Mr Mitchell Graham v Globus Medical Australia Pty Ltd

[2016] FWC 3525

[2016] FWC 3525

FAIR WORK COMMISSION

DECISION

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

Mr Mitchell Graham
v
Globus Medical Australia Pty Ltd
(U2015/16602)

SENIOR DEPUTY PRESIDENT DRAKE MELBOURNE, 15 JUNE 2016

Jurisdictional objection to an application for relief from unfair dismissal. High income threshold/Award coverage.

[1] On 8 December 2015 Mr Mitchell Graham lodged in the Fair Work Commission (the Commission), an application for relief from unfair dismissal against Globus Medical Australia Pty Ltd (Globus). Mr Graham’s employment had been terminated on 25 November 2015. He sought reinstatement.

[2] On 24 December 2015 Globus filed and served its Employer Response. Globus claimed that Mr Graham’s salary exceeded the high income threshold and that he was not covered by an industrial Award or Agreement.

[3] I wrote to Mr Graham on 2 February 2016 outlining the jurisdictional objections raised by Globus and asking him to provide a statement in response within 14 days. On 16 February 2016 Mr Graham provided a response. 1 He conceded that he earned above the high income threshold, but submitted that he was covered by the Commercial Sales Award 2010 (the Award). He stated that he understood that his employment was within the definition of a Commercial Traveller under clause 3.1 of the Award, and that he had had that understanding confirmed by the Fair Work Ombudsman.

[4] In its submissions provided to the Commission on 3 March 2016 2 Globus submitted that Mr Graham was not covered by a modern award. The application was set down for a jurisdictional hearing on 31 March 2016 at Brisbane.

[5] At the hearing Mr Graham appeared on his own behalf. Mr T. Glover of counsel, instructed by Ms L. Crossman of DLA Piper, sought permission to appear on behalf of Globus. I took into account the complexity of the issues in contest and pursuant to s.596(2)(a) of the Fair Work Act 2009 (the Act) I granted permission for Globus to be legally represented on a conditional basis.

[6] At the hearing Globus called Mr R. Lyte-Mason, the Managing Director of Globus. Mr Graham relied upon Statutory Declarations from M. Otto and E. Cramlet, current and former employees of Globus. They were not required for cross-examination. Mr Graham gave evidence and was cross-examined as was Mr S. Filho, a current employee of Globus.

Relevant Law

[7] Globus relied upon several legal authorities which have established the ‘principle purpose test’ for determining whether an employee is covered by an industrial award. The principle purpose test has been succinctly summarised in Carpenter v Corona Manufacturing (Carpenter):

“In our view, in determining whether or not a particular award applies to identified employment, more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed. In this case, such an examination demonstrates that the principal purpose for which the appellant was employed was that of a manager. As such, he was not "employed in the process, trade, business or occupation of ... soliciting orders, obtaining sales leads or appointments or otherwise promoting sales for articles, wares, merchandise or materials" and was not, therefore, covered by the Award.” 3
(footnotes omitted and my emphasis)

[8] The principle purpose test was reaffirmed by a Full Bench in Layton v North Goonyella Coal Mines Pty Ltd (Goonyella)as follows; 4

“Various Full Bench decisions have held that the proper approach to determining whether an employee is covered by an award requires an assessment of the principal purpose for which the employee was employed. This test has also been referred to as the primary function test. Indeed, Justice Gray of the Federal Court applied such a test in relation to the interpretation of the term "clerk” in Joyce v Christoffersen 26 FCR 261.” 5
(footnotes omitted and my emphasis)

[9] I have also considered the principles and reasoning of the Full Bench in McMenemy v Thomas Duryea Consultating Pty Ltd T/A Thomas Duryea Consulting 6 (McMenemy).

The evidence

[10] There was no dispute between the parties that Mr Graham’s annual rate of earnings was above the high income threshold 7 and that Mr Graham was not employed under an enterprise agreement.8 The matter for determination by me was whether Mr Graham was covered by the Award.

[11] Clause 3.1 of the Award provides a definition of a Commercial Traveller as follows;

“Commercial Traveller means a person employed, substantially away from the employer’s place of business, for the purpose of soliciting orders for, or selling articles, goods, wares or merchandise or material for wholesale sale, for resale, or for use in or in connection with the production and/or preparation and/or distribution of commodities for sale by the customer.”

