Petrucci v MPC Agents Pty Ltd ATF the MPC Agents

[2021] FCCA 1368

FEDERAL CIRCUIT COURT OF AUSTRALIA

Petrucci v MPC Agents Pty Ltd ATF The MPC Agents [2021] FCCA 1368  

File number(s):	MLG 3654 of 2019
Judgment of:	JUDGE MERCURI
Date of judgment:	21 June 2021
Catchwords:	INDUSTRIAL LAW – FAIR WORK – small claims – application of Real Estate Award 2010 - application for unpaid wages - unpaid overtime – unpaid allowances – unpaid public holidays and personal leave – accrued but untaken annual leave – unauthorised and unreasonable deductions – order for respondent to pay applicant in respect of unpaid personal leave, unpaid annual leave and unauthorised/and unreasonable deductions – application otherwise dismissed
Legislation:	Fair Work Act 2009 (Cth) s 96
Number of paragraphs:	63
Date of last submission/s:	28 October 2020
Date of hearing:	28 October 2020
Place:	Melbourne
Counsel for the Applicant:	The Applicant appeared on his own behalf
Counsel for the Respondent:	Mr Peter Gindy appeared for the respondent

ORDERS

MLG 3654 of 2019

BETWEEN:

VALENTINO PETRUCCI

Applicant

AND:

MPC AGENTS PTY LTD ATF THE MPC AGENTS

Respondent

ORDER MADE BY:	JUDGE MERCURI
DATE OF ORDER:	21 JUNE 2021

THE COURT ORDERS THAT:

1.Within 21 days, the respondent pay to the applicant:

(a)The sum of $1,096.15 in respect of unpaid personal leave;

(b)The sum of $24.34 in respect of unpaid annual leave; and

(c)The sum of $2,450 in respect of unauthorised and/unreasonable deductions made during the employment.

2.The applicant’s application is otherwise dismissed.

REASONS FOR JUDGMENT

JUDGE MERCURI

INTRODUCTION

1. This is an application under the Fair Work Act 2009 (Cth) (‘the Act’) brought in the court’s small claims jurisdiction.

2. As per the originating application filed 23 October 2019, the applicant claimed to have been underpaid during his employment with the respondent.

3. In summary, the applicant claims that on termination of his employment he was not paid:

   ·accrued but untaken annual lave entitlements;

   ·for personal leave;

   ·motor vehicle allowance;

   ·mobile phone allowance;

   ·overtime; and

   ·for work on public holidays.

4. It is common ground that the applicant was employed by the respondent from 19 July 2018 to 6 March 2019.  

5. The claims made the applicant essential fall into three categories:

   ·unpaid overtime and leave;

   ·unpaid allowances; and

   ·unauthorised deductions.

6. Before dealing with each of these matter, I will set out the relevant contractual, award and statutory provisions which apply to the applicant’s employment.

   Employment Agreement

7. Annexed to his amended application filed 3 September 2020 is a copy of the applicant’s Employment Agreement. Relevantly Clause 1.1 deals with employment and provides that:

   ·the applicant was initially employed as a Sales Cadet (level 1) for the first three months; and

   ·after three months he progressed to the role of a Sales consultant (level 2).

8. Clause 2.1 makes it clear that unless expressly stated, any Award which applies to the employee’s employment is not incorporated into the Employment Agreement.   Clause 5 deals with hours of work and expressly provides:

   5.1The Employee is required to work 38 hours per week, to be worked on the days and between the business hours stated in item 7 of Schedule 1.  …

   5.2      The Employee’s actual hours of work will reflect the nature of the position and incorporate a reasonable requirement to work additional hours.

   5.3      If you need to work overtime to complete the responsibilities of your position, you must seek written approval from your manager.  Authorised overtime will be paid for at the overtime rates specified in the Award.

9. Clause 7 deals with salary and at clause 7.2 relevantly provides:

   7.2Except as a (sic) specifically provided for under this Employment Agreement, the Employee acknowledges that the salary (Total Salary) and, along with any allowances of benefits specifically provided for in this Employment Agreement are intended to, and do, compensate the Employee in satisfaction of each and all of the Employee’s entitlements under any laws or legal instruments, awards, collective/enterprise agreements of the NES, including without limitation, any periodic rate of pay, any special or penalty rates of pay in respect of overtime, weekend, public holiday or shift work, allowances and annual leave loadings.  The Total Salary and payments, allowances or benefits are to be applied to the Employee’s entitlements whether they are calculated on an hourly, weekly, monthly or other basis, whether they are payable as a lump sum, by reference to a particular event (e.g. meal allowance) or other measure or are calculated by any other means unless otherwise stated in this Employment Agreement.

