Peter Keele v Trimont Pty Ltd
[2014] FWC 8408
•3 DECEMBER 2014
| [2014] FWC 8408 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Peter Keele
v
Trimont Pty Ltd
(U2014/11374)
COMMISSIONER JOHNS | MELBOURNE, 3 DECEMBER 2014 |
Application for relief from unfair dismissal – high income threshold – whether additional payment to be included in calculation.
Introduction
[1] This decision is about whether a $400 per week payment (Additional Payment) paid to Peter Keele (Applicant) by Trimont Pty Ltd (Employer/Respondent) should be treated as part of the Applicant’s income.
[2] If the Additional Payment is part of the Applicant’s income then he is not entitled to seek a remedy for unfair dismissal; the Applicant having made such an application on 1 August 2014 pursuant to section 394 of the Fair Work Act 2009 (FW Act).
[3] The Employer has objected to the application on two basis:
a) first, that that the dismissal was a case of genuine redundancy; and
b) secondly, that the Applicant is not a person protected from unfair dismissal because the Applicant’s annual rate of earnings was in excess of the high income threshold.
[4] On 5 September 2014 the matter was listed for conciliation before a Fair Work Commission (Commission) Conciliator. The Respondent refused to participate in the conciliation conference and consequently, the dispute remained unresolved.
[5] Consequently the matter was listed for Jurisdiction Hearing in Melbourne on 31 October 2014. During the hearing the Commission, as presently constituted, conveyed its intention to first deal with the high-income threshold matter. 1
Permission to be represented
[6] The Applicant and Respondent sought permission to be represented by Mr S Davison (solicitor) and Ms S Fitzgerald (of counsel) respectively. A determination of whether permission should be granted was necessary to ensure that the manner in which any hearing was conducted was fair and just. 2
[7] Having regard to the jurisdictional objections raised by the Respondent and the material filed by both sides, on the day before the Jurisdictional Hearing, the Commissioner advised the parties that he was satisfied the matter was vested with sufficient complexity such that he would be assisted in the efficient conduct of the matter if both sides were granted permission to be represented by lawyers.
Background
[8] The following facts were either common ground between the parties or not contested:
a) The Respondent operates a construction business in Victoria. 3
b) The Applicant commenced employment with the Respondent on 9 December 2013 as a Site Foreman. 4
c) The Applicant was employed on a full time basis pursuant to a written employment contract signed on or about 9 December 2013. 5
d) The Applicant has his own business with an Australian Business Number (ABN) and which operates under a trading name “P.T.K. Developments and Contractors” (ABN Business). 6
e) The ABN Business is not a separate legal entity. 7
f) The Applicant was paid a base weekly salary of $1,700. However, after the inclusion of allowances and other benefits, the total amount paid to the Applicant on a weekly basis was $2,398.00 (Agreed Wages Amount).
g) The Respondent also:
i. paid the Additional Payment to the ABN Business after it issued an invoice to the Respondent. 8
ii. provided the Applicant with a Toyota Hilux (valued at nearly $55,000) 9 largely for private use.10 However, there was no agreed money value of this non-monetary benefit.
h) In confirming the arrangement, on 3 December 2013 the Respondent’s Office Manager/Accounts person wrote to the Applicant in the following terms,
As per your discussions with Silvio, confirming employment with our organisation as the Foreman at our Glen Iris project and commencing on the 9th December 2013.
Your net salary per week will be $1,700.00 and the balance of $400.00 can be invoiced to us once per month. 11
i) In respect of the ABN Business the Applicant submitted invoices on a fortnightly basis. The Respondent variously recorded the reason for the payment as:
i. as “Preliminaries & site establishment”;
ii. as “Consultants”; or
iii. by reference to the weeks worked. 12
j) The invoices included the following as a description of the “Job Number” – “0612 – site code 1030 site forman”. 13
k) The Agreed Wages Amount and the Additional Payment were paid into the same bank account. 14
l) Following the termination of his employment there was a dispute between the Applicant and the Respondent about outstanding moneys. The dispute included the non-payment of annual leave calculated on the Additional Payment and the non-payment of notice calculated on the Additional Payment. In respect of the latter amount the Applicant wrote,
“The $400 included in my salary that is invoiced separately which includes holiday pay at 2.7wks plus the week in lieu already paid, but you still haven’t paid the 400 p/w which is part of the salary. 15
(emphasis added)
m) Additional holiday pay and back-pay was paid to the Applicant on 23 and 24 July 2014 (i.e. following the termination of his employment). 16
The Statutory Framework
[9] S.382(b) of the Act provides that for a person to be protected from unfair dismissal, one or more of the following must 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.
(emphasis added)
[10] In relation to earnings, s.332 of the Act relevantly provides:
(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.