[12] The parties disputed the ambit of Mr Graham’s duties. Mr Graham claimed that he had no managerial duties 9 and submitted that his role with Globus was predominantly confined to the selling of spinal equipment.10 Mr Lyte-Mason claimed that Mr Graham was an Area Manager in Queensland, and as such he was required to perform a variety of tasks.11 Mr Lyte-Mason summarised the employee structure of Globus as follows;

“Based on my experience running the Globus Medical business in Australia, the business is too young to employ any staff who are purely sales-oriented or who perform a sales-only role as their predominant duty.” 12

[13] Globus contended a trifold argument as to why Mr Graham could not be held to be employed under the Award. It argued that performing work as a Commercial Traveller was not the principle purpose of Mr Graham’s employment, 13 that Mr Graham was not employed substantially away from Globus’ place of business14 and that his sales role, whilst only one component of his employment,15 did not require him to sell products for wholesale, resale or for use in connection with the production of commodities for sale by the customer.16

[14] Mr Lyte-Mason stated that Mr Graham was not required to be substantially away from Globus’ office and, on the occasions that he was away from the office, he was predominantly providing technical support and not functioning as a salesperson. 17

[15] Furthermore, Mr Lyte-Mason explained the interaction between Globus and its customer hospitals in the following manner;

“… In other words, Globus Medical does not send supplies to hospitals to be stored until they are used by the hospital, although on occasion Globus Medical has provided supplies to a hospital on a consignment basis for use in urgent procedures.

Globus Medical invoices the hospital for its products. The patient plays no role in ordering a particular device or, for that matter, the screws that are used to connect it to the spine - this is a matter for the surgeon. The patient receives the device as part of an episode of hospital treatment.

Globus Medical products are not re-sold by the hospital. Rather, the hospital seeks a rebate from the medical insurer or Medicare for the cost of the device. The cost is the amount pre-approved on the PL lists by the Prosthetic List Advisory Committee. This is a price fixed by government. Globus Medical could charge more than the PL list price, but chooses not to do so. Therefore, the cost of a device never has to be charged to a patient (rather than being paid for by the medical insurer or Medicare) as there is no 'gap'.” 18

[16] Mr Graham relied upon his job description as a Spine Specialist Sales 19 as well as numerous receipts20 to demonstrate his sales roles as occurring substantially away from the Globus office. The responsibilities of a Spine Specialist Sales as outlined in Mr Graham’s job description is set out below:

“ 1. Meet or exceed all sales goals and objectives assigned.
2. Develop and increase customer base and continually enhance Globus Product market share within assigned territory.
3. Gain and consistently increase product knowledge through formal sales training, surgeon speaker programs, attending surgeries/OR visits, and industry research.
4. Maintain conduct that is aligned with the company quality policy, and protects confidentially and proprietary information.
5. Consistently assist Globus sales management by reporting market and competitive information in a timely manner.
6. Communicate new ideas, etc promptly to product development.
7. Attend conferences, surgeries.”

[17] Mr Graham further stated that, although upon the commencement of his employment he was given the title of Area Manager (Queensland),  21 he acted predominantly in the capacity of a ‘sales representative’, selling a range of spinal implants to a variety of surgeons based in Queensland. Mr Graham explained his role in the following terms;

“The main task of selling spinal equipment occurred completely away from the Globus office. My job was a travelling role, which attracted a car allowance to facilitate a tool of the trade vehicle for the extensive and regular travel away from the Globus Medical place of business. Regular paid parking receipts for housing the vehicle at remote locations were reimbursed through an expenses claims process and can be provided as evidence if required.

My sales role was the same as all other sales reps employed by Globus Medical in Australia, We each had a defined territory that had a specific group of customers, which would contribute to our sales budget for the year. There were differing titles given to some employees as part of their employment (details of why are unknown to me) however the primary role for all employees as directed by Managing Director was achievement of sales for their defined sales reporting territory.”

[18] Mr Filho gave evidence that he undertook a comparable sales role to that of Mr Graham and claimed that his employment required him to be substantially away from the office. 22

Consideration

[19] I am satisfied on the evidence before me that Mr Graham spent a considerable amount of time away from the Globus office for a multitude of reasons including training, selling, preparation of surgical equipment and provision of technical support. That evidence is consistent with Mr Graham’s job description. I am satisfied that Mr Graham’s duties largely concerned the marketing and/or sales of Globus’ products.

