Paca (Patsy) Sungovska v Tara Hotels T/A Grand Hotel Melbourne

[2020] FWC 2719

[2020] FWC 2719

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009 am
s.739—Dispute resolution

Paca (Patsy) Sungovska
v
Tara Hotels T/A Grand Hotel Melbourne
(C2020/2034)

DEPUTY PRESIDENT CLANCY MELBOURNE, 25 MAY 2020

Alleged dispute about any matters arising under the modern award and the NES; [s146].

[1] On 1 April 2020, Ms Paca (Patsy) Sungovska filed an application with the Commission pursuant to s.739 of the Fair Work Act 2009 (the Act) raising a dispute with her employer, Tara Hotels T/A Grand Hotel Melbourne (“Tara Hotels”). The application was made because Ms Sungovska seeks confirmation of whether she has a right to be paid a redundancy payment.

[2] On 7 April 2020, Tara Hotels terminated Ms Sungovska’s employment on the basis of redundancy.

[3] I conducted a conference on 24 April 2020 and during the course of the conference, a question arose as to whether The Grand Hotel, managed by Sofitel Certified Agreement 2007 (the Agreement) 1 applies to Ms Sungovska’s employment with Tara Hotels.

[4] Apart from its name indicating it was made in or around 2007, there is nothing in the Agreement to indicate its specific commencement date, save that in Clause 2, it is stated that it came into operation when lodged with the Workplace Authority. Clause 2 further states that the Agreement remained in force for three years and continued to remain in force notwithstanding its expiry, until extended or replaced in accordance with the Workplace Relations Act 1996.

[5] Under Clause 36 of the Agreement, full time or part time employees who are subject to its terms have an entitlement to severance pay in addition to notice, in the event of redundancy.

[6] Tara Hotels contends the Agreement does not apply to Ms Sungovska’s employment.

[7] Accordingly, I directed the parties to file and serve outlines of submissions, together with any witness statements and documentary material upon which they relied going to the question of whether or not the Agreement applies to Ms Sungovska’s employment.

[8] In the Directions, I stated that unless either party requested a hearing in relation to this aspect of the dispute, I would determine the question of whether the Agreement applies to Ms Sungovska’s employment on the basis of the material filed. No party requested a hearing in relation to this aspect of the dispute although, as outlined below, Ms Sungovska sought a hearing to address her requests for certain documents.

Submissions of Tara Hotels

[9] Tara Hotels maintains that Ms Sungovska’s employment is not governed by the Agreement. It says Ms Sungovska is an award free employee and that her employment contract dated 10 March 2016 makes no mention of the Agreement and instead refers to and attaches ‘Standard Terms-Template 9 Full time and part time award/agreement free employee employed in hotel as at 1 July 2013’ (Standard Terms). Amongst the Standard Terms, Tara Hotels relies on Clause 11.5 (b), which states:

“11.5 If your employment ends under subclause 11.1, the Company will not make any payments to you other than:

(a) if applicable, a payment in lieu of notice as set out in subclause 11.1;

(b) if applicable, any redundancy payment the Company is required to make to you under the Act…”

[10] Tara Hotels contends that Ms Sungovska was employed above and outside the level 6 classification of the Agreement (the Agreement’s highest classification level), being employed as the Housekeeping Manager. It says this made Ms Sungovska an award free employee, not covered by the Agreement. In this regard, Tara Hotels referred to the duties of a Housekeeping Supervisor in the Agreement and in particular, noted that employees at that level work with “general guidance from their department heads.” Tara Hotels submits that as Housekeeping Manager, Ms Sungovska was a “department head” referred to and that she performed a higher level of duties, such as:

•  completing disciplinary discussions and managing performance management issues;

•  planning, directing and overseeing the operation of the department, with responsibility for the health and safety within the department;

•  stock take and purchasing of equipment;

•  reviewing, contributing to and working within the annual budget.

[11] Tara Hotels says that when Mr Denis Croke purchased the business from Fullbright Pty Ltd in 2016, all employee terms and conditions and entitlements were recognized, including the relevant instrument for each employee. It says the employment of some of its employees remains governed by the Agreement, attaching as an example the documentation for a previous employee named Marie Emmanuelle MacDonald for whom it says the applicable industrial instrument was the Agreement. Tara Hotels submits the differences compared with Ms Sungovska’s arrangements are clear and that this supports its argument that Ms Sungovska was not employed under the Agreement.

[12] Tara Hotels submits that the National Employment Standards (NES), which exclude small businesses from the obligation to make a redundancy payment, apply to Ms Sungovska’s redundancy circumstances.