10. Clause 7.3 – 7.5 and 7.7 deal with sales bonuses.  Clause 7.8 make it clear that if an employee leaves their employment for any reason, they are not entitled to any sales bonuses or commissions on incomplete sales, i.e. sales which have not settled. 

11. In addition, clause 7.9 further provides that any sales or commission structure, such as the one set out in Schedule 4 can be varied or removed by the employer at any time, without notice to the employee and in entirely discretionary. 

12. Schedule 1 at item 4 identifies the relevant award as the Real Estate Award 2010 and reiterates that the applicant was to be employed at (Level 1 – first 12 months experience) for the first three months and then at Level 2 as a sales consultant thereafter. 

13. Item 7 of Schedule 1 confirms that the hours of work are 38 hours per week and goes on to state, that ‘the ordinary hours of the business are 9:30am – 5:30pm, additional hours may be required according to the operational needs of the business’.

14. Schedule 4 then deals with the Sales Bonus and makes it clear that the employee’s retainer is deducted from any bonus payable.  In particular in relation to the bonus plan which applied after 3 months employment, the contract states:

    Junior Sales Consultants move to a ‘retainer’ arrangement after the first three months of employment.  The monthly retainer is 1/12^th of the consultant’s annual salary as set out in item 8(i) of Schedule 1.  When the Consultant completes a sales activity that qualifies for a bonus (Commission) they are then paid the Commission minus that month’s retainer. 

15. In relation to Sales Cadets (which was the position held by the applicant for the first three months of his employment), Schedule 4 further provides:

    Sales Cadets earn a base salary paid each month with the potential to earn additional bonuses based on the Sales Plan set out below.

16. The drafting of Schedule 4 is not as clear as it might be.  However, it appears that the effect of this schedule is that as a Sales Cadet, the applicant had the opportunity to earn a Sales Bonus of up to 10% of the Net Commission available to the respondent, if he was involved in both generating a lead and completing a sale.  Alternatively, if he was only involved in generating a lead he would be entitled to 7.5% of the Net Commission or 2.5% if he was only involved in completing a sale.

17. Unlike the position for Sales Consultants, it does not appear that the employee’s retainer was deducted from this commission/bonus. 

    Real Estate Award 2010

18. It is common ground that the Real Estate Award 2010 (‘the Award’) applied to the applicant’s employment with the respondent. 

19. Clause 10.2 of the Award relevantly provides that a full time employee is an employee engaged to work an average of 38 hours per week.  Clause 13.2 requires that at the time of engagement and at the time of any change, the employer must advise the employee of their classification.

20. Clause 14.1 then sets out the minimum weekly wage for a full time adult employee.  It provides for two rates of pay for Real Estate Employee Level 1 (Associate Level), one for the first 12 months of employment at that level and another for any employment after the first 12 months of employment at that Level.   It then provides another rate for a Real Estate Employee Level 2 (Representative Level).

21. Clause 15 of the Award then deals with the payment by wages with commission, bonus or incentive payments and essentially provides that any such arrangement must be evidenced in writing.

22. Clause 18 provides for various allowances including:

    ·18.1 – 18.3 – Motor Vehicle allowance; and

    ·18.6 – Mobile phone allowance.

23. Clause 21 deals with the payment of wages and clause 23 deals with hours of work and related matters.

24. Relevantly it provides:

    23.1Subject to clause 23.3, the ordinary hours of work will be 38 per week and may be worked on any day of the week.

    23.2An employee … will be allowed either one and a half or two rostered days free of duty each week.  Such rostered days off may be taken in one of the following ways:

    (a)       one consecutive period;

    (b)       two periods; or

    (c)       three periods comprising one day and two half days.

25. Clause 24 deals with overtime and expressly provides:

    24.1     Payment of Overtime

    (a)Hours worked at the specific direction of the employer in excess of those prescribed in clause 23 – Ordinary hours of work and rostering on an employee’s rostered day or half day off work will be paid at time and a half for the first two hours and double time thereafter or taken as time off instead of payment for overtime as prescribed in clause 24.2.

