Mr Glenn Robert Macdonald v Mineral Resources Limited
[2022] FWC 981
•17 MAY 2022
| [2022] FWC 981 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Glenn Robert Macdonald
v
Mineral Resources Limited
(U2021/9144)
| DEPUTY PRESIDENT BINET | PERTH, 17 MAY 2022 |
Application for an unfair dismissal remedy
On 11 October 2021 Mr Glenn Macdonald (Mr Macdonald) filed an application (Application) pursuant to section 394 of Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC) alleging he was unfairly dismissed by Mineral Resources Ltd (Mineral Resources).
On 28 October 2021 Mineral Resources filed a Form F3 Employer Response to an Unfair Dismissal Application, raising the jurisdictional objection that Mr Macdonald earned more than the high-income threshold ($158,500 for dismissals after 1 July 2021).
On Friday 18 February 2022, the matter was listed for conciliation however the issues in dispute between the parties could not be resolved.
Taking into account the parties wishes and circumstances, it was determined that a Determinative Conference would be the most effective and efficient way to determine the Application. Consequently, the Application was listed for a Determinative Conference in Perth on Tuesday 22 February 2022 (Determinative Conference).
Directions for the filing of materials in advance of the Determinative Conference were issued to the parties on 16 December 2021 (Directions).
Permission to be represented
The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which any hearing is conducted is fair and just.[1]
Neither party sought permission to be represented at the Determinative Conference.
At the Determinative Conference Mr Macdonald represented himself and Mr King represented Mineral Resources.
Evidence
The Directions required the parties to file their witness evidence in chief in advance of the Hearing.
In accordance with the Directions Mr Macdonald filed a witness statement setting out his evidence in chief in advance of the Determinative Conference.[2] At the Determinative Conference Mr Macdonald gave further oral evidence.
In accordance with the Directions Mineral Resources filed a witness statement setting out the evidence in chief of its witness Mr King (Mr King).[3] Mr King is the Industrial Relations Manager of Mineral Resources. At the Hearing Mr King cross examined by Mr Macdonald.
The parties jointly prepared and filed a Digital Court Book containing the evidence and submissions of the parties filed prior to the Hearing date (DCB). The DCB was admitted at the Hearing as an exhibit and marked Exhibit DCB1.
In reaching my decision, I have considered all the submissions made and the evidence tendered by the parties, even if not expressly referred to in these reasons for decision.
Background
Mr Macdonald commenced employment with Mineral Resources on 28 December 2020 in the position of Senior Safety Advisor at the Mount Marion mine site pursuant to an employment contract dated 18 December 2020 (Contract).[4]
Mr Macdonald’s employment was not covered by a modern award or enterprise agreement.[5]
The Contract describes Mr Macdonald’s renumeration as follows:[6]
“REMUNERATION
(a) The Employee's salary and entitlements are specified in Schedule A.
(b) The salary will be paid to the Employee’s account of the financial institution of choice within Australia. Salary shall be paid fortnightly in arrears, and each Employee is required to comply with any requirement to submit a timesheet for hours worked.
(c) MRL will pay the Employee the Total Variable Remuneration (TVR) specified in Schedule A. This TVR includes
(i)the Employee's base salary;
(ii)MRL's superannuation contributions referred to in clause 9; and
(iii)any other amounts specified in Schedule A, including salary sacrificing arrangements provided to the Employee, e.g. novated lease.
(d) The Employee agrees that the remuneration payable to them under this letter and in Schedule A includes compensation for and may be set off against all entitlements, benefits or payments that might otherwise be due to the Employee under any applicable industrial instrument that may apply to their employment. This includes but is not limited to:
(i)minimum weekly wages;
(ii)allowances;
(iii)overtime and penalty rates for out of hours worked or working on weekends and public holidays;
(iv)annual leave loading;
(v)shift loadings; and
(vi)any other penalties or allowances.
(e) Accordingly, no special rates or allowances for working particular times or under particular conditions will be payable unless otherwise agreed in writing.”