Submissions of Ms Sungovska

[13] Ms Sungovska also provided copies of the Agreement and the employment contract dated 10 March 2016. The employment contract records a remuneration package of $61,860.75 gross per annum, comprising a salary of $56,493.84 and $5,366.91 in Superannuation.

[14] Ms Sungovska says however that the copy provided does not contain her signature and nor do the Standard Terms provided by Tara Hotels. Ms Sungovska relies on there being no statement in the contract that she is award free and highlighted the following term:

“4. Previous Service

Your previous service with Fullbright Pty Ltd will be recognised as service with the Company for the purposes of determining your entitlements to employment benefits under the Fair Work Act 2009 (Cth).”

[15] Ms Sungovska maintains that Tara Hotels should provide her with both her original signed employment contract with Tara Hotels and her original signed contract with Fullbright Pty Ltd. Ms Sungovska also seeks a letter from Tara Hotels recognising her 19 years of service, title and duties performed.

Reply submissions of Tara Hotels

[16] Tara Hotels submits that Ms Sungovska’s high salary and title indicate that she is an award free employee. It says that Ms Sungovska’s $31.49 hourly rate of pay at the time of her termination equates to a full time salary of 62,224.24 and that this sat well above the Housekeeping Supervisor rate, being $6,500 per annum higher. Further, Tara Hotels contends the fact that the Housekeeping Supervisor reported to Ms Sungovska and had her employment governed by the Agreement, confirms that Ms Sungovska is an “award free employee”, particularly as the Agreement does not have a classification capable of covering her. It also maintains Ms Sungovska is excluded from Agreement coverage by virtue of her duties and level of responsibility.

Relevant Legislation

[17] Although its precise commencement date is not apparent on the material before me, it can be concluded that the Agreement was a collective agreement made between 27 March 2006 and June 2009. As it was still in force when the Act commenced on 1 July 2009 it is for present purposes an ‘agreement-based transitional instrument’ subject to the transitional rules in Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act). 2 The Agreement can therefore continue to operate and be enforced.3

[18] Additionally, Division 1 of Part 3 of Schedule 11 of the Transitional Act applies in relation to a transfer of business and transferable instruments that are transitional instruments. For present purposes, the provisions contained in Division 1 of Part 3 of Schedule 11 operate in such a way that the Agreement covering Fullbright Pty Ltd was:

a) capable of being a transferable instrument when the business of Fullbright Pty Ltd transferred to Tara Hotels; and

b) could cover any employee who transferred from Fullbright Pty Ltd to Tara Hotels.

[19] Therefore, if Ms Sungovska was covered by the Agreement when the business of Fullbright Pty Ltd transferred to Tara Hotels, the Agreement can continue to cover her in her employment with Tara Hotels.

Consideration – does the Agreement apply?

[20] Neither party has produced documentary evidence that unequivocally establishes that Ms Sungovska’s employment was and is covered by the Agreement. However, Tara Hotels submits the documentary evidence confirms Ms Sungovska is an award-free employee who was not and is not covered by the Agreement.

[21] It is noted that Ms Sungovska contends that Tara Hotels should provide her with both her original signed employment contract with Tara Hotels and her original signed contract with Fullbright Pty Ltd. For the reasons that follow, I do not think this would change anything.

[22] Clause 3 of the Agreement deals with the relationship of the Agreement to the Award and references “the Award or any other award or industrial instrument.” The definitions clause in the Agreement defines the Award as “the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 or any other award applying to the Employer.” Clause 38 of the Agreement, which provides for annualised salaries, makes reference to two Awards; the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 and the Liquor and Accommodation Industry – Hotels, Resorts and Gaming- (Managerial Staff) – Award 2003.

[23] The Modern Award that would apply to this workplace would be the Hospitality Industry (General) Award 2010 (the Modern Award). It is evident that the classification structure in the Modern Award has elements from both the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 and the Liquor and Accommodation Industry – Hotels, Resorts and Gaming- (Managerial Staff) – Award 2003. For instance, the classifications contained in Levels 1-6 of the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 are virtually mirrored in Levels 1-6 of Clause 20.1 of the Modern Award.

[24] Prior to the Award Modernisation process completed by Fair Work Australia, managerial staff in a hotel were not covered by the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998. Instead, they appear to have been covered by the Liquor and Accommodation Industry – Hotels, Resorts and Gaming- (Managerial Staff) – Award 2003. Provisions from that latter Award appear to have found their way into the Modern Award at both clause 20.2 and clause D.2.9 of Schedule D and confirm that certain management staff in a hotel are covered by the Modern Award. As such, I am not persuaded by the assertion of Tara Hotels that Ms Sungovska was an “award free employee.”

