Munro v Beckett Australia Pty Ltd

[2020] FCCA 3196

FEDERAL CIRCUIT COURT OF AUSTRALIA

MUNRO v BECKETT AUSTRALIA PTY LTD [2020] FCCA 3196

Catchwords:
INDUSTRIAL LAW – Small claims – application for unpaid commission –Real Estate Industry Award 2010 – unpaid minimum rate under the Award – determination of the end date of employment – outstanding commission – Award entitlements – pecuniary penalty claim – application dismissed.

Legislation:

Fair Work Act 2009 (Cth), s. 548.

Real Estate Award 2010, cl. 14, 16, 22, 23, 24.

Applicant: DEAN ALAN MUNRO

Respondent: BECKETT AUSTRALIA PTY LTD

File Number: MLG 1909 of 2019

Judgment of: Judge Mercuri

Hearing date: 23 March 2020

Date of Last Submission: 23 March 2020

Delivered at: Melbourne

Delivered on: 26 November 2020

REPRESENTATION

Advocate for the applicant: In person

Solicitors for the applicant: None

Advocate for the respondent: Mr Georgiou

Solicitors for the respondent: None

ORDERS

1. Within 7 days, the respondent pay the applicant the sum of $568.05 in respect of unpaid wages pursuant to the Real Estate Industry Award 2010.

2. The applicant’s application otherwise be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1909 of 2019

DEAN ALAN MUNRO

Applicant

and

BECKETT AUSTRALIA PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a claim for unpaid commission brought in the court’s small claims jurisdiction.  When the claim was initially filed,[1] the applicant sought payment for commission in respect of two transactions, namely in respect of Ms Elina Law (‘the Law transaction’) and Ms Elise McGain (‘the McGain transaction’).  By the time the matter came on for hearing, the applicant conceded that he had been paid commission in respect of the transaction for Ms McGain although it seems there was still a dispute about the amount of commission paid to him in respect of that transaction.[2]

   [1] Small claim under Fair Work Act 2009 Form 5 filed 18 June 2019.

   [2] Transcript of proceedings pages 8 and 12.

2. The applicant further claimed that, in the alternative, he was not paid the minimum rate specified under the Real Estate Industry Award 2010 (‘the Award’).[3]

   [3] Small claim under Fair Work Act 2009 Form 5 filed 18 June 2019; see also applicant’s submissions filed 3 April 2020 page 4.

3. The applicant also seeks declarations that the respondent has breached the Award and the Fair Work Act (2009) (‘the Act’) and the imposition of penalties in respect of those breaches.[4]

   [4] Applicant’s submissions filed 3 April 2020 page 4.

Facts

1. It is common ground that:

   (a)the applicant was employed by the respondent as a buyer’s advocate, commencing on or about 16 January 2019;[5]

   (b)the applicant signed an employment agreement which provided that he was employed on a ‘commission only basis’ and set out the terms on which he would be remunerated;

   (c)the respondent’s owner and principal, Mr Thomas Georgiou, provided the applicant with the opportunity to work on securing a property for a client of the respondent’s, namely Ms Elina Law;

   (d)it was agreed orally between the applicant and Mr Georgiou that the applicant would receive commission in respect of any commission from Ms Law at the rate of 25% (gross excluding GST);

   (e)the applicant tendered his resignation orally on Friday, 26 April 2019 and by letter dated 29 April 2019;

   (f)it was agreed between the applicant and Mr Georgiou that the applicant could continue working to secure a property for Ms McGain after his employment with the respondent came to an end and continue to receive a commission payment in accordance with his employment contract;

   (g)Mr Georgiou told the applicant that his employment would come to an end on Friday, 3 May 2019;

   (h)On Saturday, 4 May 2019, the respondent facilitated a purchase for Ms Law in respect of which it received commission.

   [5] This is the date on which the applicant signed his employment contract.  The applicant asserts that he commenced on 14 January 2019.  Nothing turns on the dispute in commencement date.

2. As noted above, the applicant signed an employment agreement on 16 January 2019 (‘the Employment Agreement’).[6]  Both parties have annexed to their material, a copy of that agreement.  Relevantly, the Employment Agreement provides:

   [6] Applicant’s submissions filed 3 April 2020 page 1.

   1.2The Employee will serve Beckett (Australia) Pty Ltd in the Position specified in Schedule 2.  …

   …

   2.1The Employee’s Commencement Date with Beckett (Australia) Pty Ltd is set out in Schedule 1.  …

   …

   5.2The Employee’s remuneration will consist of:

   (a)commission payments (if any) to be paid to the Employee in accordance with the rules set out in Schedule 3.