    (b)Hours worked at the specific direction of the employer in excess of those prescribed in clause 23 other than on an employee’s rostered day or half day off work will be paid at the hourly rate of pay or taken as time off instead of payment for overtime as prescribed in clause 24.2.

    (c)For the purposes of this clause, specific direction means that the employee was given an express instruction to perform work in excess of the hours prescribed under clause 23.

    (d)For avoidance of doubt, where the employee works hours in excess of those prescribed under clause 23 at their own initiative (i.e. without any express instruction from the employer to do so) the employee will not be entitled to payment in accordance with this clause. (emphasis in original)

    Unpaid Overtime

26. The applicant claims that he was entitled to overtime for which he was not paid in accordance with the Award in the sum of $11,228.10.  The basis of this claim is the applicant’s evidence that he consistently worked between 60 and 70 hours per week.  He has based his claim on having worked six days per week at least from 8:30am to 5:30pm each day.  In his evidence, the applicant states that he probably worked more than those hours but has estimated the amount of work he performed based on the respondent’s office opening hours. 

27. The applicant’s Employment Agreement expressly states that his hours of work were 38 hours per week, plus reasonable additional hours. 

28. The respondent conceded that the applicant was a very hard worker and that he did work long hours (see Transcript page 15).  But the respondent maintained that the applicant worked those hours by choice and was not directed by him to work those hours.  I understand the respondent’s submission to be that in light of the terms of the Award and the Employment Agreement, the applicant is therefore not entitled to overtime payments for those additional hours.  I agree with this submission.

29. The Award makes it clear that overtime is only playable for hours of work which are specifically directed to be worked by the employer.  Moreover, the Award makes it absolutely clear that in the absence of a specific direction, and where, as in this case, the employee works the additional hours at his own initiative, the employee will not be entitled to overtime payments. 

30. Similarly, under the employment contract, not only does the overtime need to be directed, but the employee must seek and obtain written approval for such work.  The applicant has produced no evidence of any such written approval.  Nor has he given oral evidence that he sought or obtained such written approval.  At its highest, the applicant’s evidence is that the job required the extra work and therefore he did it. 

31. The applicant therefore has not established a breach of either the Award or the Employment Agreement in relation to overtime payments.  That aspect of his claim is therefore dismissed.

    Unpaid Allowances

32. Turning to the claim for unpaid allowances. The applicant claims that he did not receive a car allowance in accordance with the Award in the sum of $3,799.90, nor did he receive a mobile phone allowance in accordance with the award in the sum of $350.

33. As noted, the Award does provide for payment of various allowances including car allowances and telephone allowances. 

34. The Employment Agreement however, provides that the salary paid to the applicant was in satisfaction of all entitlements under the Award, including such allowances.  The applicant claims that he was entitled to a car allowance of $146.15 per week and a mobile phone allowance of $50 per month.

35. Accepting those figures that would amount to an annualised figure of $8,199.80.  The respondent’s evidence, which I accept is that as the applicant was being paid $57,000 per annum when the award prescribed a minimum rate of $862.50 per week which amounts to an annualised salary of $44,850.  The annual salary payable to the applicant was sufficient therefore to cover his minimum weekly rate of pay and these allowances. 

36. The applicant’s claim for unpaid allowances is therefore not established.

    Unpaid public holidays and personal leave

37. The applicant also claims that he was not paid for public holidays during which he worked in the sum of $468.35 or for personal leave taken during his employment in the sum of $118.08. 

38. In relation to personal leave, in the document headed ‘Summary of Underpayments’ attached to his application filed 3 September 2020, the applicant states that in respect of the period from 29 October 2019 ( I think this was intended to be 2018 as this is the date when, according to the applicant’s material he moved to Level 2) to 17 March 2019, he was owed 13.06 hours of personal leave for which he should have been paid $258.91 but in respect of which he was only paid $140.83, leaving an underpayment of $118.08.  According to his spreadsheet (also attached to his application), he took a day of sick leave on 18 September 2018.  In his spreadsheet he states that he was not paid for that day of sick leave.  However, the applicant’s pay slips for this period show that he was paid $4,084.03 for the month of September 2018.   It appears from this pay slip that the applicant was paid for personal leave taken in the month of September 2018 although it appears that he was only paid for 5.46 hours at the rate of $25.81.

39. The applicant has not given any evidence about the leave he took on that date.  Nor has he explained the basis upon which he claims to have been entitled to 13.06 hours of personal leave. 

