Mr Stephen Hargans v Ottoway Engineering Pty Ltd

[2014] FWC 1227

[2014] FWC 1227

FAIR WORK COMMISSION

DECISION

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

Mr Stephen Hargans
v
Ottoway Engineering Pty Ltd
(U2013/15471)

COMMISSIONER SIMPSON BRISBANE, 16 APRIL 2014

Application for relief from unfair dismissal - Jurisdictional objection concerning High Income Threshold - Applicant not covered by Professional Employees Award 2010 - Annual rate of earnings exceeded High Income Threshold - Application dismissed.

[1] Mr Stephen Hargans (the Applicant) made an application on 31 October 2013 for unfair dismissal remedy against Ottoway Engineering Pty Ltd (the Respondent).

[2] The Respondent objected to the application on the basis that it said the Applicant is not protected from unfair dismissal as he does not meet any of the requirements in Section 382(b). A directions conference was held on 18 February 2014.

[3] The parties were requested following the filing of submissions to notify chambers if they wished to have a hearing in accordance with my directions concerning the jurisdictional objection. The Respondent filed statements and submission on 7 March, the Applicant filed submissions on 14 March and the Respondent provided a reply by way of correspondence on 20 March. Although not provided for in the directions the Applicant provided further written material on 21 March.

[4] No request was made for a hearing and on that basis I proceed to deal with the matter on the papers.

[5] For convenience I will set out s.382 of the Fair Work Act 2009 (the Act).

“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.

Note: High income threshold indexed to $129,300 from 1 July 2013”

[6] The Applicant satisfies Section 382(a) as the Respondent is not a small business and the Applicant was employed for more than six months.

[7] The Applicant asserts that he was covered by the Professional Employees Award 2010 which the Respondent contests.

[8] Depending on my finding concerning award coverage the other issue which may need to be determined is whether pursuant to s.382(b)(iii) Mr Hargans earnings exceeded the “high income threshold” in s.333 of the Act. The High Income Threshold applying at the time of termination was $129,300.

[9] In relation to earnings s.332 of the Act provides that:

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.

[10] Section 333 of the Act provides as follows:

333 High income threshold

(1) Subject to this section, the high income threshold is the amount prescribed by, or worked out in the manner prescribed by, the regulations.

(2) A regulation made for the purposes of subsection (1) has no effect to the extent that it would have the effect of reducing the amount of the high income threshold.

(3) If:

(a) in prescribing a manner in which the high income threshold is worked out, regulations made for the purposes of subsection (1) specify a particular matter or state of affairs; and

(b) as a result of a change in the matter or state of affairs, the amount of the high income threshold worked out in that manner would, but for this subsection, be less than it was on the last occasion on which this subsection did not apply;

the high income threshold is the amount that it would be if the change had not occurred.

[11] Regulation 3.05(6) reads as follows:

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.

Background

[12] The Respondent is involved in the on-site engineering construction industry. It appears it is not contested that the Applicant was engaged as a Construction Manager. His duties were set out in an affidavit provided by the Chief Financial Officer of Ottaway Engineering Pty Ltd, Ra’ed Alaraj. 1

Award Coverage

[13] The Applicant asserts he is covered by the Professional Employees Award 2010. This submission appears to be based on the claim that his role required daily association, negotiation and planning with Professional Engineers.

[14] The Applicant states that he has an Advanced Diploma Project Management with over twenty years in managing projects.

[15] He states that he managed the onsite site business unit on the GLNG Upstream Project for the Respondent. The Applicant states that indirect management included two qualified engineers, two professional welding inspectors, one painting inspector, one HSC officer, 3 staff and 3 other supervisors, and direct management included to trades and trades assistants.

[16] I will not repeat all of the information provided in the Applicants submission that describes in some detail the nature of his role for the Respondent, suffice to say it is overwhelmingly duties and responsibilities that are managerial in nature including financial control, developing of a work schedule, negotiating with third parties on behalf of the Respondent including commercial negotiations, reporting daily to the National Construction Manager and less frequently to the Queensland General Manager, review, modification and submission of Project Management Plans for client approval, management of safety and also management of IT.

[17] Duties performed by the Applicant were set out in the Affidavit of Mr Larry Watson filed by the Respondent and the Applicant has not taken up the invitation in the directions order to contest that material at a hearing.