   (b)statutory superannuation payments.

   5.3For the avoidance of doubt, this Agreement is a ‘commission only’ contract within the terms of the Award.

   5.4Beckett (Australia) Pty Ltd will pay the Employee’s commission salary into the Employee’s nominated bank account in equal instalments on a monthly basis.  Any commission that is payable to the Employee is payable within 30 days of the unconditional purchase once the commission has been received from the client.  …

   …

   6.The remuneration and benefits Beckett (Australia) Pty Ltd has agreed to provide as set out in this Agreement fully compensate the Employee for all aspects of the work performed … and Beckett (Australia) Pty Ltd is entitled to set off any claim for additional compensation or any entitlements that may otherwise be owing under any industrial instrument or statute (including but not limited to any minimum wages, overtime, penalty rates, shift loadings, ….) against any … commission,… or other benefits provided for in this Agreement.[7]

   [7] Smalls claims under Fair Work Act 2009 Form 5 filed 18 June 2019, annexure ‘Dean Alan Munro, Employment Agreement, Private & Confidential’; see also Respondent’s submissions filed 15 April 2020 Attachment 4 – Dean Munro Employment Agreement (‘the Employment Agreement’).

3. Clause 14 of the Employment Agreement provided that the applicant could terminate his employment by giving the employer one week’s notice in writing.[8]

   [8] Employment Agreement page 5.

4. Schedule 1 relevantly:

   (a)identified the commencement date as 16 January 2019;

   (b)noted the Modern Award as the ‘Real Estate Employee Level 1 (Associate Level) Real Estate Industry Award 2010’.[9]

   (c)noted the relevant classification as ‘after first 12 months at this level’;[10]

   (d)contained the following under the heading ‘Remuneration’:

   The Employee will be paid all purchase and selling commissions to which the Employee is entitled in accordance with Schedule 3, subject to the terms below.

   Commissions are only payable to the Employee from the date of any unconditionally signed or legally enforceable contract, and once such funds are cleared in Beckett (Australia) Pty Ltd’s accounts.[11]

   (e)Schedule 2 is headed ‘Position Description’ and contains the following:

   The Employee is to provide services to Beckett (Australia) Pty Ltd in the position of Senior Buyers Advocate.  …

   [9] Employment Agreement page 13.

   [10] Employment Agreement page 13.

   [11] Employment Agreement page 13.

   POSITION TITLE

   Real Estate Employee Level 1 (Associate Level) after first 12 months at this level (Buyers Advocate).[12]

   (f)Schedule 3 then contains the Commission Structure.[13] It relevantly states that the applicant was employed as a Real Estate Employee Level 1 (Associate Level) and goes on to provide that the employee is entitled to commission of:

   (i)60% of the total net amount not including GST if it relates to an employee generated lead; or

   (ii)10-40% of the total net amount not including GST if it relates to a Beckett (Australia) Pty Ltd generated lead – as agreed in advance.[14]

   [12] Employment Agreement page 15.

   [13] Employment Agreement page 17.

   [14] Employment Agreement page 18.

5. Schedule 3 also states that ‘purchase and selling commissions paid to employees are inclusive of any statutory superannuation payments payable on the commissions (in accordance with minimum statutory requirements)’.[15]

   [15] Employment Agreement page 19.

6. In addition, the following statement is made in Schedule 3:

   General

   Commissions are paid to the Employee only upon the receipt of commission paid from the client into the Beckett Australia Pty Ltd Bank Account.  Once commissions are received by Beckett (Australia) Pty Ltd, they will be paid to the Employee in the next earliest monthly pay period.[16]

   [16] Employment Agreement page 19.

Issues

1. In considering this claim, the following factual issues arise for determination:

   (a)When did the employee’s employment come to an end?

   (b)Is there any outstanding commission owing to the applicant from the transaction regarding Ms McGain?

2. In addition, the following legal issues arise:

   (a)Was the applicant’s employment on a commission only basis, permitted by the Award?

   (b)If not, has the applicant received his minimum entitlements under the award?

   (c)Does the applicant have a claim, under his employment contract, to any commission arising from the transaction for Ms Law?

   (d)Does the court have the power to deal with the applicant’s pecuniary penalty claims?

When did the applicant’s employment come to an end?