[11] At the relevant time when the Applicant made his application for a remedy from unfair dismissal, the high-income threshold was $133,000.
Question to be determined
[12] The issue to be determined is whether the Additional Payment can be characterised as:
a) the Applicant’s wages; 17 or otherwise
b) an “amount … applied or dealt with in any way on the [Applicant’s] behalf…” 18.
[13] In simple terms, the question to be answered is “What was the Additional Payment payment for?”
[14] The import of the matter is that, if the Additional Payment:
a) is a part of the Applicant’s earnings then, when it is added to the Agreed Wages Amount the Applicant’s annual rate of earnings is $145,496. Consequently he is over the high-income threshold and cannot make an application for a remedy for unfair dismissal;
b) is not a part of the Applicant’s earnings then the total of the Agreed Wages Amount is $124,696 and the Applicant is under the high-income threshold.
Evidence
[15] The Commission has had regard to all of the evidence in the proceeding. However, in this decision, the Commission does not seek to set out in detail all of the evidence presented in the proceedings, rather it sets out the evidence in brief terms and focuses on the essential question of “What was the Additional Payment payment for?”
[16] The Respondent called evidence from its Managing Director, Mr Silvio Ascenzo. The Applicant relied on his own evidence.
[17] In the Witness Statement filed in the proceeding it was the evidence of Mr Ascenzo that:
a) He has been the Managing Director of the Respondent for 33 years; 19
b) It was initially agreed that Applicant would be paid a base salary of $1,700 and an additional amount of $400 per week, which would be paid to him through the Applicant’s own company. The Applicant, prior to signing his contract, entered into salary negotiations with Ascenzo. The Applicant requested that the Respondent pay him an amount which was split between direct payment to him and payment to his company ... Although the Applicant’s base salary was $1,700 his weekly payment into his account was $2,398, once allowances were added, with an additional payment of $400 per week into his company’s account. 20
[18] In his oral evidence before the Commission Mr Ascenzo gave the following evidence:
“MS FITZGERALD: I might just talk to you a bit about the salary package that the applicant was offered or negotiated. When you offered him the job what discussion was there about his package?---
MR ASCENZO: Well, his package - he came and said that he wanted so much. We agreed on the price what he wanted to finish the project or to work for us as a site foreman. He also said to me that he had a company on the side that he had a carpentry business that he didn’t want to let go or close up but that if we could pay some money into his business he had. So we came to an agreement that was so much for wages and then so much to put into his business.
THE COMMISSIONER: And how was the $400 arrived upon?---
MR ASCENZO: Your Honour, I think that was arrived by both of us. Actually I think he actually said that, you know, he needed so much for wages each week like to live on and the rest we’d put on - we’d put into his company. He’d invoice us on a monthly basis or fortnightly basis and put into his company but it was one package. It was one - it was all one - it was one payroll.
THE COMMISSIONER: Yes, but it’s your evidence that that $400 was really wages?---
MR ASCENZO: Yes, it was part of his wages.” 21
and then further,
“THE COMMISSIONER: What separate work did the company do in respect of the 400?---
MR ASCENZO: Nothing at all. As a site foreman it was all - there was no separate work.
MS FITZGERALD: And how did you arrive at that amount? Why $400?---
MR ASCENZO: I can’t - it was actually what Peter wanted. He needed so much a week for wages. That’s what he said to me, “I need so much a week,” and the rest we put into that.
MS FITZGERALD: Was that $400 amount to vary or was it a fixed amount?---
MR ASCENZO: It was a fixed amount.” 22
and then further,
“MR DAVISON: The $400 payments that were made, they were in response to an invoice, weren’t they?---
MR ASCENZO: No, they’re in response to what we agreed with when we came into the boardroom that so much was on wages and the other part went to his building company.” 23
[19] In the Witness Statement filed in the proceeding it was the evidence of the Applicant that:
a) He was employed by the Respondent in the position of site foreman. 24
b) At the time he was offered the position by Mr Ascenzo there was a conversation about the nature of the employment. The Applicant was informed by Mr Ascenzo that there was an abundance of work and it was for this reason that the Applicant was offered a full-time employment contract as opposed to being brought on as a contractor. 25 (emphasis added)
c) At the time he was offered the position Mr Ascenzo suggested the arrangement where the Applicant separately invoice the Respondent for additional services through his business. As such PTK provided additional services to the Respondent. The services provided by PTK included, but were not limited to, preliminary and site establishment works and consultancy. 26
[20] In his oral evidence before the Commission the Applicant gave the following evidence:
“THE COMMISSIONER: Yes, but it was your understanding that the $400 was really wages?---
MR KEELE: Well - - -
THE COMMISSIONER: It was just being dressed up as something else?