[18] The Respondent in its submissions addresses three potential modern awards, and two enterprise agreements. Having read the submissions of both parties it is clear based on that material and the terms of the respective industrial instruments that two of the modern awards and the two agreements do not cover the Applicant. I do not see it as necessary to address in any further detail those industrial instruments.

[19] The Applicant has only pressed an argument concerning the Professional Employees Award 2010. As stated in the Respondents submission that award applies to “employees performing professional engineering duties” who are covered by the classifications in Schedule B of the Award.

[20] Clause 3.2 of the Award defines the engineering stream as follows:

“3.2 Engineering stream
Experienced engineer means a Professional engineer with the undermentioned qualifications engaged in any particular employment where the adequate discharge of any portion of the duties requires qualifications of the employee as (or at least equal to those of) a member of Engineers Australia. The qualifications are as follows:

membership of Engineers Australia; or

having graduated in a four or five year course at a university recognised by Engineers Australia, four years’ experience on professional engineering duties since becoming a Qualified engineer; or

not having so graduated, five years of such experience.

Graduate engineer means a person who is the holder of a university degree (four or five year course) recognised by Engineers Australia or is the holder of a degree, diploma or other testamur which:

has been issued by a technical university, an institute of technology, a European technical high school (technische hochschule) or polytechnic or other similar educational establishment; and

is recognised by Engineers Australia as attaining a standard similar to a university degree; and has been issued following:

a course of not less than four years duration for a full-time course after a standard of secondary education not less than the standard of examination for matriculation to an Australian university; or

a part-time course of sufficient duration to obtain a similar standard as a four year full-time course after a similar standard of secondary education.

Professional engineer means a person qualified to carry out professional engineering duties as defined. The term Professional engineer will embrace and include Graduate engineer and Experienced engineer as defined in this clause.
Professional engineering duties means duties carried out by a person in any particular employment, the adequate discharge of any portion of which duties requires qualifications of the employee as (or at least equal to those of) a graduate member of Engineers Australia.”

[21] Award coverage within the stream is dependent on the Applicant performing duties that require qualifications at least to those of a graduate member of Engineers Australia. Coverage under the Award was considered by Lawler VP in Halasagi v George Weston Foods Limited[2010] FWA 6503. 2

[22] Lawler VP considered at length the meaning of the definition of “professional engineering duties” as it appears in the Award. As set out in the Respondents submissions Lawler VP identified a two stage process to determine coverage in the engineering stream, firstly, to consider the qualifications of the employee and the qualifications required to perform the duties, and secondly, to consider whether the employee fell within a classification in the award.

[23] On the Applicants own material he holds no qualifications in engineering, and further it is apparent to me from the nature of the role he is engaged to perform no engineering qualifications are required for him to have held that position. I adopt the conclusions of Lawler VP in the authority referred to and applying that approach it is plain that the Applicant is not covered by the Professional Employees Award 2010.

High Income Threshold

[24] Having made the finding above it is necessary to determine whether Mr Hargan’s annual rate of earnings and such other amounts worked out in accordance with the regulations is less than the high income threshold.

[25] The Respondent correctly relies on the Full Bench decision in Zappia v Universal Music Australia Pty Ltd t/a Universal Music Australia[2012] FWAFB 6108  3 as authority for the proposition that the determination of the annual rate of earning is the annualised rate of earnings at the time of dismissal, not the amount earned in the previous 12 months.

[26] Mr Hargan’s has not challenged the Respondent submissions concerning the assessment of his earnings at the time of termination. The Respondent said at the time of the Applicants dismissal he was earning $90 per hour, for a ten hour day ($4,500 per week). On that basis the Respondent calculates his annual rate of earnings was $234,000 per year. Further, even if regularly rostered overtime was removed, the Applicants base annualised earnings on a 38 hour week over 52 weeks amount to $177,840. Either way the amount is above the high income threshold.

[27] Given my findings the Commission does not have jurisdiction to deal with the application and it must be dismissed.

COMMISSIONER

 1   Affidavit dated 7 March 2014 by Ra’ed Alaraj.annexure RA4

 2   Halasagi v George Weston Foods Limited[2010] FWA 6503

 3   Zappia v Universal Music Australia Pty Ltd t/a Universal Music Australia[2012] FWAFB 6108

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