1. It is common ground that the applicant told Mr Georgiou that he was resigning on Friday, 26 April 2019.[17]  Mr Georgiou’s evidence, which I accept, is that he asked the applicant to confirm that in a written letter.[18]  It is also common ground that the applicant provided a letter of resignation on Monday, 29 April 2019.[19] 

   [17] Applicant’s submissions filed 3 April 2020 page 2; see also respondent’s submissions filed 15 April 2020 page 4.

   [18] Transcript of proceedings page 15.

   [19] Applicant’s submissions filed 3 April 2020 page 2; see also respondent’s submissions filed 15 April 2020 page 4.

2. Mr Georgiou gave evidence, which I also accept that:

   (a)he then told the applicant that he was no longer to perform any work in relation to Ms Law’s transaction;[20]

   (b)the applicant was not involved in the due diligence for the property which Ms Law ultimately purchased;[21] and

   (c)although the usual practice would have been for the applicant to finish up immediately, as a sign of good will and in light of the fact that the applicant had indicated that he was in financial difficulties at the time, the respondent agreed to allow the applicant to continue servicing two clients for a short period after his employment had come to an end; namely Ms McGain and Ms Frayne.[22] 

   [20] Respondent’s submissions filed 15 April 2020 page 6.

   [21] Respondent’s submissions filed 15 April 2020 page 6.

   [22] Respondent’s submissions filed 15 April 2020 page 7.

3. It is also common ground that ultimately, the applicant assisted Ms McGain in purchasing a property on 24 May 2019.[23]  Ms Frayne did not ultimately proceed to finalise a purchase.

   [23] Applicant’s submissions filed 3 April 2020 page 3; see also respondent’s submissions filed 15 April 2020

4. The applicant’s evidence is that Mr Georgiou told him that his employment would finish up on the Friday, 3 May 2019.[24]  That is consistent with Mr Georgiou’s evidence and is also consistent with the applicant giving one week’s notice of termination if one accepts, as I do, that he gave notice of his resignation, which was accepted, on Friday, 26 April 2019.[25] 

   [24] Applicant’s submissions filed 3 April 2020 page 3.

   [25] Respondent’s submissions filed 15 April 2020 page 7.

5. The applicant says that Mr Georgiou’s direction that his employment cease on Friday, 3 May 2019, was opportunistic given that the respondent was bidding on a property for Ms Law on 4 May 2019 and that this was an attempt to avoid having to pay the applicant any commission received in respect of that sale.[26]  I do not accept that characterisation.  Whilst it is the case that the applicant’s hours of work could extend to Saturday,[27] there is no requirement that work be performed on a Saturday.[28]  Indeed, in relation to ordinary hours of work, Schedule 1 of the Employment Agreement provides:

   Your supervisor will agree with you on a weekly work pattern.[29]

   [26] Applicant’s submissions filed 3 April 2020 page 3.

   [27] Employment Agreement page 13.

   [28] Employment Agreement page 13.

   [29] Employment Agreement page 13.

6. Moreover, as stated the applicant verbally tendered his resignation on Friday, 26 April 2019 therefore one week’s notice would have expired on Friday, 3 May 2019.

7. I therefore find that the applicant’s employment came to an end on the Friday, 3 May 2019. 

8. It is also common ground that the applicant did attend the auction on 4 May 2019.[30]  This does not lead me to conclude that he was still working on that day.  I find that when the applicant asked if he could attend the auction, Mr Georgiou told the applicant that it was up to him. In any event, for the reasons which follow even if the applicant’s employment had continued up to and including 4 May 2019, that would not have been determinative of his commission claim.

   [30] Applicant’s submissions filed 3 April 2020 page 3; see also respondent’s submissions filed 15 April 2020 page 6.

Is there any outstanding commission owing in relation to the McGain transaction?

1. It is common ground that the applicant has received payment of $9,600, inclusive of superannuation, in respect of the McGain transaction.[31]  As is evident from the summary of the relevant contractual terms set out in some detail above, the applicant’s entitlement to a commission under his contract is exclusive of GST.[32]

   [31] Transcript of the proceedings page 12; see also respondent’s submissions filed 15 April 2020 page 4.

   [32] Employment Agreement page 18.

2. It is apparent from the documentation provided by the respondent at Attachment 6 to his response that Ms McGain’s agreement with the respondent provided for an acquisition fee of $17,600 inclusive of GST.[33]  The applicant’s concedes that he received $9,600 however says that he should have received $10,200.[34]  It is not clear how he arrives at this figure. He has not led any evidence about the amount of GST which applies to this contract.  However, in an email dated 6 June 2019 which the applicant annexed to his application, Mr Georgiou stated:

   Your calculations on this deal are incorrect.  … (Ms McGain) committed to a fixed fee of $16,000 + GST ($17,600 inclusive of GST).  As per your Employment Agreement with Becket, you will be paid 60% gross and including super.  This means you will be paid $9,600 gross and including super.[35]

   [33] Respondent’s response filed 27 November 2019, Attachment 6.