MR KEELE: It was dressed up as something else but the whole thing is I was - I had invoiced under my business name.
THE COMMISSIONER: Yes?---
MR KEELE: Under the ABN.
THE COMMISSIONER: But whether it was suggested by you or suggested by Mr Ascenzo, you accept that this 400 bucks was really wages?---
MR KEELE: Well, it wasn’t wages because I invoiced it under my business name.” 27
and then further,
“THE COMMISSIONER: But it could have equally been treated just as wages, couldn’t it?---
MR KEELE: No - equally treated as wages, yes. It could’ve been.” 28
and then further,
“MS FITZGERALD: That’s what you said to me before?---
MR KEELE: Yes, I misunderstood the question. What I’m saying is that PTK really didn’t do anything on site accept for the purpose PTK was on the figurehead and I was told to invoice the company of a certain aspect and that’s what I did.
MS FITZGERALD: But there was no actual separate work being performed by PTK, was there?---
MR KEELE: No.” 29
and then further,
“THE COMMISSIONER: Sorry, so we’ve dealt with the preliminary and site establishment works. There’s no separate consultancy work performed by PTK?---
MR KEELE: No
THE COMMISSIONER: So the only actual work performed was your personal labour, wasn’t it?---
MR KEELE: That’s right.
THE COMMISSIONER: And all the moneys paid were really in respect of your personal labour?---
MR KEELE: Yes.” 30
Consideration
[21] What the evidence in this matter establishes is that both Mr Ascenzo and the Applicant agree that no additional work (other than the Applicant’s services as an employed Foreman) was rendered in exchange for the Additional Payment. 31
[22] There is a dispute between Mr Ascenzo and the Applicant about who had the idea to separately invoice the Additional Payment, 32 but that hardly seems relevant. The truth of the matter is that the Additional Payment was paid exclusively for the Applicant’s services as a Foreman. Therefore, the answer to the essential question of “What was the Additional Payment payment for?” is “wages”.
[23] To the extent that the Applicant claimed in his Witness Statement that the ABN Business provided additional services to the Respondent, that was a false statement. For a period of time during his oral evidence the Applicant tried to maintain this fiction, 33 but ultimately made the honest concession that there was no actual separate work being performed by the ABN Business.34
[24] By reason of the evidence the Commission, as presently constituted, finds that the Additional Payment was part of the Applicant’s wage for his position as Foreman. The Additional Payment is therefore to be added to the Agreed Wages Amount.
[25] Consequently, for the purposes of s.383(b)(iii) of the FW Act the sum of the Applicant’s annual rate of earnings was $145,496 and was not less than the applicable high-income threshold of $133,000. The Respondent’s jurisdictional objection is therefore upheld.
Conclusion
[26] For the reasons set out above, the Commission, as presently constituted, is not satisfied the Applicant was protected from unfair dismissal. The Applicant’s application for a remedy for unfair dismissal is dismissed.
[27] An order will be issued with this decision.
COMMISSIONER
Appearances:
Mr S Davison for the Applicant.
Ms S Fitzgerald for the Respondent.
Hearing details:
Melbourne.
31 October 2014.
1 PN38.
2 Warrell v FWC [2013] FCA 291.
3 Respondent Outline of Submissions dated 13 October 2014, para 4, Applicant’s Outline of Submissions dated 23 October 2014, para 11.
4 Respondent Outline of Submissions dated 13 October 2014, para 6, Applicant’s Outline of Submissions dated 23 October 2014, para 14.
5 Respondent Outline of Submissions dated 13 October 2014, para 7, Applicant’s Outline of Submissions dated 23 October 2014, para 15.
6 Applicant’s Outline of Submissions dated 23 October 2014, para 22.
7 PN243 - 245.
8 PN246.
9 Exhibit R2.
10 PN297 – PN307.
11 Exhibit R4.
12 Annexure “SA-02” to Exhibit R1.
13 Exhibit R5 was an example of such an invoice.
14 PN447.
15 Exhibit R3.
16 Annexure “SA-02” to Exhibit R1.
17 Such that it is caught by the definition in s.332(1)(a) of the FW Act.
18 Such that it is caught by the definition in s.332(1)(b) of the FW Act.
19 Exhibit R1, para 2.
20 Exhibit R1, para 10.
21 PN91-PN93.
22 PN127 – PN129.
23 PN206.
24 Exhibit A1, para 3.
25 Exhibit A1, para 4.
26 Exhibit A1, para 12.
27 PN340 – PN343.
28 PN347.
29 PN369 – PN370.
30 PN373 – PN375.
31 See Mr Ascenzo’s evidence PN127. See the Applicant’s evidence PN370.
32 PN199, Exhibit A1, para 12.
33 PN348 – PN368.
34 PN370.
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