Mr Nicholas McMenemy v Thomas Duryea Consulting Pty Ltd T/A Thomas Duryea Consulting

[2012] FWA 4955

Note: An appeal pursuant to s.604 (C2012/4605) was lodged against this decision - refer to Full Bench decision dated 28 August 2012 [[2012] FWAFB 7184] for result of appeal.

[2012] FWA 4955

FAIR WORK AUSTRALIA

DECISION

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

Mr Nicholas McMenemy
v
Thomas Duryea Consulting Pty Ltd T/A Thomas Duryea Consulting
(U2012/5289)

SENIOR DEPUTY PRESIDENT DRAKE SYDNEY, 26 JUNE 2012

Application for unfair dismissal remedy - jurisdictional questions - whether applicant employed under award conditions - whether applicant employed in a classification in the relevant award - Fair Work Act 2009 s382.

[1] Mr McMenemy lodged an application pursuant to s394 of the Fair Work Act 2009 (the Act) against Thomas Duryea Consulting Pty Ltd t/a Thomas Duryea Consulting (TDC). I heard this application on 8 May 2012 in Sydney. Mr D Mahendra of Counsel appeared for the applicant. Mr R A Millar of Counsel appeared for TDC.

[2] TDC raised the jurisdictional objection that Mr McMenemy’s employment was not covered by an enterprise agreement or award and that his annual rate of earnings exceeded the high income threshold. TDC’s jurisdictional objection turns on whether or not Mr McMenemy is covered by the Professional Employees Award 2010 (the Award).

[3] The relevant provision of the Act is set out below.

“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.”

[4] The coverage clause of the Awardrelevantly provides:

“4. Coverage

4.1 This award covers employers throughout Australia with respect to their employees performing professional engineering and professional scientific duties who are covered by the classifications in Schedule B - Classification Structure and Definitions of the award and those employees.

4.2 This award covers employers throughout Australia principally engaged in the information technology industry, the quality auditing industry or the telecommunications services industry and their employees who are covered by the classifications in Schedule B.”

[5] Modern awards issued as a consequence of the award modernisation process fall into three categories. These are awards that cover an industry or industries, awards that cover an occupation or occupations and hybrid awards that have both an industry coverage and also an occupational coverage. This awardis in the third category. It covers employers in the industries specified in clause 4.2 but it also has occupational coverage as specified in clause 4.1.

[6] There is no dispute that TDC is an employer principally engaged in the information technology (IT) industry. The question for determination before me is whether or not Mr McMenemy was engaged in one of the classifications set out in the Award. Clause 4.2 covers only those falling within the classifications set out in Schedule B to the Award. Did Mr McMenemy perform work, which work was the principal purpose for which he was employed and was within the scope of a “Level 4 - Professional Employee” classification, which is set out below?

“B.1.11 Level 4—Professional

(a) An employee at this level performs professional work involving considerable independence in approach, demanding a considerable degree of originality, ingenuity and judgement, and knowledge of more than one field of, or expertise (for example, acts as their organisation's technical reference authority) in a particular field of professional engineering, professional scientific/information technology field or professional information technology field.

(b) An employee at this level:

(i) initiates or participates in short or long range planning and makes independent decisions on professional engineering or professional scientific/information technology policies and procedures within an overall program;

(ii) gives technical advice to management and operating departments;

(iii) may take detailed technical responsibility for product development and provision of specialised professional engineering or professional scientific/information technology systems, facilities and functions;

(iv) coordinates work programs; and

(v) directs or advises on the use of equipment and materials.

(c) An employee at this level makes responsible decisions not usually subject to technical review, decides courses of action necessary to expedite the successful accomplishment of assigned projects, and may make recommendations involving large sums or long range objectives.

(d) Duties are assigned only in terms of broad objectives, and are reviewed for policy, soundness of approach, accomplishment and general effectiveness.