   [34] Transcript of the proceedings page 12.

   [35] Smalls claims under Fair Work Act 2009 Form 5 filed 18 June 2019.

3. I find that the commission payable in respect of the McGain transaction was 60% of $16,000 (being $17,600 less GST).  That amounts to a gross figure of $9,600, which is the amount paid to the applicant.  The applicant has therefore not established that he is entitled to any further payment under his contract in relation to the McGain transaction.

Is the applicant’s commission only employment permitted by the award?

1. Part 4 of the Award deals with minimum wages and related matters.  Relevantly, Clause 14 provides for minimum weekly wages for employees covered by the award.  Clause 14.3 however relevantly provides:

   The minimum weekly wage in clause 14.1 is not payable to an employee engaged on a commission-only basis pursuant to clause 16 – Commission-only employment.

2. Clause 16 then deals with commission-only employment.  Relevantly, it provides at Clause 16.2:

   The objective of commission-only employment arrangements is to provide a mechanism by which a salesperson who meets the requirements set out below should achieve remuneration of 125% or more of the annualised minimum wage that an employee working in the same property sales level under this award would be entitled to be paid.

3. It is clear from this provision that the intention of commission-only arrangements are to permit such payment mechanisms, provided that, the employee is receiving at least 125% more than the minimum rate they would have otherwise received, if they had simply been paid the minimum award rate.

4. Clause 16.3 sets out various conditions which must be met before an employee can be employed on a commission only basis.  The respondent submitted that there were two key criterion, both of which were met and therefore the applicant was properly employed on a commission only basis.[36]  Those two criterion were that the applicant had been employed as in real estate for more than 12 months and that the applicant had a real estate licence.  It is common ground that the applicant met both of these elements.

   [36] Respondent’s submissions filed 15 April 2020 page 3.

5. Clause 16.3(a) provides that a person may enter a commission only agreement under the Award if all of the conditions in that clause are met.  Whilst the applicant meets the conditions in 16.3(a)(i), (ii) and (iv) the evidence does not clearly establish that the conditions at (iii) or (vi) have been met.  But in any event, even if those conditions were met, on the basis of the employment contract between the applicant and the respondent, it is clear that the applicant was employed as a Real Estate Employee Level 1 and therefore the condition in (v) has not been met. 

6. For completeness, I note that in relation to condition 16.3(a)(iii), the requirement is that the employee has been engaged ‘in property sales or commercial, industrial or retail leasing as a Real Estate Employee Level 2 or higher with any Licenced Real Estate Agent, … for at least 12 consecutive months in the 3 years prior to entering into a commission only agreement.’[37]

   [37] Clause 16.3(a)(ii) Real Estate Industry Award 2010.

7. The evidence given by the applicant is that he was employed at a real estate agency for more than 12 months prior to joining the respondent.[38]  However, it is not clear that he was employed at Level 2 or above during that period.  In any event, as stated above, the employee was not employed as a Level 2 employee by the respondent, but rather was employed as a Level 1 employee. 

   [38] Applicant’s submissions filed 3 April 2020 page 1.

8. I accept the evidence given by the respondent that when employing the applicant, he was offered a base salary plus commission or commission only employment and that the parties ultimately agreed to commission only employment.[39] However, that is not determinative of whether or not the award has been properly applied in this case. 

   [39] Respondent’s submissions filed 15 April 2020 page 2.

9. For these reasons, it was therefore not open to the applicant and the respondent to enter an employment agreement on a commission only basis.  Leaving aside the contractual position between the parties, the employee was therefore entitled to be paid the minimum rate of pay pursuant to the award. 

10. As a consequence of this finding, the respondent was required to pay the applicant in accordance with the Award.

Award entitlements

1. As stated, on a proper reading of the applicant’s employment contract, he was employed as a Real Estate Level 1 (Associate Level) after the first 12 months at this level employee.  The applicant’s evidence is that the minimum weekly rate of pay for this level was $728.20.[40] He seemed to suggest that as he regularly worked on Saturdays he was entitled to more than this minimum rate for the 16 weeks that he was employed.

   [40] Transcript of the proceedings page 5.