Schedule A of the Contract provides as follows:[7]
“Employee: Glenn Macdonald
Position: Senior Safety Advisor
Employment Status: Full Time
Commencement Date: 28 December 2020
Work Location: Mount Marion
Reports to: Systems Manager
Base Remuneration: $142,000.00
*Site Uplift: $28,400
Superannuation: 9.5% or as per ATO requirements
*Total Variable Remuneration: $186,588
Roster: Eight (8) days on, Six (6) days off”
*Site Uplift:
A 20% site uplift on base salary will be applied in recognition for all hours worked on the project site listed within schedule A. This uplift shall not be paid during any period of annual leave, personal/carer’s leave, long service leave, community service leave, maternity leave or any period of unpaid leave. Please note the above figure is an estimate and not a guarantee due to the conditions set out in this clause.* Total Variable Remuneration:
The figure represents an estimation of your potential earnings including superannuation, based on current operational requirements.”
Clause 7 of the Contract provides that:
“7. PLACE OF EMPLOYMENT
(a) The Employee's principal Work Location is specified in Schedule A. MRL may require the Employee to work in other locations from time to time within Australia on either a temporary or permanent basis.
(b) If the Employee is required to relocate to a new work location, MRL will reimburse the Employee any reasonable pre-agreed expenses for the relocation.”
Mineral Resources applied a payroll configuration that averaged the salary payments of Mr Macdonald across hours worked and rest & recreation leave (R&R). The 20% site uplift was applied across all hours that Mr Macdonald worked, as well as all R&R hours.[8]
Mr Macdonald was paid superannuation on the site uplift for all hours and pay periods.[9]
For the duration of his employment, he was employed on a full-time basis and was paid the site uplift except for paid and unpaid leave, and public holidays.[10]
Mr Macdonald was initially employed to oversee the implementation of a CRM program at the Mt Marion site. While he undertook this task he performed an eight days on six days off roster. His rostered hours on duty were performed at the Mt Marion site. [11]
Mr Macdonald was subsequently directed to assist in the implementation of a CRM programme at several other Mineral Resource sites. While undertaking this task he was rostered his rostered hours of work were performed at the Mineral Resources head office in Applecross. He was paid the site uplift during this period.[12]
At the time of his dismissal he was in negotiation with Mineral Resources for a new contract of employment to reflect a change in the duties which he was required to perform and that his work would be performed in Perth and off Site.[13]
Throughout the entire period of his employment he was paid the site uplift other than during periods of annual leave, personal leave and on public holidays.
Mineral Resources terminated Mr Macdonald’s employment on 21 September 2021.[14]
Is Mr Macdonald protected from unfair dismissal?
Section 382 of the FW Act provides that:
“s.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”
The parties agree that a modern award did not cover, and enterprise agreement did not apply, to Mr Macdonald during his employment with Mineral Resources.
The high income threshold at the time of Mr Macdonald’s dismissal was $158,500.
Section 332 of the FW Act defines ‘earnings’ as follows:
“s.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.”
The parties agree that:
a.Mr Macdonald’s ‘earnings’ include his base salary of $142,000 per annum.
b.The Contract provides for the payment of a site uplift of 20% of Mr Macdonald’s base salary which equates to $28,400 per annum.
The parties disagree as to whether the site uplift is ‘earnings’ for the purposes of section 332 of the FW Act.
Mr Macdonald submits that the site uplift is a reimbursement or allowance being a sum of money paid every day that cannot be determined in advance. In support of this submission he points to:
a.Schedule A where it states that that the site uplift is paid “… in recognition for all hours worked on the project site listed within schedule A”. Schedule A identifies Mount Marion as the work location.
b.Schedule A where it warns that the annual site allowance sum of $28,400: “…is an estimate and not a guarantee due to the conditions set out in this clause.”
c.Schedule A which describes Mr Macdonald’s total remuneration package as a ‘Total Variable Remuneration and notes that: “The figure represents an estimation of your potential earnings including superannuation, based on current operational requirements.”
d.Schedule A which provides that the site uplift is not payable during periods of paid and unpaid leave.
Mr Macdonald also points to Clause 8 of the Contract which indicates that his total renumeration package includes compensation for overtime etc. He submits that the shift uplift is therefore a payment for allowances, overtime and penalty rates and therefore takes on the character of payments of that nature.