40. In addition, the applicant claims to have taken personal leave from 1 March 2019 to 8 March 2019 inclusive.  In his application, the applicant states that his employment came to an end on 6 March 2019.  Therefore any leave taken after that date, even on his case is not able to be claimed.

41. As to the claimed personal leave prior to 6 March 2019, the applicant’s material discloses that on 1 and 2 March 2019, he was unwell and provided a medical certificate to his employer.  Whilst on sick leave, he stated that he was contacted by his employer and reprimanded for three client complaints regarding him not returning their calls while he was on sick leave. 

42. The applicant further states that on 5 March 2019, he was told that his mother was ill and on 6 March 2019, the applicant’s representative wrote on his behalf by email to the respondent raising various concerns about his employment entitlements.  A copy of this correspondence is annexed to the applicant’s application.  Relevantly, the applicant’s representative also advised the respondent in the email dated 6 March 2019 that the applicant’s mother was unwell in Italy, that he had to immediately return to Italy to care for her, but that he was not resigning his employment nor was he abandoning his employment. Rather he was seeking to take some leave as either personal or carer’s leave or compassionate leave and some unpaid leave if required. 

43. I note that in the correspondence sent on 6 March 2019 on the applicant’s behalf to the respondent, the applicant acknowledged that he did not have sufficient accrued leave to cover his absence to care for his mother and also that it was unclear when he would be able to return. 

44. The applicant further states that since the email of 6 March 2019 was sent, he was removed from all of the respondent’s data bases and email systems and consequently he says that the respondent terminated his employment on this date.

45. The applicant ultimately returned to Australia on 18 April 2019. 

46. In the general protection proceedings which were initiated in the Fair Work Commission, the respondent filed a response in which it denied terminating the applicant’s employment on 6 March 2019.  Relevantly, the respondent said in that document that the respondent had received at least three complaints about the applicant prior to 1 March 2019.  In circumstances where the respondent has unsuccessfully tried to discuss this with the applicant and where the applicant had not complied with the respondent’s request to forward work related emails to Mr Peter Gindy so they could be dealt with in his absence, an in circumstances where it was unclear how long the applicant would be absent from work, the respondent removed the applicant from the business IT system so that it could respond to work related emails in the applicant’s absence.

47. In giving his evidence in this matter, Mr Gindy denied terminating the applicant’s employment.  It is clear that there is a dispute between the parties as to whether the applicant’s employment came to an end as a result of his own conduct, i.e. in that he either resigned, abandoned his employment or otherwise ceased to be employed.  The applicant says that he expressly did not resign or abandon his employment and that by removing him from the company’s IT systems, the respondent effectively terminated his employment.  As stated, Mr Gindy’s evidence is that the employment came to an end due to the actions of the applicant.  It is not necessary for me to determine how the applicant’s employment came to an end, however, it is necessary to determine when it came to an end.

48. It is common ground that the applicant was not at work from 1 March 2019 until he left for Italy on the evening of 6 March 2019.  The applicant says that he was on sick leave during this time. 

49. The pay slips which have been produced show that the applicant was paid up to the 28 February 2019.  That pay was processed on 3 March 2019 and consisted of his normal monthly pay. 

50. It also shows that he had an annual leave accrual at that time of 12.66 hours and that his accrual YTD having regard to previous leave taken showed a balance of 1.18 hours.  There is no evidence that this leave was paid to the applicant on termination.

51. Section 96 of the Act provides that an employee is entitled to 10 days paid personal/carer’s leave for each year of service. Such leave accrues on a pro rata basis. The applicant commenced employment on 23 July 2018. Assuming his employment came to an end on 6 March 2019 as maintained by him, he accrued an entitlement to about 7 days of personal leave. Prior to 1 March 2019, he had taken one day of personal leave so he had about 7 days credit. On that basis and in the absence of any direct evidence from Mr Gindy as to the date on which he says the applicant’s employment was terminated, I accept that his employment came to an end on 6 March 2019. As such, he should have been paid for 1 to 6 March 2019 as paid personal leave. I note that 2 and 3 March 2019 were a Saturday and Sunday. In circumstances where the applicant regularly worked on Saturdays, and in circumstances where there is no direct evidence as to his ‘days off’ each week, I am satisfied that he ought to be paid five days personal leave for this period (i.e. including the Saturday). The amount claimed by the applicant for personal/carer’s leave is $118.08. On my calculations, at an annual salary of $57,000, this equates to a daily rate of $219.23. Five days of unpaid personal leave at this rate is $1,096.15 in respect of unpaid personal leave.