(e) The employee supervises a group or groups including professionals and other staff, or exercises authority and technical control over a group of professional staff. In both instances, the employee is engaged in complex professional engineering or professional scientific/information technology applications.”

[7] Whether or not Mr McMenemy is employed in the above classification is to be determined by reference to the “principal purpose” test expounded in the Full Bench decision of the Australian Industrial Relations Commission (as it then was) in R. Brand v APIR Systems Limited: 1

“The Full Bench in Carpenter v Corona Manufacturing Pty Ltd²⁸ dealt with the correct approach to determining whether a particular award applies to an applicant's employment. The matter before that bench was similar, in many respects, to the circumstances of this matter. The Full Bench considered the nature of the work performed by the applicant in the matter on appeal and then set out the manner in which the determination of the question should be approached:

At the time of the termination of his employment, the appellant was employed by the respondent as National Sales Manager. The agreement under which he was employed stated that the "function and responsibilities of the employee will involve sales and management duties throughout Australia". The appellant's job description identified his duties in a way that, in our view, can only be described as principally managerial in nature. The Commissioner found that the tasks for which the appellant was employed were those set out in the job description. We agree. Whilst the appellant may, on occasion, have performed tasks that might fall under the headings of "soliciting orders", "obtaining sales leads" or "promoting sales", such tasks formed a minor part of the work he was required to perform.

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.²⁹ 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."

(emphasis added)

Mr Thomas’s evidence

[8] Mr Thomas is the Chief Executive Officer (CEO) and co-founder of TDC with 12 years experience in IT infrastructure consulting. He employs 90 staff. His evidence was that the job performed by the applicant was 90 percent State Director of New South Wales (NSW Manager) and 10 percent National Practice Manager for Cloud Solutions.

[9] Mr Thomas accepted that Mr McMenemy was initially engaged as a contractor in order to plan and develop Cloud Solutions for the employer. Mr McMenemy was then offered a full-time position with TDC which involved a combination of his pre-existing role with Cloud Solutions as well as management duties.

[10] Mr Thomas agreed that Mr McMenemy was responsible for the long range planning of Cloud Solutions. He denied that Mr McMenemy gave technical advice to either himself or Mr Duryea in relation to Cloud Solutions. He rejected Mr McMenemy’s evidence that he had taken on detailed technical responsibility for product development such as Private Cloud Solutions or had hosted disaster recovery. However, Mr Thomas did concede that he questioned Mr McMenemy regarding what equipment and materials were to be used and what courses of action might be necessary to expedite the successful completion of Cloud Solution’s projects and disaster recovery initiatives.

[11] Mr Thomas’s evidence was that these detailed technical responsibilities lay with the engineers and technical architects employed by the business, of which TDC employed 50 or 60, and these employees did not report to Mr McMenemy. The technical aspects of these programs were designed by the technical staff within the business, the engineers and the technical architects. Mr McMenemy was responsible for sales and marketing and perhaps for the building of the outer phase in the sales oriented offerings of TDC’s business.

[12] Mr Thomas said that Mr McMenemy was responsible for what he called the “guided market” which is the marketing of a set of offerings and the development of a product that the market would accept. The technical architecture and engineering component of this work was undertaken by the data centre team.

[13] Mr Thomas rejected Mr McMenemy’s evidence that he had spent only 30 percent of his time on a day-to-day basis managing the staff who reported to him, although he conceded that he had not worked with Mr McMenemy on a day-to-day basis. He conceded that he could not provide any direct evidence regarding the daily tasks Mr McMenemy had undertaken. His direct involvement with Mr McMenemy was limited to an attendance on a management telephone conference on Wednesday mornings, email contact and periodic visits to the Sydney office, during which visits he would hold discussions with Mr McMenemy and the members of his team. Those concerned the performance of the Sydney office, Mr McMenemy’s role as NSW Manager and his other responsibilities such as invoicing, sales and the general management of the 15 to 20 Sydney staff. On the days that Mr Thomas was present in the Sydney office he had not observed Mr McMenemy performing technical duties.

