Mr Aaron Foster v CBI Constructors Pty Ltd

[2013] FWC 9536

[2013] FWC 9536[Note: An appeal pursuant to s.604 (C2014/3) was lodged against this decision - refer to Full Bench decision dated 24 May 2014 [[2014] FWCFB 1976] for result of appeal.]

FAIR WORK COMMISSION

DECISION

AND

REASONS FOR DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Aaron Foster
v
CBI Constructors Pty Ltd
(U2013/11928)

COMMISSIONER CLOGHAN PERTH, 12 DECEMBER 2013

Unfair dismissal.

[1] Mr Foster has made application to the Commission seeking a remedy for alleged unfair dismissal from his employment with CBI Constructors Pty Ltd.

[2] CBI Constructors Pty Ltd objects to the application on the grounds that Mr Foster is not protected from unfair dismissal because, as a Warehouse Supervisor, his annual rate of earnings is over $129 300 and also he is not covered by a modern award. For Mr Foster to be protected from unfair dismissal, it is necessary for him to demonstrate to the Commission that he was covered by a modern award or that his annual rate of earnings is less than the high income threshold.

PROCEDURAL BACKGROUND

[3] On 25 July 2013, Mr Aaron Foster (Mr Foster or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from his employment with CBI Constructors Pty Ltd (Employer).

[4] The application is made in accordance with s.394 of the Fair Work Act 2009 (FW Act).

[5] The application was the subject of an unsuccessful conciliation conference on 3 September 2013 and was referred to me for arbitration on 6 September 2013.

[6] On 8 October 2013, the Employer objected to the application on the grounds that the Applicant is not protected from unfair dismissal because at the time he was dismissed:

● a modern award did not cover Mr Foster;
● an enterprise agreement did not apply to Mr Foster’s employment; and
● Mr Foster’s annual rate of earnings exceeded the high income threshold.

[7] The application was the subject of a conference in the Commission on 21 October 2013. The Applicant conceded at the conference that an enterprise agreement did not apply to his employment. The parties agree that Mr Foster had completed the minimum period of employment at the time of his dismissal to be protected from unfair dismissal.

[8] The parties agreed that the outstanding jurisdictional objections be dealt with by written submissions, and if necessary, further oral submissions.

[9] The Commission is required to determine two threshold questions prior to determining, if necessary, the merits of Mr Foster’s application. The questions are:

● Did a modern award apply to Mr Foster’s employment at the time of his dismissal? and

● Was Mr Foster’s annual rate of earnings, at the time of his dismissal, greater than or less than the high income threshold?

[10] These questions follow from the legislative provisions relating to unfair dismissals.

RELEVANT LEGISLATIVE FRAMEWORK

[11] Mr Foster is protected from unfair dismissal in accordance with s.382 of the FW Act as follows:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[12] Regulation 3.05 of the Fair Work Regulations 2009 (FW Regulations) explains how to calculate the amounts for the purpose of assessing whether Mr Foster’s annual rate of earnings is less than the high income threshold. Regulation 3.05 is as follows:

“3.05 When a person is protected from unfair dismissal—high income threshold

(1) For subparagraph 382(b)(iii) of the Act, this regulation explains how to work out amounts for the purpose of assessing whether the high income threshold applies in relation to the dismissal of a person at a particular time.

Note: Under section 382 of the Act, a person is protected from unfair dismissal if specified circumstances apply. One of the circumstances is that the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Piece rates

(2) ...

(3) ...

(4) ...

(5) ...

Benefits other than payment of money

(6) If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”

[13] I now turn to the questions for determination.

Did a modern award apply to Mr Foster’s employment at the time of his dismissal?

[14] The Applicant asserts that the Storage Services and Wholesale Award 2010 (SSW Award) covered his employment and that Mr Foster’s work included skills described in the classification of Storeworker grade 4 with the exception that he supervised less than 10 Storeworkers. The Applicant’s summary reads:

“...the respondent conducts its business in an industry that the award covers, and the applicant was engaged in work that the award expressly covers. It follows that the award covered the applicant’s employment.”

[15] The first matter to observe is that the SSW Award is an “industry” award. In other words, the award covers a discrete and particular business activity, rather than an award which covers, for example, a particular occupation (Air Pilots) or age group (Children’s Services).

[16] The SSW Award sets out at clause 4, the coverage of the SSW Award. Clause 4.1 reads as follows:

“4.1 This industry award covers employers throughout Australia in the storage services and wholesale industry and their employees in the classifications listed in clause 14 - Classification.” (my emphasis)

[17] Clause 3 - Definitions and interpretation of the SSW Award sets out the meaning of the “storage services and wholesale industry” as follows:

“Storage services and wholesale industry means the receiving, handling, storing, freezing, refrigerating, bottling, packing, preparing for sale, sorting, loading, dispatch, delivery, or sale of whole, of produce, goods or merchandise as well as activities and processes connected, incidental or ancillary”.

