Mr Gary North v Thermfresh Pty Ltd (Formerly Thermfresh Australia Pty Ltd)

[2013] FWC 6850

[2013] FWC 6850

FAIR WORK COMMISSION

DECISION

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

Mr Gary North
v
Thermfresh Pty Ltd (Formerly Thermfresh Australia Pty Ltd)
(U2013/7555)

COMMISSIONER SPENCER BRISBANE, 11 SEPTEMBER 2013

Application for relief from unfair dismissal - jurisdictional objection - high income threshold - no modern award or enterprise agreement.

[1] This decision relates to an application made by Mr Gary North (the Applicant) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy alleging that the termination of his employment from Thermfresh Pty Ltd (Formerly Thermfresh Australia Pty Ltd) (the Respondent) was harsh, unjust or unreasonable.

[2] The Respondent has raised a jurisdictional objection in relation to the Applicant’s application alleging that the Applicant was not a person protected from unfair dismissal in that the Applicant earned over the high income threshold and was not covered by a modern award or enterprise agreement.

[3] This decision considers the jurisdictional objection only.

[4] Directions were issued for the filing of submissions in relation to the jurisdictional objections only. The parties consented to the matter being determined on the papers.

[5] While not all of the evidence and submissions in the matters is referred to in this decision all of such have been considered.

Legislation

[6] The Act sets out when a person is protected from unfair dismissal. Section 382 provides 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.”

[7] Employee Earnings are defined by s.332 of the Act as follows:

“332 Earnings

(1) An employee’s earnings include:

(a) the employee’s wages; and

(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) However, an employee’s earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;

(b) reimbursements;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

(d) amounts prescribed by the regulations.

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.”

Summary of Respondent submissions and evidence

[8] The Respondent filed a Form F4 Objection to Application for Unfair Dismissal Remedy.

[9] Annexure A to the Form F4 was a letter to the Applicant dated 11 March 2012 which was a letter of offer to the Applicant for the position of Managing Director. The letter stated:

“Your employment has as its primary focus the development of HFI Group, and supporting PrimeARC Group and its businesses.”

[10] The “offer of employment & terms and conditions of employment” attached to the letter of 11 March 2012 advised that the Applicant, in his position as Managing Director, would report to the Group Managing Director and the Board of Directors of PrimeARC Group Pty Limited (the parent company of the Respondent).

[11] Importantly the offer of employment stipulated that the “base remuneration” would be $174,000 per annum. This figure included “all Australian Government mandated superannuation contributions”.

[12] In addition to the base remuneration provided for the offer of employment provided for the Applicant’s entitlement to participate in the performance bonus scheme with the Respondent. There is no evidence before the Commission about any bonus payments.

[13] The offer of employment provided for a termination period of three months by either party within the first year and six months thereafter. The offer of employment also provided for a wide ranging restraint-of-trade or non-competition clause. The offer of employment has been accepted and signed by the Applicant.

[14] The position description of the position of Managing Director was attached to the offer of employment. The position description relevantly provides:

“The primary role of the Managing Director is to provide vision and leadership in development and implementation of the company’s financial strategies, policies, tools, operations, facilities, compliance, reporting and reviews. The Managing Director will provide input and recommendations on the financial environment to the Group Managing Director and the Board of Directors of PrimeARC Group.

...

More specifically, the duties of the Managing Director include:

● Assist in effectively integrating the PrimeARC, FCI, HFI, IACS and other businesses as soon as practicable;

● Developing an overarching 3 year business plan for consideration and approval by the Board as soon as practicable;

● Developing a budget for the business for each financial year, the 2012/13...;

● Developing an effective and implementable succession strategy for each of the key management positions;

...”

[15] The position description also goes on to describe the specific management responsibilities within the key areas assigned to the Applicant including: strategic planning, staffing and resources, organising the business, control, review and special activities.

[16] The offer also identified that the “total bonus” available to the Applicant was $40,000.

Summary of Applicant submissions and evidence

[17] The Applicant submitted that he was employed as the Chief Operating Officer (COO) of the Respondent.

[18] The Applicant stated that he could, on one day, be the COO, another day a refrigeration mechanic, another day a broom sweeper. The Applicant stated that he would do what was required of him to help the business.

[19] The Applicant submitted that he is a trade qualified refrigeration mechanic and has been since 1985.

[20] The Applicant originally submitted that he came under the “state award” and that the current hourly rate for a qualified technician with the experience of the Applicant was a base hourly rate of $38 to $68 per hour. The Applicant submitted that with his experience he would likely be at the higher end of that range.

[21] The Applicant submitted that this meant that a refrigeration mechanic of his experience would receive a base salary of $2720 before overtime and that on the Applicant’s approximation would receive $141,000 per year, plus super, vehicle and overtime. In the Applicant’s evidence this was “standard” within the industry.

[22] The Applicant’s evidence was that he was averaging 70-80 hours every week and sometimes in excess of 100 hours. The Applicant stated that this included

“operations, service work on the tools, installation works, quoting and sit supervision, also design and construct re tenders and briefs.”

[23] The Applicant stated that PrimeARC “enforced” working conditions which would see the Applicant driving for 6 hours to a work-site, working 8-10 hours straight, and then driving a return trip of a further 6 hours. The Applicant made some further submissions regarding the effect of this allegation on the Applicant but they are not relevant to the questions for determination in this jurisdictional objection.

[24] The Applicant submitted that working back his salary to just his base rate (ie excluding overtime etc) then the Applicant submitted that he was only earning an hourly rate of $37.00 per hour.

[25] The Applicant annexed a copy of the PAYG payment summary for the period of 1 July 2012 to 28 February 2013 (the date of the Applicant’s termination). This reveals gross payments in the amount of $101581.00 earned in that period.

