PHILLIPS v VISSER - [2010] FMCA 684

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PHILLIPS v VISSER & ANOR

[2010] FMCA 684

INDUSTRIAL LAW – Application for compensation for contravention of the Fair Work Act 2009 (Cth) – whether breach by employer of s.340(1) Fair Work Act 2009 (Cth).

Fair Work Act 2009, ss.340, 341(1), 336
Taxation Administration Act 1953, ss.15-25 of Schedule 1

Applicant:

VESNA PHILLIPS

First Respondent:

KAREN VISSER

Second Respondent:

CHIROPEDIC BEDDING PTY LIMITED

File Number:

MLG 1017 of 2010

Judgment of:

Riethmuller FM

Hearing date:

13 August 2010

Date of Last Submission:

13 August 2010

Delivered at:

Melbourne

Delivered on:

13 August 2010

REPRESENTATION

Counsel for the Applicant:

The Applicant appearing in person

Counsel for the Respondent:

The Respondent appearing in person

ORDERS

The application be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 1017 of 2010

VESNA PHILLIPS

Applicant

And

KAREN VISSER

First Respondent

CHIROPEDIC BEDDING PTY LIMITED

Second Respondent

REASONS FOR JUDGMENT

(As Revised from Transcript)

This is an application for compensation under the Fair Work Act2009 on the basis of adverse action having taken place in the workplace. The applicant ended her employment with the second respondent as a result of a number of incidents that took place during and around a time of change in pay cycles for a number of employees in the workplace.
It is appropriate that I first start by looking at the nature of the provisions that I must deal with. Chapter 3 provides for the rights and responsibilities of employees, employers and organisations under the Fair Work Act. Section 336 gives the objects of the Part, which are in the following terms:
336 [Objects of this Part]
The objects of this Part are as follows:
(a) to protect workplace rights;
(b) to protect freedom of association by ensuring that persons are:
(i) free to become, or not become, members of industrial associations; and
(ii) free to be represented, or not represented, by industrial associations; and
(iii) free to participate, or not participate, in lawful industrial activities;
(c) to provide protection from workplace discrimination;
(d) to provide effective relief for persons who have been discriminated against, victimised or otherwise adversely affected as a result of contraventions of this Part.
At s.340 of the Act, significant protections are put in place:
340 [Protection]
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
The workplace right is defined in section 341(1) of the Act. There are three different definitions. The two relevant ones in this case are s.341(1)(a) and (c).
341 [Meaning of workplace right]
Meaning of workplace right
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
…
(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee--in relation to his or her employment.
As to whether there was technically a resignation or a dismissal ultimately, it seems, is not a matter that I have to formally determine in this case. Given that there are potential claims with respect to unfair dismissals that I cannot hear in this Court, it is better that I refrain from making findings with respect to those issues.
The case was framed as being one whereby the applicant, as the payroll administrator, had the role or responsibility under a workplace law, being the tax laws and the various workplace awards, to ensure that the appropriate amount of tax was deducted from wages, and the appropriate award rates were paid to employees. Her case also extended to the ability to make a complaint or inquiry to the Australian Tax Office or other relevant body under the workplace laws, with respect to the carrying out of her duties.
The chapter itself appears, when read at first blush, to be focussed upon what would be considered traditionally industrial relations issues and workplace rights. However, the extended definition of a workplace law clearly includes the tax laws, and therefore the tax issues would come within the meaning of the section.
In interpreting section 341(1)(a), I find that the definition of a role or responsibility under a workplace law or a workplace instrument or order made by an industrial body refers to a person who has a specific obligation imposed upon them either personally, or by reason of them occupying a particular position. One could easily see this with respect to a union delegate in a workplace or other specified positions that have specific roles under the law.
With respect to the tax laws, I am not able to identify any specific obligation placed upon a payroll administrator or payroll manager. There are certainly obligations placed upon the corporate employer. If appropriate tax is not remitted to the Australian Taxation Office by way of director’s penalty notices, very specific obligations can be placed upon the corporation’s directors.
In the circumstances, I am not persuaded that the applicant had a role or responsibility as defined by the section. She was, however, entitled to the benefit of any workplace laws, workplace instruments or order made by an industrial body. This would include the benefit of ensuring that appropriate tax was deducted from her wages.
In this case, the adverse action that is alleged is the dismissal which, if it is a dismissal, clearly falls within s.342 of the Act. It is appropriate that I turn now to consider whether or not, even if it were a dismissal, it was as a result of the employee exercising any of their workplace rights within the meaning of the Act, or as a result of those workplace rights not being protected.
The core issue in the case relates to the amount of tax that ought to have been deducted from the employees’ salaries during a time when the company was changing from weekly to fortnightly pay cycles. A large number of employees were involved, and during the changeover period, there was a pay period which it transpired contained eight working days.
This pay period, therefore, was longer than a week, but less than a fortnight. There are obligations on the company under section 15-25, in Schedule 1 to the Taxation Administration Act 1953 to withhold money from wages and remit that to the tax office. The withholding has to be done in accordance with the withholding schedules referred to in the schedule to the Taxation Administration Act.
The various schedules are published by the Commissioner of Taxation and I have had regard to them, in particular Schedule 1 Statement of formulas for calculating amounts to be withheld, being form NAT1004. This appears to be the general schedule, and explains the various rates that are to be withheld for weekly, fortnightly and monthly amounts, and provides details for those creating software packages.
Importantly, it explains that the formulas comprise linear equations in the form of Y=AX – B, where Y is the weekly withholding amount expressed in dollars, X is the number of whole dollars in the weekly earning, plus 99 cents, and the values of the coefficients A and B for each set of formulas for each range of weekly earnings are shown on a separate page.
I note that this is not the only schedule that has been set out by the ATO. Importantly, there are withholding schedules - tax tables for daily and casual workers, form NAT1024, and also another schedule for bonuses and similar payment, form NAT7905.
