MILITARY TEMPLATE TECHNOLOGY PTY LTD And DIRECTOR, AUSTRALIAN DEFENCE FORCE RESERVES EMPLOYER SUPPORT PAYMENT SCHEME

[2011] AATA 490

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 490

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2010/2857

GENERAL ADMINISTRATIVE DIVISION		)
Re		MILITARY TEMPLATE TECHNOLOGY PTY LTD

Applicant

And DIRECTOR, AUSTRALIAN DEFENCE FORCE RESERVES EMPLOYER SUPPORT PAYMENT SCHEME

Respondent

DECISION

Tribunal  Senior Member Bernard J McCabe

Date 15 July 2011

Place Brisbane

Decision  The Tribunal affirms the decision under review.

..............................................

Senior Member

CATCHWORDS

EMPLOYER SUPPORT PAYMENT SCHEME — reserve service —full-time work —
part-time work — regular paid employment — decision affirmed.

Accent Services Australia Pty Ltd and Director, Employer Support Payment Scheme [2010] AATA 205

REASONS FOR DECISION

15 July 2011 Senior Member Bernard J McCabe

1.      

Military Template Technology Pty Ltd (“MTT”) is the applicant in these proceedings. The man behind MTT is Mr Andrew Dahl. He is a director and secretary of the company, and he is its only full-time employee. Mr Dahl has an extensive background in the military. He has been a member of the reserves since 2001 and he holds the rank of major. His employer, the applicant, has released him to do reserve work for extended periods since 2001. The respondent, the Director of the Employer Support Payment Scheme, paid employer support payments to the applicant for those periods when the applicant was deprived of the benefit of

Mr Dahl’s services. But a dispute has arisen in relation to the claims made by MTT in 2009. The respondent concluded Mr Dahl was only employed by the applicant on a part-time basis – specifically, that he worked around 17 hours per week in the periods under review. That determination effectively reduced the amount the employer would receive. Mr Dahl and the employer disagree with the respondent’s view. They say Mr Dahl was a full-time employee, or would have been but for his reserve service. They say the employer should be paid on the basis that Mr Dahl worked for the company full-time.

2.      The dispute has now come before the Tribunal for review. For reasons I will explain, I have decided the decision under review should be affirmed.

Background to the dispute

3.      MTT was incorporated in 2001. The company was formed to take over a business conducted by Mr Dahl that he had been running with a colleague from the Army, Mr Alan Victor, since around 1995.  Mr Dahl was appointed as a secretary and director of the company when the company was registered. He also holds one of the two issued shares. The other share is held by his fellow director, Mr Victor.

4.      Mr Dahl described the company’s business in the course of his evidence. Its core business is the manufacture and supply of range planning templates and protractors used by the Army. He supplies those products to other defence clients overseas. But MTT does more than that. Mr Dahl said he saw himself as an entrepreneur and innovator. He said MTT was prepared to tackle business opportunities as and when they arose. By way of example, he said the company had recently accepted printing contracts and produced pool covers that were unrelated to his defence contacts and background.

5.      In 2008, the company resolved at a general meeting to employ Mr Dahl on the basis he would receive a salary of $55,000 pa, a fully funded company car and phone, two weeks of paid annual leave, additional unpaid leave as required and unlimited unpaid Army reserve leave. That formal arrangement was recorded in the minutes of the meeting which were reproduced in exhibit one at p 56. I note the minutes expressly record that Mr Dahl was a full-time employee of the company. The payment arrangement is unusual. Mr Dahl was not paid a fixed amount on a fixed schedule. He was paid the equivalent of a fortnight’s salary when he completed the equivalent of a fortnight’s work.

6.      Mr Dahl said he was the only full-time employee of MTT in the periods under review. In his evidence, he explained his duties are wide-ranging. He said he attends to every aspect of the company’s business. He is obviously passionate about MTT: he claimed to think about the business and new opportunities during every available minute. He was unable to precisely identify how much time he spent on company business through the use of time sheets or other records. I accept that, as a small-business, MTT did not necessarily operate like that, so it is unsurprising that he could not account for every hour that he spent on his job with MTT. Mr Victor did say in a statutory declaration (exhibit one at p 6)  that Mr Dahl worked 40 hours a week – although that must be during the periods when Mr Dahl was present and not engaged on reserve service.

7.      Mr Victor is also employed in the business on a part-time basis, although I was told in evidence that his input tends to be of a technical nature. He also assists with manufacturing tasks when Mr Dahl is absent from the company on reserve service. Several other individuals, including Mr Dahl’s spouse, have also been employed in the business on a part-time basis over recent years. Mr Dahl said he remained responsible for overseeing the business and planning its strategy, even when he was engaged on reserve service.

8.      

Mr Dahl helpfully prepared a chart that showed the proportion of MTT’s gross income that came from the Employer Support Payment scheme: exhibit 2 at p 18. The chart shows that in the 2006, 2007 and 2008 financial years, roughly one third of the company’s income came from the scheme. The respondent calculated that

Mr Dahl was on reserve service on:

·260 days in 2005-2006 (which meant he was available to work at MTT on 105 days);

·317 days in 2006-2007 (which meant he was available to work at MTT on only 48 days during that period);

·366 days in 2007-2008 (which meant he was not available to work at MTT at all during that year, except to the extent that he was authorised to look after his employer’s business during the course of his service); and

·220 days in 2008-2009 (which meant he was available on 145 days to work for the applicant).