Mr McMenemy’s evidence

[14] In or about August 2010 Mr McMenemy was engaged by TDC as a Senior Specialist -Technical and Commercial Consulting Resource on an ongoing basis.

[15] In September 2010 Mr McMenemy was engaged as a subject matter expert in relation to Cloud Solutions. During this project Mr McMenemy spoke to Mr Evan Duryea at least every day to consult on product, technical and commercial initiatives related to Cloud infrastructure.

[16] In early June 2011 Mr McMenemy gave evidence that Mr Thomas offered him the NSW Manager role in addition to his existing role of National Practice Manager - Cloud Solutions. Mr Thomas told Mr McMenemy that he would not be giving up his responsibilities for matters relating to Cloud computing and that this would be reviewed within six months.

[17] On 30 June 2011 Mr McMenemy accepted the joint role. His employment documents included an Employment Agreement, a Deed of Restraint and a Position Description.

[18] On 6 July 2012 Ms Lucy Russell-Slater, Human Resources Manager, confirmed in an email to Mr McMenemy that Level 4 of the Professional Employees Award 2010was “...the level you sit under”. 2

[19] Mr McMenemy’s evidence was that it was always his understanding that the role and responsibilities he undertook would fall within Level 4 of the Award. This is because he thought that he was engaged for his technical and product specific competency and the capacity to apply that ability in a commercial manner.

[20] In relation to his job mix at the date of termination of employment, Mr McMenemy said that he still performed the tasks and duties performed during his former consultancy whilst working in his newly appointed role. Mr McMenemy’s evidence was that the overall management of the Sydney office would only take up about 30 percent of his time, whilst 70 percent comprised his former duties.

[21] Mr McMenemy was of the view that having a technical background and understanding was an inherent requirement in his initial role which still comprised 70 percent of his duties at the date of termination of employment. He would engage in regular technical liaison with engineers and vendors to validate the design and implementation approach of the Cloud Solutions product, the most appropriate way to achieve effective outcomes and save them money. He acted as a lead sales expert and frequently worked with teams of technical experts from vendors and internal technical staff.

[22] In cross-examination Mr McMenemy rejected the proposition that he was engaged to provide the strategic and planning services for the Cloud Project. His evidence was that his role was broader than that. He would get involved in the technical architecture. Mr McMenemy said that his role was never intended to be ‘hands-on’. 3

[23] As the NSW Manager, Mr McMenemy agreed that he was engaged for his ideas, know-how and what he could bring to TDC’s consulting business, in particular, delivering commercially driven services on the basis of technical knowledge.

[24] Mr McMenemy rejected the proposition, put on behalf of TDC, that the responsibilities connected with leading on product development relating to Cloud Solutions, was a strategic or marketing type role.

[25] Mr McMenemy was taken to a set of email exchangesannexed to his witness statement 4which he said demonstrated that he was consulted on commercial and technical issues. It was put to him that the emails did no more than evidence a cursory involvement in the pricing, sales and marketing of certain products. Mr McMenemy rejected that proposition. He responded that pricing analysis involved "... specialist technical knowledge".5

[26] Mr McMenemy accepted that the duties outlined in paragraph 3(b) of his statement involved a degree of strategy and planning which required a depth of detailed, technical knowledge and in relation to paragraph 3(d) he accepted that that particular part of the role also involved strategy and planning.

[27] Mr McMenemy was taken to his employment contract. He accepted that one of his roles was working with the EMC Corporation to secure a possible capital investment. This attracted a contractual EMC investment bonus of $25,000. There was also a Key Performance Indicator (KPI) bonus of $100,200. 6 He accepted that the KPI’s were strategy, people, profit target, reporting and marketing. He conceded that he was not paid separately from the remuneration package for work relating to the Cloud Project and the contract had not expressly provided for that. There were no employees engaged in the Cloud Project and there was nothing in the KPIs relating to the Cloud Project.