When one views them as a whole, it seems clear that the purpose of the schedules is to provide a method by which the amount of tax that is likely to be payable over the course of a whole year is made pro rata, based upon the actual earnings in any given period, and deducted from employees’ salaries and remitted to the ATO so that at the end of the year, the employee does not owe any additional tax.
The evidence of the accountant who was called was to the effect that he has done the calculations and if the precise amounts set out in the schedules are deducted, the employee will pay slightly too much tax and get a small refund at the end of the year. However, that is the schedule amount, and clearly within the Commissioner’s contemplation.
The applicant, when calculating the tax payable for the eight-day period, utilised the fortnightly schedule of deduction amounts. The applicant’s manager believed that it should be calculated by using a pro rata of the formula, recognising that this represented eight days of payments, rather than a full 10 working days.
This resulted in a difference in the amount of tax that should be taken out, the applicant believing a lesser amount should be taken out than the respondent. The applicant had contacted the ATO for confirmation of the calculation method that she utilised. The accountant gave evidence that when he tried to obtain definitive answers about these issues, and that he had received two different answers from two different sections of the ATO.
Ultimately, it is a very fine legal point as to precisely how the schedules are meant to operate. Given the amounts actually involved, it seems unlikely that ordinarily this would have been the subject of litigation or dispute between an employer, an employee or the ATO.
However, for the purpose of determining the amount of withholding in this case, I find that the better view is that the pro rata or amortised version adopted by the manager is the appropriate version, in keeping with the formula set out in the schedule and the various schedules that have been published by the ATO. It also seems to be the preferred interpretation of the schedules. In cases where there is more than one partial week, there could be amounts of tax that are well below what is owing ultimately being deducted over the course of the year, if the applicant’s method was used. This is clearly well outside the parameters contemplated by the Commissioner in setting out the schedules, and impractical for employers who would receive a tax bill when lodging their return.
I therefore find that the manager’s view as to the precise amount of tax that ought to be deducted was ultimately the correct one. However, in this case, I am also of the view that both the applicant and the first respondent were genuine in their beliefs at the time, and genuine in their desire to ensure appropriate accounting standards were met, appropriate payments were made, and that the company appropriately dealt with its various responsibilities.
The difficulties that arose then flowed from the fact that both were deeply committed to the positions they had taken with respect to the amount of tax that should be deducted. For general operational reasons, the manager was tightly wed to the proposition that employees should receive an amount in their pay slip that is eight times one fifth of their weekly amount. The people on the factory floor were informed of this proposition and confusion would follow if, in the first changeover week, the amount was not in that sum. This also accorded with the manager’s understanding of how the tax schedules would apply.
The applicant in her genuine belief as to the operation of the tax schedules formed the view that this meant too much tax, by an average of 10 or 20 dollars, was being deducted from employee’s pay packets, and that they should receive those additional funds in their pay packets. Unfortunately, what flowed was that the manager directed that the pay slips should not be given out in the format set out by the applicant, and the employees were in fact given those pay slips. Confusion erupted within the company, and the accountant was telephoned by a more senior manager who was in the eye of the storm.
The accountant, being the accountant who gave evidence, gave the manager very practical and very good quality advice. The advice was to the effect that it was more important to bring back staff harmony than the actual amount of money that was involved. Cash cheques were then drawn for various employees, to put that situation back into a state of calm.
What does this mean in terms of protected action under the Fair Work Act? The applicant is entitled to the benefit of the proper application of the tax laws, and in this case, her pay would have been calculated properly, in accordance with the tax laws, on the manager’s version.
The applicant is also entitled to make a complaint or inquiry to an appropriate body with respect to compliance with the various laws that apply in the workplace. She did that, in making inquiries with the ATO. It does not appear that the making of those inquiries was an issue that caused concern for the manager or in the workplace.
There were other events which indicate that the workplace management was not averse to putting right any defects that she located per se, provided that they were able to manage them carefully in the context of running a company. In this regard, the issues that arose with Mr N are instructive. It was discovered that Mr N may have been underpaid in accordance with the various awards, and the applicant drew this to the attention of her manager.
The manager wished to review the various calculations and documents, and then take an opportunity to speak to the staff member personally before making changes, so as to explain what had happened and manage the error that appears to have occurred. The applicant, however, altered his pay that week, which was technically in compliance with the award, but created a management issue for the manager. Mr N is not the person claiming the workplace right, and therefore this applicant cannot bring an action on his behalf.
Other issues that arose related to public holiday pay. A public holiday occurred over Easter requiring pay adjustments. Adjustments were made when the applicant brought this to the company’s attention, so as to change the rates of pay.
Ultimately, the dispute between the manager and the applicant largely came down to one of being able to give direction and being able to be satisfied that the manager had confidence in the employee. As a result of the way in which these various events were handled, the manager quite properly points out the difficulties about processing the pay slips, asking the pay slips not to be handed out, and asking that she have time to speak directly to Mr N prior to him being told of the error made, so that she could manage the situation.
None of these things indicate that it was the applicant’s desire to make a complaint or inquiry to the ATO or the relevant workplace authority to obtain the correct tax rates or correct pay rates that led to any adverse action. Whether the whole situation could have been handled differently is not for me to say. I do not propose to embark upon an analysis of whether or not this could be a case pleaded as an unfair dismissal case, because I do not have jurisdiction in that regard in the case.
I am not able to conclude that any adverse action that took place here was as a result of the applicant exercising any workplace right, or desiring to exercise any specific workplace right. In those circumstances, I dismiss the current application.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Riethmuller FM

Date: 13 August 2010