The question of whether a site uplift or allowance should be included in the calculation of ‘earnings’ has been previously considered by the FWC.
Deputy President Smith in an ex tempore decision in Venning v McConnell Dowell Constructors (Aust) Pty Ltd[15] held that a site allowance should not included in the calculation of ‘earnings’. In that case, the site allowance was not payable if:
“The Company reserves the right to change or cease payment of the Site Allowance where there is no longer a requirement for the Employee to work at the site or where he or she is no longer subject to the conditions that warrant the payment of the Site Allowance.”
The site allowance was also not payable when the employee was on annual leave or long service leave. Superannuation was not paid on the site allowance.
Deputy President Smith explained the rationale for his decision as follows:[16]
“I am of the view that the site allowance is not to be considered when determining whether or not an employee exceeds the high income threshold and is therefore a person protected from unfair dismissal as it is for disabilities associated with the site and is not guaranteed.”
However, since the date of that decision Deputy President Gooley has held on at least four occasions that a site allowance should be included in the calculation of annual ‘earnings’.[17] On each of those occasions she distinguished the decision in Venning on the grounds that the superannuation was payable on the site allowance and at least some forms of paid leave.
In Alan Ferguson v MacMahon Holdings Limited T/A MacMahon Contractors Pty Ltd,[18] Deputy President Gooley determined that the site allowance paid to Mr Ferguson should be included in ‘earnings’. In that case the allowance was not paid if Mr Ferguson transferred to a site where the allowance was not payable. Superannuation was paid on the site allowance. The site allowance was payable during annual leave and personal leave only if Mr Ferguson was not on an extended absence. It was not paid on long service leave.
Deputy President Gooley held that not withstanding that the site allowance could be removed at the sole discretion of the employer that did not mean that the payment was discretionary and should be excluded from the calculation of earnings. She also held that the site allowance should not be characterised as a reimbursement.
“It was submitted by Mr Ferguson that the site allowance should not be included because it is paid as compensation. Mr Ferguson submitted that he incurred additional expenses such as mobile phone bills and he also suffered other disadvantages such as separation from his family due to his offsite work. It was also submitted that because Macmahon Contractors could relocate Mr Ferguson at its sole discretion to a site where Mr Ferguson was not entitled to a site allowance, the amount could not be determined in advance. I do not accept these submissions. While a site allowance may be paid to compensate the employee for the disabilities associated with working away from home, it is not a living away from home allowance. Nor is it a discretionary bonus. I accept that Mr Ferguson would not have been entitled to the allowance if he were transferred to Perth for example however that does not mean the amount should not be included in his annual earnings. There are many circumstances where an amount which is included in an employee’s wages will cease being paid because of changed circumstances. For example, an employee who receives a night shift penalty will have that amount included, but that penalty will not be paid if the employee ceases to work night shift. The site allowance is not discretionay” [FOOTNOTES OMITTED]
She applied the same reasoning in Trevor Raymond Wilkinson v BIS Industries Limited T/A BIS Industries.[19] In Mr Wilkinson’s case superannuation was paid on his base salary and site allowance. The site allowance was payable on annual leave, personal leave and pay in lieu of notice. But was not included for the purpose of calculating annual leave on termination or long service leave or redundancy pay.
The site uplift payable to Mr Macdonald was not referenced to any specific costs incurred by Mr Macdonald and therefore can not be properly characterised as a reimbursement. It therefore is not excluded from the calculation of ‘earnings’ pursuant to section 332(2)(b) of the FW Act.
The site uplift is a fixed sum. It did not vary depending on the hours of work Mr Macdonald performed or the sales that he was able to achieve. It can therefore be differentiated from payments for voluntary overtime and the payment of commissions and performance based bonuses which cannot be determined in advance.
The site uplift was not in the nature of a discretion payment such as a discretionary bonus. The fact entitlement to payment is conditional does not necessarily flow that the payment can not be determined in advance. If the specified condition of work location was met the site uplift was payable. Mineral Resources had no contractual power to alter the amount of the payment if the condition of work location was met.