1. The applicant has not established that he was required to work on any public holiday.  As I understand his evidence he says that he was required to work on Christmas Eve.  Christmas Eve is not a public holiday.  His claim for unpaid wages in respect of public holidays is therefore not made out.

   Accrued but untaken annual leave

2. As noted above, the final pay slip provided to the applicant indicates that he had an annual leave balance of 1.185 hours.  There is no evidence that this has been paid to him.  In those circumstances, the employer is required to pay him that outstanding amount.  The amount claimed for unpaid annual leave is $93.98.  As I have found that his accrual on termination was only 1.185 hours, the respondent owes him $24.34 (calculated by reference to his annual salary of $57,000).

   Unauthorised and unreasonable deductions

3. It is common ground that the respondent made a number of deductions from the applicant’s wages as evidenced in the applicant’s pay slips, namely:

   Conference and awards contributions:   $10.00

   Other pre-Tax Deductions:                  $25.00

   Boards & Flag  :  $422

   Ray White concierge:  $1,350

   Vouchers:  $70

   Boards :  $103.30

   Business Cards:  $132

   Ray White Concierge:  $1,100

   Total:   $3,212.30

4. The applicant claims that this amount ought to be returned to him in full, on the basis that he did not ever consent to these deductions being made from his salary.

5. Mr Gindy gave evidence that the applicant not only consented to these deduction but also derived a benefit from them in earning his income and, with the exception of the second Ray White Concierge amount, which he was prepared to concede ought to be returned to the applicant, denies that the balance ought to be returned to him.  In relation to the Boards deductions, Mr Gindy has given evidence that the applicant still has these boards in his possession. 

6. Section 326 of the Act relevantly provides:

   (1)A term of a modern award, an enterprise agreement or a contract of employment has no effect to the extent that the term permits, or has the effect of permitting, an employer to deduct an amount from an amount that is payable to an employee in relation to the performance of work, if the deduction is:

   (a)directly or indirectly for the benefit of the employer or a party related to the employer; and

   (b)unreasonable in the circumstances.

7. The applicant has annexed to his application, a letter which details the purpose and regularity of the deductions.  It appears that this was prepared by the respondent in response to a request from the applicant who was in the process of applying for a bank loan.  In any event, the purpose of the deductions made are clarified as follows:

   ·the conference and awards contribution and other pre tax deductions related to ‘a customised hat we were wearing during an event’;

   ·the ‘board & flag’ deduction relates to customised boards and five customised sold stickers;

   ·the ‘voucher’ deduction was for coffee vouchers to use for clients; and

   ·the ‘Concierge’ deduction related to the call centre used to make calls on behalf of the applicant.

8. The applicant has annexed a text message exchange with Mr Gindy on 10 December 2018 which makes it clear that he was not happy about the Concierge charge. 

9. On the basis of the totality of the evidence, I am satisfied that the deductions, other than the concierge charge, are not unreasonable in circumstances where the applicant obtained a personal benefit for those charges.  In relation to the concierge fee, I note that the respondent has conceded that the second deduction made in February 2019 should be repaid as the applicant did not get the benefit of that.  However, I am somewhat troubled by the first concierge charge as well.  There is no evidence that the applicant approved that deduction in advance.  It clearly is payable to an entity associated with the respondent.  And moreover, the applicant disputes the value to him of that charge.

10. In all of those circumstances, even if the respondent could argue that it was a term of the applicant’s employment that he utilise the services of the concierge service, in my view such a clause would have no effect and therefore would not permit the employer to make the deduction.  I note that the respondent has not led any evidence that would bring these deductions within the scope of Regulation 1.12 as being reasonable.  In all of those circumstances, I find that the respondent was not authorised to make the deductions for the concierge services and ought to repay the sum of $2,450 to the applicant.

    CONCLUSION

11. I note that the applicant also seeks consideration to orders being made for the payment of fees he has incurred in pressing his claims against the respondent.  This matter has come before the court in its small claims jurisdiction.  As a general rule each party would bear their own costs in such matters.  In circumstances where the bulk of the applicant’s claim has not been successful, I am not satisfied that it is a matter which would warrant the court to exercise any discretion it has to award costs for either party.

12. For each of these reasons, I make the orders set out at the beginning of these reasons.

I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mercuri.

Associate:

Dated:       21 June 2021