[18] For an employee to be covered by the SSW Award it is necessary the employer be “in” the “storage services and wholesale” industry. Put in the form of question for the purposes of this application - is the Employer in the “storage services and wholesale” industry? The answer must clearly be in the negative.

[19] The substantial character of the Employer is in engineering and the construction of either onsite or pre-fabricated materials. It is not in the “storage services or wholesale” industry. While not determinative, it is notable that Mr Foster’s offer of employment contains the footnote:

“Engineering ● Procurement ● Construction Since 1889”

[20] The Applicant is asserting that because he is employed as a Warehouse Supervisor, his Employer is in the storage services industry. While Mr Foster may work in the Employer’s warehouse, that does not affirm the proposition that the Employer is in the storage services industry. Such a proposition is not sound and ignores all other reliable facts.

[21] I find that Mr Foster was not employed in the storage services and wholesale industry. Consequently, the SSW Award did not apply to Mr Foster’s employment at the time of his dismissal.

[22] While it is not necessary, on the basis of the statement of facts and submissions, I would also not have found that Mr Foster to fall within the classification of “Storeworker grade 4”, for a number of reasons. Mr Foster may have carried out a number of the generic skills/duties of a Storeworker grade 4, such as interpersonal and communication skills, liaising with management, coordinating activities, but his salary alone is indicative of the disparity between a Storeworker and Warehouse Supervisor.

[23] I now turn to the second question for determination.

Was Mr Foster’s annual rate of earnings, at the time of his dismissal, greater than or less than the high income threshold of $129,300?

[24] Mr Foster’s offer of employment states that the terms contained therein and the “Staff General Terms and Conditions of Employment” (General Terms) form part of his contract of employment. The General Terms provides for a salary review in November each year for Supervisory Staff. The salary review is based upon salary movements in the construction industry, individual performance and increased level of experience.

[25] On 1 November 2012, Mr Foster’s salary was increased by approximately 10.25% to $122 226 per annum. This amount is not in dispute between the parties. Consequently, it is necessary to determine what further earnings, if any, Mr Foster received from the Employer which can properly be considered in accordance with subsection 382(b)(iii) of the FW Act.

[26] “Earnings” as defined in subsection 332(1) of the FW Act includes “the employee’s wages”.

[27] The Australian Concise Oxford Dictionary (ACOD) defines “wage” as “the amount paid at regular intervals, esp by the day or week or month, for time during which workman or servant is at employer’s disposal”. While “wages” is not defined in the FW Act, subsection 332(2) of the FW Act excludes various payments from earnings. Relevant to this application is paragraph 332(2)(a) which reads:

“(a) payments the amount of which cannot be determined in advance.”

[28] The legislative note to paragraph 332(2)(a) states:

“Some examples covered by paragraph (a) are commissions, incentive based payments and bonuses, and overtime (unless the overtime is guaranteed)”. (my emphasis)

[29] Clearly, the legislative context to the meaning of earnings is that amounts which cannot be pre-determined in advance are excluded. For example, bonuses which may be dependent on the performance of the individual or group of employees, are not included because of its indeterminate nature. However, it is important to note that overtime, of itself, is not excluded entirely. Overtime which is guaranteed is included for the purposes of earnings.

[30] On a regular and systematic basis, Mr Foster was required to perform 2.5 hours overtime each week for the purposes of conducting safety pre-start meetings. In addition, Mr Foster worked further overtime each week. All overtime was paid at Mr Foster’s ordinary hourly rate of pay.

[31] This leads to the question of whether Mr Foster was guaranteed or sure that he would receive 2.5 hours each week of overtime. Put differently, could Mr Foster have a confident expectation each week that he would receive 2.5 hours each week in overtime as a result of the pre-start meetings?

[32] For the financial year 2012/2013, Mr Foster’s earnings occurred in 25 fortnightly periods. Of the 25 fortnightly periods, Mr Foster did not work overtime in two fortnights. In those two fortnightly periods, it appears he took annual leave or unpaid leave. Of the remaining 23 fortnightly periods, Mr Foster worked 475.13 hours overtime or an average of 20.66 hours per fortnight. In summary, in the financial year 2012/2013, Mr Foster had a gross payment of $145 040.

[33] Putting aside discretionary overtime, the mandated overtime associated with pre-start meetings was 2.5 hours per week at $61.8553 per hour. Calculated on 46 weeks per year, the total amount is $7 113.35.

[34] The ACOD defines “guarantee” as “thing given...for fulfilment of conditions.” Mr Foster’s contract of employment expressly guarantees payment for work undertaken beyond 38 hours per week. In that respect, the hourly monetary amount, or payment, is guaranteed for overtime worked. However, the legislative note infers that while the amount may be guaranteed, it is the number of hours and corresponding payment which has to be guaranteed.

[35] On the evidence, there is a specific right for Mr Foster to be paid for overtime worked. This amount can be determined in advance and I have no documentary material that the Employer has used its discretion in the past, or intends to do so in the future, to modify the overtime regime for supervisors as it supervisors and pre-start meetings.

