorities make it clear that where a payment is made to an employee in discharge of an award obligation, which payment is in fact in excess of the amount of the obligation, the amount of the excess cannot be set-off against a claim in respect of a different award obligation unless at the time of the payment of the excess the employer designates that the excess is payable in respect of a purpose or an obligation different from the purpose for which the initial payment is made.[13]
[12] Josephson v Walker (1914) 18 CLR 691.
[13] (2002) 121 IR 250 at para.60.
In summary, where there is a payment made for, or in respect of, ordinary hours of work which is in excess of the award obligation,
the excess cannot be set-off against a claim for underpayment of overtime unless, at the time of the payment of the excess, the employer designates that the excess over the amount of the award obligation is paid to the purpose of satisfying any entitlement to overtime payments.
In this case, the Applicant was entitled to an unpaid meal break.
The employer chose to pay her for a 30-minute break. There was no agreement at the time that this payment would be in lieu of the Award rate or of overtime. The employer cannot therefore now claim that the Applicant was overpaid and off-set that amount against other award obligations.
The amount of the underpayment
I accept the Respondents’ submission that, in calculating the amount of the underpayment, there was some double-counting in that hours in excess of 38 were counted both at single time rate and then at the overtime rate. In some cases, where the Applicant worked from
1.00 p.m. to 9.00 p.m., the hours after 6.00 p.m. were not calculated at the overtime rate which, in accordance with cl.30.2(d) of the
Modern Award, they should have been. The Court was provided with information from both the Applicant and Respondents of the days worked and hours recorded over the period of the Applicant’s employment. While these records are somewhat deficient, they are the best evidence available to the Court. Taking those matters into account, the total underpayment would appear to be $11,917.31, rather than the amount of $15,235.65 contained in the Orders of 20 September 2013.
In her originating application, the Applicant sought payment of interest on the unpaid wages. Under the provisions of s.547 of the Act,
the Court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary. Similar provisions were contained in s.722 of the WR Act. I see no reason why I should not order that interest be paid on the amount the Respondents were required to pay under the terms of the relevant Awards and which has been outstanding since at least February 2012. In the absence of provisions in the Rules with respect to the calculation of such interest, the Federal Court Rules 2011 (Cth) (“the FC Rules”) apply.
In accordance with Practice Note CM 16 of 28 November 2008,[14]
the applicable rate is the Reserve Bank of Australia cash rate plus 4%.
[14] See Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174.
The position of the Second Respondent
The Respondents have sought orders that the Second Respondent be removed as a party to the action. The evidence before the Court was that the Second Respondent was a director of the First Respondent.
She hired the Applicant, determined her pay rate and personally paid the Applicant's wages into her account. While Mr Barker may have been familiar with the books and records of the First Respondent,
he was not involved in the day-to-day operation of the business.
The application in this case involves a contravention of a civil remedy provision of the Act, namely s.45.
The provisions of s.550 of the Act provide that a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. Under s.550(2) of the Act:
A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
To be involved in a contravention for the purposes of s.550(2)(c) of the Act does not require that the person knew that they were contravening a provision of the Act at the time the contravention occurred; it is sufficient that they knowingly participated in the activity which constituted the contravention. The Second Respondent set the Applicant’s rate of pay and paid her wages. I am satisfied that the Second Respondent was directly knowingly concerned in the contravention in that she authorised the payments made to the Applicant.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Judge Whelan
Associate:
Date: 29 May 2014
Key Legal Topics
Areas of Law
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Civil Procedure
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Negligence & Tort
Legal Concepts
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Abuse of Process
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Costs
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Damages
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Duty of Care
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Negligence
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Res Judicata
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