[28] There was a position description for the NSW Manager role attached to the employment contract. Mr McMenemy said that he had requested a position description for National Practice Manager - Cloud Solutions but it had not been received. He agreed that the description, “State manager is a highly accomplished professional with a balance of strategic insight, operational expertise, technological and financial skills and is commercially savvy across both sales and marketing” 7was an accurate depiction of the NSW Manager component of his full-time role. He accepted that he was an important member of the senior management team, that he reported directly to the CEO, that he was charged with running the Sydney office as well as the ongoing management of tracking and reporting on operational issues. He had significant financial responsibilities, including managing revenue streams and controlling departmental expenditure. Mr McMenemy also helped specialists execute their marketing and sales duties on a local basis. He said these duties accounted for 30 percent of his time on the job, a little bit over a day a week.

[29] Mr McMenemy rejected the proposition put to him that it would take more than 30 percent of his time to complete those tasks. He rejected the proposition that he had taken on the NSW Manager role with only some residual responsibility concerning Cloud Solutions.

[30] In relation to the reference to the Award in his contract, Mr McMenemy said that he did not understand what it meant as he had principally worked overseas and that the inclusion of this type of terminology was “alien” to him. 8 The only basis for Mr McMenemy’s understanding that on commencement the role and responsibilities that he would undertake fell within the Level 4 classification of the Award, was the information supplied by TDC’s Human Resources Manager.9

[31] Mr McMenemy’s evidence was that TDC had engaged him because of his technical and product specific competency. However, when pressed, he could not remember the specific content of that conversation. He accepted that he had no formal qualifications in IT but he rejected the proposition that his background primarily reflected a marketing and sales capacity.

[32] Whether an employee is employed under award conditions is a question to be determined on the facts of each case, requiring an examination of the terms of the particular award and the employee’s tasks and responsibilities against the principles I have already outlined.

[33] The role in which Mr McMenemy was initially employed before accepting the NSW Manager role involved the operation of Cloud Solutions. I accept Mr McMenemy’s evidence regarding his duties in the performance of that role. On balance I am satisfied that, before appointment to the NSW Manager role, Mr McMenemy’s employment was covered by the Award. The Award was specifically referred to by TDC in its employment documents specifying Mr McMenemy’s duties as being within the relevant award classification. I am not satisfied that the inclusion of that description was an oversight and I can see no reason to set aside the designation within the documents.

[34] Mr Thomas had no first-hand knowledge of Mr McMenemy's day-to-day work in Sydney at the time of termination of employment. No employee from Sydney was called who might have had some knowledge of Mr McMenemy’s working day and perhaps could have contradicted his evidence. There is no reason for me to reject Mr McMenemy’s evidence. I accept him as a witness of truth.

[35] However, the relevant test is not predicated on the basis that the work that is performed for the majority of the time is the decisive issue. If it was, given the absence of any evidence to the contrary, Mr McMenemy's evidence would lead to the inescapable conclusion that he was covered by the Award at the date of termination of employment.

[36] Mr McMenemy was promoted into the NSW Managers role. It was a change. It involved different duties including the overall management, including financial management, of the Sydney office. It was a move up and a move beyond the constraints of Mr McMenemy's previous position.

[37] I am satisfied that the NSW Manager role was the principal purpose of Mr McMenemy's employment with TDC. I have therefore concluded that there was no award coverage of Mr McMenemy's position at the date of termination of employment.

[38] Thomas Duryea Consulting’s jurisdictional objection is upheld. The application is dismissed.

SENIOR DEPUTY PRESIDENT

 1   [PR938031]

 2   Exhibit McMenemy 2 pp. 57-58

 3   Transcript PN138

 4   Exhibit McMenemy 2 pp. 1-10

 5   Transcript PN147

 6   Transcript PN202

 7   Transcript PN213

 8   Transcript PN314

 9   Transcript PN328 - 329 and Exhibit McMenemy 2 para 9

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