[25] However, I am not persuaded that this means Ms Sungovska was covered by the Agreement. Her position as Housekeeping Manager with Tara Hotels did not fall within the classification structure of the Agreement and nor do I consider it was capable of doing so. The Agreement defines the applicable Award as the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 and its classification structure does not cover managerial staff. This is consistent with the scope and classification structure of the Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998. As outlined above, it is clear from the Awards in operation at the time the Agreement was made, that employees in managerial positions in hotels were covered by a different Award to the one that covered the employees they managed.

[26] Therefore, I do not consider that Ms Sungovska was covered by the Agreement at the time her employment was terminated. This being the case, there are two implications. Firstly, I consider the disputes procedure in Clause 31 of the Agreement does not apply, with the result that the Commission cannot exercise any powers pursuant to that clause. Secondly, the redundancy entitlements in the Agreement cannot apply to Ms Sungovska.

Further Matters

[27] I consider Ms Sungovska’ employment was covered by the Modern Award at the time of her redundancy and that it applied to her employment. Clause 17 of the Modern Award outlines that redundancy pay is provided for in the National Employment Standards (NES). Further, the dispute resolution procedure in the Modern Award provides as follows:

“9.1 Clause 9 sets out the procedures to be followed if a dispute arises about a matter under this award or in relation to the NES.

9.2 The parties to the dispute must first try to resolve the dispute at the workplace through discussion between the employee or employees concerned and the relevant supervisor.

9.3 If the dispute is not resolved through discussion as mentioned in clause 9.2, the parties to the dispute must then try to resolve it in a timely manner at the workplace through discussion between the employee or employees concerned and more senior levels of management, as appropriate.

9.4 If the dispute is unable to be resolved at the workplace and all appropriate steps have been taken under clauses 9.2 and 9.3, a party to the dispute may refer it to the Fair Work Commission.

9.5 The parties may agree on the process to be followed by the Fair Work Commission in dealing with the dispute, including mediation, conciliation and consent arbitration.

9.6 If the dispute remains unresolved, the Fair Work Commission may use any method of dispute resolution that it is permitted by the Act to use and that it considers appropriate for resolving the dispute...”

[28] Tara Hotels asserts that the entitlement to redundancy pay provided for in the NES does not apply to Ms Sungovska. It contends that at the time Ms Sungovska’s employment was terminated due to redundancy on 7 April 2020, it was a small business employer and therefore not obligated to pay the 12 weeks redundancy pay that s.119 of the Act prescribes. 4 Tara Hotels has listed the 14 employees it says were employed as at 7 April 2020.

[29] To have been excluded from the obligation to pay redundancy pay by virtue of being a small business employer, Tara Hotels had to have employed fewer than 15 employees at the earlier of the time immediately before Ms Sungovska’s termination or the time she was given written notice of her termination as described in s.117(1) of the Act. In the circumstances of this case, the material date appears to be 6 April 2020, when Ms Sungovska was sent an email at 10.49pm advising that her position was redundant with effect from 7 April 2020.

[30] Ms Sungovska challenges the assertion that Tara Hotels was a small business employer at the material time. She asserts there were other employees, although Tara Hotels disputes that the individuals Ms Sungovska names were employees at the material time.

[31] In making this application, Ms Sungovska seeks a determination from the Commission as to whether a payment of redundancy pay should be made. This would require the Commission to exercise its power of arbitration. Further, Ms Sungovska seeks a hearing for the purposes of requiring Tara Hotels to provide her with her original signed employment contract with Tara Hotels, together with the original signed contract with Fullbright Pty Ltd and a letter recognising her 19 years of service, her title and the duties she performed.

[32] I consider I am able to recommend to Tara Hotels that it provide Ms Sungovska with signed copies of the two contract documents she seeks (if it is in possession of same) and a letter recognising her 19 years of service, her title and the duties she performed. However, for the Commission to arbitrate an outcome to any dispute between the parties in relation to the NES redundancy pay entitlement that is raised through the dispute resolution procedure of the Modern Award, both parties to the dispute must consent.

[33] Tara Hotels is therefore directed to advise my Chambers by 4.00pm on Wednesday 27 May 2020 as towhether it consents to the Commission proceeding to arbitrate the question of whether Ms Sungovska is entitled to receive a payment of redundancy pay.

DEPUTY PRESIDENT

Written submissions:

Ms Sungovska, 7 May 2020.
Tara Hotels T/A Grand Hotel Melbourne, 4 May 2020 and 12 May 2020.

Printed by authority of the Commonwealth Government Printer

<PR719618>

 1   CAEN073914261

 2 Item 2(3)(a) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

 3 Items 2(2) and 16 of Schedule 16 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

 4 Section 121(1)(b) of the Fair Work Act 2009.