2. The Award deals with an employee’s ordinary hours of work at Clause 23 and relevantly provides that an employee’s ordinary hours of work will be 38 hours per week and ‘may be worked on any day of the week.’  The Award further provides that an employee is to be provided with either one and a half or two rostered days free of duty each week and also provides for hours of work to be averaged over an eight week period with the average not exceeding 38 hours.[41] 

   [41] Clause 23 Real Estate Industry Award 2010.

1. Clause 24 then provides that hours worked in excess of ordinary hours prescribed in Clause 23 are to be paid for at the overtime rate specified or alternatively an employee may be entitled to time of in lieu of such overtime.[42]

   [42] Clause 24 Real Estate Industry Award 2010.

2. Whilst it is accepted that the applicant worked on Saturdays, the applicant’s evidence does not establish what hours he worked generally and indeed whether he worked in excess of 38 hours per week so as to qualify for overtime, or indeed, what overtime might be payable.  Therefore, the applicant has not established a claim for any amount payable for work in excess of 38 hours per week under the Award. 

3. Having found that the applicant’s employment commenced on 16 January 2019 and came to an end on 3 May 2019, he was employed for a period of 15 weeks and two days.  The applicant’s evidence is that his rate of pay under the Award for a 38 hour week was $728.20 per week. 

4. On that basis he should have been paid $11,219.28 plus superannuation. It is common ground that the applicant received:

   (a)$780.00 in respect of Daryl Berlim;[43]

   (b)$1,283.10 in respect of Sandra Ricci;[44]

   (c)$9,600 in respect of Ms McGain.

   [43] Applicant’s submissions filed 3 April 2020 page 3.

   [44] Applicant’s submissions filed 3 April 2020 page 4.

5. This totals $11,663.10, inclusive of superannuation. 

6. Clause 22.2 of the Award also requires an employer to make superannuation contributions to a superannuation fund for the benefit of an employee as required by relevant superannuation legislation.  As both parties made submissions on the basis that the applicant was entitled to be employed on a commission only basis, neither party made submissions on the amount of superannuation which would be payable on the salary payable to the applicant under the Award. 

7. It appears from Attachment 8 and 9 to the respondent’s written submissions, and documents attached to the applicant’s written submissions, that the respondent has paid the total sum of just over $1,011.87 to the applicant’s nominated superannuation fund. This leaves a balance of $10,651.23 of the monies paid to the applicant (gross).[45]  In those circumstances there is a shortfall of $568.05 in the wages that should have been paid to the applicant under the Award. 

   [45] Respondent’s submissions filed 15 April 2020 page 2.

8. The applicant seeks interest on any outstanding amount owing to him.  In all of the circumstances, I have found that the applicant was offered a contract with a base rate of pay and a lower commission structure.  I am therefore not satisfied that this is a case in which interest ought to be ordered. 

Does the applicant have a claim, under his employment contract, to any commission arising from the transaction for Ms Law?

1. For the reasons set out above, the applicant’s employment with the respondent came to an end on 3 May 2019.  The applicant’s contract provides that commission is only payable ‘from the date of any unconditionally signed or legally enforceable contract, and once such funds are cleared in Beckett (Australia) Pty Ltd’s accounts.’[46]  Leaving to one side the applicant’s argument that an unconditional contract was signed on 4 May 2019, being one day after the applicant’s employment came to an end and even if I were to accept that his employment ought to have come to an end on the Saturday, 4 May 2019, this does not address the fact that the contract makes it clear that the commission only becomes payable when, in addition to a signed contract, the funds have cleared in the respondent’s account.

   [46] Employment Agreement page 11.

2. The applicant has led no evidence to suggest that the relevant amount was cleared in the respondent’s account before he ceased employment, or indeed that it occurred during the period from 4 May 2019 until he completed the sale for Ms McGain in late May 2019.  It appears from the documents attached to the respondent’s response that the relevant payment was received from Ms Law on 12 June 2019.

3. The applicant has not established an entitlement under his contract to any payment of commission in respect of the transaction for Ms Law. 

Pecuniary Penalty Claim

1. Finally, the applicant also seeks an order for the imposition of a penalty for the respondent’s failure to comply with the Award. This application was brought by the applicant in the court’s small claims jurisdiction. That jurisdiction is limited by section 548 of the Act. It does not extend to claims for a pecuniary penalty order. As such, I do not have the jurisdiction in this proceeding to deal with that aspect of the applicant’s claim.

Conclusion

1. For each of these reasons, I order that the respondent pay the applicant $568.05 within seven days and that the applicant’s claim otherwise be dismissed.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Mercuri

Associate: 

Date: 26 November 2020