[26] The Applicant submitted that this meant that he was under the High Income Theshold.

[27] The Applicant submitted that he is covered under “a modern award or an agreement” but did not specify specifically which modern award or agreement he was relying upon.

[28] The Applicant made further submissions regarding alleged underpayments he claims he is owed by the Respondent but these are not relevant to matters for determination in this jurisdictional determination.

Consideration

[29] The relationship between the parties in this matter is clearly strained. The material before the Commission indicates that the Applicant entered into an agreement with the Respondent for the sale of his business. This sale, and subsequent interaction between the parties, has lead to significant litigation between the parties.

[30] The questions for the determination by the Commission in relation to this jurisdictional objection are whether the Applicant’s annual rate of earnings, and such other amounts, is less than the high income threshold? And whether a modern award or enterprise agreement applied to the Applicant?

[31] At a conciliation conference convened before the Commission, I expressed a view that based upon the material filed by the Respondent, the Applicant’s annual rate of earnings was over the amount of the high income threshold. The offer of employment and the Applicant’s submissions indicated clearly that the Applicant was entitled to an annual rate of earnings higher than the high income threshold.

[32] The Applicant’s contention was that his annual remuneration should either be based upon only the amount he did in fact earn (being $101,581 for less than a full year) or worked back to a nominal base hourly rate, in relation to the total number of hours worked. These approaches are inconsistent with the legislation and current case law. The fact of the matter is that the Applicant was entitled to receive at least $174,000 per annum as base remuneration under the offer of employment dated 11 March 2012. The Applicant’s earnings were over the high income threshold.

[33] The remaining matter for consideration is the application of a modern award or enterprise agreement to the applicant. Neither party identified the terms of any enterprise agreement, which applied to the Applicant.

[34] Following the conference in this matter, the Commission sent correspondence to the parties, directing that they file further submissions in relation to some matters which arose during the conference (which are not of relevance to this determination) and specifically to the Applicant in the following terms:

“The Commissioner requires the Applicant to specify the specific Modern Award that he submits covered him during his employment. The Applicant must specifically refer to those clauses of the Coverage of the Modern Award and Classifications that he relies upon. The Applicant must also specify his ordinary duties which he relies upon as falling within the coverage.”

[35] The Applicant responded in the following terms:

“Re the position I have re current award I am classified under I have come to certain conclusions there isn't any one just award that covers my ex employment with Thermfresh p.l.

As I come under the clerk award for part and then under another as the technical component of employment I am having a hard time narrowing down to specifically define.

As per my email and subsequent employment I was working far more than a standard 40hr week. It was more like 100hrs a week but not re numerated accordingly.

I will leave this with you to decide accordingly and wait your advice.”

[36] The Applicant has not provided the specific submissions or evidence as required.

[37] However, the Applicant contends, in part, that at the time of his dismissal he was covered by the Clerks - Private Sector Award 2010 (the Clerks Award).

[38] Clause 4.1 of the Clerks Award states:

“4. Coverage

4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees. However, the award does not cover:

(a) an employer bound by a modern award that contains clerical classifications; or

(b) an employee excluded from award coverage by the Act.” (emphasis added)

[39] And further clause 4.7 stated:

“4.7 Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.”

[40] It is clear from the terms of the Clerks award and the material before the Commission that the Applicant was not covered by the Clerks Award. The Applicant was not engaged wholly or principally in clerical work and, given the Applicant’s submission that more than one award covered him, he was not, in accordance with clause 4.7 performing work in an environment that is within the coverage of the Clerks Award.

[41] The Applicant did not identify any specific modern award in the alternative other than stating that he was “under another” award in relation to his work in the technical stream.

[42] The Applicant was the owner of the Company and the COO. Two opportunities to present his full case and a conference, where the award coverage issue was explained, were provided to the Applicant. It is suffice to say that it is not for the Commission to piece together a case for either party. Both parties have now had two opportunities to place before the Commission submissions and evidence in relation to the jurisdictional objection and in response to the jurisdictional objection.

[43] However the offer of employment (which the Applicant did not submit was incorrect) clearly shows that the Applicant was contractually obligated to undertake very senior management duties. It is noted that the Applicant has not stated, that he did in fact do these duties, he raised that this was because of the management decisions made by the Respondent (or the parent corporation). But upon reviewing the position description, filed with the Form F4 by the Respondent (a copy of which was sent by express post by the Commission to the Applicant), and signed by the Applicant, the Applicant was the person responsible for these matters in the Respondent.

[44] Taking into account the offer of employment and the further material the Applicant’s evidence as to his duties is not accepted. The Applicant’s evidence is unreliable and has been skewed to support his case. It is illogical that a major corporation would enter into quite a significant employment contract with a senior manager and then “enforce” that that manager would then undertake front-line duties, while still receiving a significant wage.

[45] The Commission is not satisfied, on the basis of the material before the Commission, that the Applicant was covered by the Clerks Award. The Applicant did not identify or submit, that he was covered by any other specific modern award and it is not appropriate for the Commission to then undertake the task of reviewing each and every modern award on the Applicant’s behalf particularly as the Applicant was specifically directed to make submissions in this regard and chose not to.

[46] Accordingly for the aforementioned reasons the jurisdictional objection is upheld. In accordance with the legislative tests in s.382 of the Act the Applicant was a person whose annual rate of earnings was over the high income threshold and he was not covered by a modern award or enterprise agreement.

[47] Therefore the application filed by the Applicant on 15 March 2013 pursuant to s.394 of the Act is dismissed.

[48] I Order accordingly.

COMMISSIONER

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