9.      I accept Mr Dahl has undertaken less reserve service in recent years. The employer was paid much smaller amounts during those periods as a result. It seems Mr Dahl has decided to focus on MTT’s business. That focus has certainly produced results: the chart showed income dramatically increasing in the 2010-2011 financial year. I also note that Mr Dahl derived income from the company, from the Army and from a primary production partnership during the years of income I have referred to above.

The periods in dispute

10.     MTT made a number of claims in respect of Mr Dahl’s service rendered in the in 2009. The respondent examined Mr Dahl’s pattern of employment during the first six months of that year and concluded he was working part-time, rather than full time, and paid MTT accordingly. The respondent determined Mr Dahl was only available to the company 48.8% of the time given his extensive service commitments during the period.

The relevant law

11.     

The rules in this case are found in the Defence (Employer Support Payments) Determination 2005 (“the Determination”). The Determination distinguishes between full-time work and part-time work. Section 3, the definition section, provides relevantly that full-time work is a minimum of 35 hours of regular paid employment each week, while part-time work is regular paid employment for less than 35 hours per week. The respondent directed me to clause 15 of the Defence Instruction (General) PERS 05-42 (“the Instruction”) which elaborated on the meaning of

full-time work

and part-time work. Clause 15 says one evaluates whether a person works full-time by looking at the amount of work they “normally” or “ordinarily” undertake. The respondent says I am entitled to have regard to the terms of the Instruction as an aid to the interpretation of the Determination. I think the approach contemplated by clause 15 of the Instruction is implicit in the definitions of full-time work and part-time work in s 3 of the Determination in any case.

12.     Mr Dahl says he was employed on a full-time basis in MTT’s business (that is for at least 35 hours a week) when he was not on reserve service in 2006-2009. I have no reason to dispute his evidence and that of Mr Victor to that effect. Indeed, I accept that Mr Dahl was working on MTT’s business even during some of the periods he was on reserve service, although that employment could only have been on a part-time basis. But those findings only take us only so far. Mr Dahl says the only time when he was not working full-time on MTT business in 2009 was when he was on reserve service. To put it another way, he says he would have been working full-time for MTT throughout the year but for his service with the reserves. In those circumstances, he argues, it is clear he ordinarily worked for MTT on a full-time basis.

13.     Mr Dahl seemed concerned that he was suspected of being dishonest, or of rorting the system. I will say at once that I did not form that impression of him. I accept he was a witness of truth. I also accept that he honestly believed his company was entitled to receive payments at the full-time rate. He said he did the reserve work out of a sense of duty, and because his country needed him. He was offended that his willingness to answer his country’s call seemed to be used against him.

14.     I also formed the impression that Mr Dahl was troubled by the Tribunal’s decision in Accent Services Australia Pty Ltd and Director, Employer Support Payment Scheme [2010] AATA 205. Mr Dahl suggested at several points that he felt the decision in Accent Services marked a change in the respondent’s approach to dealing with these cases. I am not sure that it does. For present purposes, the case does no more than make the obvious point that the Tribunal will consider the hours of work, the conditions of employment and the amount of pay when assessing whether a person is in regular full-time employment.

15.     There is nothing remarkable in Mr Dahl’s rate of pay but his conditions of employment and hours of work are interesting. The terms of the employment agreement recorded in the minutes of the company meeting in 2008 – in particular the unlimited right to take leave for reserve service, and the unusual practice of paying wages when enough hours were worked, rather than on a regular schedule - obviously contemplate that Mr Dahl would spend significant periods away from the company. Mr Dahl’s evidence also made it clear that the company did not replace him while he took that leave; Mr Victor and the other part-time employees only undertook aspects of Mr Dahl’s role on a part-time basis. In other words, the company conducted its business on the basis that Mr Dahl was not going to be there all of the time. That conclusion is consistent with the proposition that Mr Dahl was not working there full-time.

16.     In the course of carrying out this analysis, one must not forget we are trying to determine whether Mr Dahl’s pattern of work around the relevant time is properly characterised as “regular paid employment” for at least “35 hours each week”. The fact that he works more than 35 hours a week when he is present is not the issue. I have already indicated I am satisfied that Mr Dahl works many hours more than that when he is on the job. But did he do that regularly, in the sense that he did it each week?

17.     I am not satisfied that he did. The evidence establishes Mr Dahl’s work pattern evolved over a number of years to the point where he effectively had two part-time jobs: one in the military, and one at MTT.  He was away from MTT for long stretches, and he was frequently absent for shorter periods when he might otherwise be working there. Importantly, the company’s business adapted to accommodate his pattern of availability. I accept he worked intensively at MTT when he was there, but MTT did not operate at full-capacity in his absence. I note that once he did resume a pattern of full-time employment at MTT in more recent times, the business of the company appears to have expanded and become more profitable.

18.     Part of the difficulty in this case stems from the nature of the work performed by Mr Dahl. As an entrepreneur engaged in an essentially creative process, he was constantly thinking about his business and its opportunities. That sort of mental activity can be difficult to characterise in an exercise like the one at hand. The fact he might think about his business constantly does not necessarily mean he is engaged in employment in the sense intended by the determination.

19.     The respondent concluded Mr Dahl should be paid on the basis that he was working part-time for 17 hours a week. That assessment was based on an analysis of Mr Dahl’s payslips during a sample period. The process was explained in the reviewable decision dated 18 June 2010 (exhibit one at pp 89-90). I was not given any reason to doubt the accuracy or reasonableness of that method of assessment. I therefore affirm the decision under review.

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe

Signed: ...................................................................................
  Associate

Dates of Hearing   19-20 May 2011
Date of Decision   15 July 2011
Applicant   Self-Represented          
Solicitor for the Respondent      Mr A Reilly, DLA Piper Australia