The Contract provided that Mineral Resources could direct Mr McDonald to work at a different work location. However, the Contract provided for an eight on six off roster typical of a site based role. There was no capacity to alter this roster pattern. This is consistent with the evidence that at the time of his dismissal Mr McDonald was in negotiation with Mineral Resources for a new contract of employment to reflect that his work would be performed in Perth and off Site.[20]
I note that unlike the situation in Venning v McConnell Dowell Constructors (Aust) Pty Ltd[21] and consistent with the situation in the cases cited by Deputy President Gooley above the Contract provided that superannuation was payable on the site uplift.
The fact that the site uplift was not payable during paid or unpaid leave does not mean the ‘amount’ of the payment can not be determined in advance.[22] The ‘amount’ of the payment is expressed as a fixed percentage of base salary. The potential that leave might be taken must however be included in the calculation of ‘earnings’.
The annual rate of earnings is to be assessed as at the time of dismissal. It is not an assessment of the actual earnings in the 12 months immediately prior to dismissal.[23] As at the time of the dismissal Mr McDonald was still employed pursuant to the Contract. Although the parties had commenced negotiations for new contractual arrangements the parties may or may not have ultimately agreed to new terms.
Mr Macdonald’s ‘earnings’ for the purposes of section 382 of the FW Act can therefore be calculated as follows:
Base remuneration = $142,000
Site uplift per annum = $28,400
Roster 8 days on 6 days off
Average hourly rate = $32.51
20% site uplift per hour = $6.50
20% site uplift per day $6.50 x 12 hours = $78 per day
Annual leave per annum $78 per day x 28 days = $2184
Sick leave per annum $78 x 14 days = $1092
Public holidays per annum $78 x 11 days = $858
Base remuneration per annum ($142,000) plus site uplift per annum ($28,400) minus maximum paid leave ($4134) = Annual earnings of $166,266.
The high-income threshold for dismissals occurring after 1 July 2021 and before 30 June 2021 was $158,500.
As Mr Macdonald’s ‘earnings’ for the purposes of section 382 of the FW Act exceed the high income threshold he is not protected from unfair dismissal. His application for a remedy for unfair dismissal is therefore dismissed.
An order to this effect will be issued with this decision.[24]
DEPUTY PRESIDENT
Appearances:
Mr G Macdonald for the Applicant.
Mr D King for the Respondent.
Hearing details:
2022.
Perth
22 February.
[1] Warrell v Walton (2013) 233 IR 335, 341 [22].
[2] Digital Court Book, 44-51 (‘DCB’).
[3] Ibid 175-303.
[4] Ibid 123.
[5] Ibid.
[6] Ibid 13-14.
[7] Ibid 20.
[8] Ibid 85, 100-121.
[9] Ibid 85.
[10] Ibid 123.
[11] Ibid 7.
[12] Ibid 8.
[13] Ibid.
[14] Ibid 123.
[15] Sean Nigel Venning v McConnell Dowell Constructors (Aust) Pty Ltd[2013] FWC 7838.
[16] Ibid at [8].
[17], Alan Ferguson v MacMahon Holdings Limited T/A MacMahon Contractors Pty Ltd[2015] FWC 1294, Scott Priddis v Komatsu Australia Pty Ltd - [2015] FWC 2406, Trevor Raymond Wilkinson v BIS Industries Limited T/A BIS Industries - [2015] FWC 2385, Suleski v Rio Tinto Iron Ore Dampier[2015] FWC 1663.
[18] Alan Ferguson v MacMahon Holdings Limited T/A MacMahon Contractors Pty Ltd - [2015] FWC 1294.
[19] [2015] FWC 2385.
[20] Ibid.
[21], Sean Nigel Venning v McConnell Dowell Constructors (Aust) Pty Ltd[2013] FWC 7838.
[22] This is consistent with the findings of Deputy President Gooley in Trevor Raymond Wilkinson v BIS Industries Limited T/A BIS Industries[2015] FWC 2385 and Alan Ferguson v MacMahon Holdings Limited T/A MacMahon Contractors Pty[2015] FWC 1294, in which the site allowance was not payable on some types of leave.
[23] Zappia v Universal Music Australia Pty Limited t/a Universal Music Australia[2012] FWAFB 6108 at [9].
[24] PR741072.
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