[20] However, as expressly stated in Carpenter, the assessment of the principle purpose of Mr Graham’s employment does not involve a mere quantitative assessment of his duties. The frequency with which Mr Graham performed sales related duties does not define the purpose for which he was engaged.

[21] Globus is a multinational company in its infancy within Australia. I am satisfied that as a result it may be necessary at different times for it to require an employee to give weight and attention to a particular duty within that employee’s range of duties. In doing so, the employee is meeting the variable needs of the business. An explicit or implicit requirement by the enterprise for an employee to give precedence to a particular task does not necessarily change the principle purpose for which that employee is engaged. After having considered the evidence I am satisfied that Mr Graham was principally employed in a managerial capacity and therefore that he was not covered by the Commercial Sales Award 2010 when employed by Globus.

[22] Having determined that issue it is not necessary for me to consider the balance of the definition in the Award, but for the sake of certainty I will indicate that I am not satisfied that Mr Graham’s employment would be within the definition of a ‘Commercial Traveller’ under the Award.

[23] The definition of a Commercial Traveller is a multifaceted definition. Is the employee employed substantially away from the employer’s place of business? Is the employee substantially away from the employer’s business for ‘soliciting orders or selling’? Is the employee away for the purpose of the ‘soliciting of orders or selling’ for wholesale sale or resale purposes, including circumstances whereby the goods sold has some effect in the resale of another product?

[24] I have already indicated that I am satisfied and find that Mr Graham was substantially away from the employer’s place of business. I am also satisfied and find that a predominant reason for Mr Graham’s absence from the employer’s place of business was for the ‘soliciting of orders or selling’ of Globus’ products.

[25] The evidence suggested that the products Mr Graham provided to hospitals were invariably ordered on an ‘as-needed’ basis and that no ‘mark-up’ was applied to the product by the hospital. A patient of the hospital was never directly billed by Globus nor did a hospital re-sell the product. I was not satisfied and find that the spinal products Mr Graham sold could not be said to have been subject to resale. Whether the products sold by Mr Graham could be deemed to be sold for wholesale purposes requires further examination. The Macquarie Dictionary defines ‘wholesale’ as follows;

“The sale of commodities in large quantities, as to retailers or jobbers rather than to customers directly.” 23

[26] It was uncontested between the parties that the products sold by Mr Graham were not sold in large quantities, but rather were provided to hospitals as needed. Further, I was not satisfied and could not find that a hospital would be ‘retailing’ a product when it is inserting that product into a patient, particularly in circumstances where the hospital derives no profit from that product.

[27] I am not satisfied that Mr Graham’s soliciting of orders or selling could be said to create a situation in which a product is ‘on-sold’ either by resale or wholesale to a customer.

Conclusion

[28] For these reasons I find that Mr Graham’s employment, whilst predominately comprising a sales role on a quantitative basis, was a management role. I find that the principle purpose of Mr Graham’s employment was as an Area Manager for Queensland.

[29] As such I am satisfied and find Mr Graham was not a person covered by the Commercial Sales Award 2010, and was therefore not a person protected from unfair dismissal pursuant to s.382 of the Act on the date of termination of his employment.

[30] The jurisdictional objection of the respondent is upheld. The application lodged by Mr Graham for relief from unfair dismissal pursuant to s.394 of the Act is dismissed. An Order will be issued consistent with this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr M.Graham, on his own behalf.

Mr T.Glover, of Counsel, on behalf of the respondent.

Hearing details:

Brisbane.

2016,

31 March.

Final written submissions:

Respondent, 15 April 2016.

 1   Exhibit Graham 2

 2   Exhibit GB1

 3 122 IR 387 (AIRC, 17 December 2002) at [9]

 4   [2007] AIRCFB 713

 5   Ibid at [25]

 6   [2012] FWAFB 7184

 7   Exhibit GB1 at [23]

 8   Ibid at [24]

 9   Exhibit Graham 2

 10   Ibid.

 11   Exhibit GB2 [18] – [22]

 12   Ibid at [23]

 13   PN93

 14   PN93

 15   PN107

 16   PN103

 17   Exhibit GB2 [28] – [27]

 18   Exhibit GB2 [8] – [10]

 19   Exhibit Graham 1

 20   Exhibit Graham 6

 21   Exhibit Graham 2

 22   PN504

 23   A Delbridge & JRL Bernard (ed), The Macquarie Dictionary. 3rd ed. 1998.

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