[36] The Employer, in its original submissions of 6 November 2013, states:

“It is a requirement within CB&I generally, and at the Facility, that work must not commence until a pre start is completed each day. The pre-start meetings are not contingent upon productivity and business needs” (my emphasis)

[37] The Applicant, in his response, states that the Employer was not contractually entitled to permit him to work additional hours and specifically he:

“was required, in the course of performing my duties as the Warehouse Supervisor, to attend meetings that would otherwise have been outside my normal working hours.

I attended these meetings as directed”.

[38] Further, the Applicant submits that if the Employer had chosen different alternatives, he would not have worked the additional hours.

[39] In reply to these submissions on 18 November 2013, the Employer states that there was “never a day on which a pre-start meeting did not take place and Mr Hughes’ statement [for the Employer] outlines that Mr Foster, along with all other supervisors, was required to attend a mandatory pre-start meeting of 30 minutes to discuss safety and outstanding issues from the previous day”. At no time did the Employer contemplate any of the alternatives suggested by Mr Foster. In short, the work crew commenced at 6:30 am and all supervisors had a pre-start meeting at 6:00 am, Monday to Friday.

[40] I note that in Mr Foster’s offer of employment of 6 January 2011, under the heading of Hours of Work, it refers to how overtime will be paid. This term is complemented in the General Terms document with a term at 4.3 which indicates that the standard working hours of 38 hours may be varied by the Employer.

[41] I am satisfied, on the facts and documentation, that Mr Foster was required and indeed undertook guaranteed overtime of 2.5 hours each week for the purposes of attending pre-start meetings.

[42] The sum of $122 226 and $7 113.35 is $129 339.

[43] I now turn to the issue of superannuation.

[44] The Applicant concedes that, in accordance with subsections 332(2)(c) and (4) of the FW Act, $916.69 forms part of Mr Foster’s annual rate of earnings.

[45] Accordingly, the sum of Mr Foster’s annual rate of earnings is as follows:

Annual salary

$122 226.00

Mandatory overtime

7 113.35

Superannuation in excess of mandatory contribution of 9.25%

($12 222.60 minus $11 305.90)

916.69

$130 256.04

[46] The Employer does not rely upon the additional discretionary overtime “at this stage”. For that reason, I have not given consideration to this issue.

[47] The Employer also relies upon the fact that Mr Foster was provided with a motor vehicle and mobile telephone as part of his employment. The Employer estimated that Mr Foster’s personal use of the motor vehicle at $4 735.70 but does not rely on the personal use of the mobile telephone as part of his annual rate of earnings. Should I be wrong in relation to the inclusion of guaranteed overtime as part of Mr Foster’s annual earnings, I find as follows in relation to the personal use of the Employer provided motor vehicle.

[48] There is no dispute between the parties that Mr Foster had access to a motor vehicle to travel to and from work. After arriving at work, Mr Foster would “check his keys in at reception and collect them at the end of the day”. The weekly distance travelled by Mr Foster was approximately 145 kilometres and annually (46 weeks) approximately 6 670 kilometres. Using the Royal Automobile Club of Victoria rate for the type of vehicle, it is $0.71 per kilometre; resulting in a monetary value asserted by the Employer of $4 735.70 1.

[49] The Applicant asserts that there is no evidence that he was entitled to this benefit or that he entered into an agreement to such an entitlement. Further, the motor vehicle enabled Mr Foster to respond to out-of-hours security calls without the Employer incurring an expense and that the vehicle was used during business hours.

[50] The Employer rejects Mr Foster’s assertion that the vehicle was incidental to him responding to out-of-hours security call outs. The Employer contracts a security business for such eventualities.

[51] While the provision of private use of a motor vehicle is not expressly provided in Mr Foster’s offer of employment, the General Terms provide a term which enables an improvement of conditions of employment for Mr Foster with one month’s notice. Whether or not the one month’s notice was given, Mr Foster accepted by his actions the improved conditions of employment and consequently I am satisfied that he received a non-monetary benefit which has been reasonably assessed by the Employer.

[52] I am satisfied that Mr Foster’s travel between home and work was personal not work related and that it constituted a non-monetary benefit of $4 735.70 which, irrespective of the argument relating to guaranteed overtime, I must take into account when determining the Applicant’s rate of earnings at the time of his dismissal.

CONCLUSION

[53] Having considered the submissions and attached documentation, I find, for the reasons above, that in accordance with subsection 332(1) of the FW Act and Regulation 3.05 of the FW Regulations, Mr Foster’s annual rate of earnings, at the time of his dismissal, was not less than the high income threshold of $129 300. Accordingly, Mr Foster is not protected from the unfair dismissal provisions of the FW Act and his application must be dismissed for want of jurisdiction. An order to this effect is issued conjointly with this Decision and Reasons for Decision.

COMMISSIONER

Final written submissions:

Applicant: 13 November 2013.

Respondent: 6 and 18 November 2013.

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