Reardon and Secretary, Department of Employment
[2016] AATA 1027
•15 December 2016
Reardon and Secretary, Department of Employment [2016] AATA 1027 (15 December 2016)
Division
GENERAL DIVISION
File Number
2015/5855
Re
Sophia Reardon
APPLICANT
And
Secretary, Department of Employment
RESPONDENT
DECISION
Tribunal Miss E A Shanahan, Member
Date 15 December 2016 Place Melbourne The Tribunal affirms the decision under review.
[sgd].............................................................
Miss E A Shanahan, Member
EMPLOYMENT – Fair Entitlements Guarantee Act 2012 – professional photographer – five years employment on a casual basis – full time employment for just under 12 months – employer in administration – in accordance with Act paid annual leave entitlements and one week’s pay in lieu of notice – conflict between FEG Act and Fair Work Act 2009 – definitions of casual work – decision affirmed.
Legislation
Fair Entitlements Guarantee Act 2012
Fair Work Act 2009General Retail Industry Award 2010 [MA000004]
Cases
Re Metal, Engineering and Associated Industrial Award 1998—Part I (2002), 110 IR 247 Schumen v Pace Trading Pty Ltd (2007) 169 IR 101
Shortland v Smiths Snackfood Co Limited (2010) 198 IR 237
Telum Civil (Queensland) Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 230 IR 30
Transport Workers’ Union of Australia v Q Catering Limited [2014] FWC 6160Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Donau Pty Ltd [2016] FWCFB 3075
Secondary Material
Fair Work Ombudsman, Article K252417 – Does casual service count for redundancy pay & notice? (7 September 2016)REASONS FOR DECISION
Miss E A Shanahan, Member
15 December 2016
Ms Reardon is a professional photographer who was employed by Photo Corporation of Australia from 16 June 2007 until 29 July 2013. For just over the first five years she was employed as a casual with set days of work and received a 25 per cent loading of her salary based on her ordinary hourly rate of pay. On 7 August 2012 Ms Reardon became a permanent full-time employee. Her employment was terminated on 29 July 2013 following her employer’s insolvency, the employer having gone into administration on 25 July 2013 and being placed in liquidation on 23 October 2014.
Ms Reardon lodged an application for an advance payment under the Fair Entitlements Guarantee Act 2012 (FEG Act) on 2 December 2014. On 16 March 2015 she was paid an advance sum of $1,981.63 before tax. This sum represented an entitlement of $1,279.39 for annual leave and one week’s pay in lieu of notice. There was no entitlement to redundancy pay as Ms Reardon had not been a permanent employee for 12 months.
Following review by an authorised review officer (ARO) the initial determination was affirmed on 8 October 2015. Ms Reardon lodged her application for review of this decision by this Tribunal on 4 November 2015. Ms Reardon met all the requirements in terms of her application for an advance under the FEG Act but on advice she obtained from the Fair Work Ombudsman she was led to believe that she was eligible to receive four weeks of pay in lieu of notice and 11 weeks of redundancy pay on the basis that her years of casual employment were considered to contribute to continuous service, giving her a total of over six years of employment by Photo Corporation of Australia.
The major argument she presented was that in determining her entitlement to FEG payments the decision maker had not taken into account sections 22, 117 and 119 of the Fair Work Act 2009 (FW Act) or the definition of continuous service as provided by the FW Act. In support of her contention Ms Reardon provided logbook entries, a copy of a letter from the Fair Work Ombudsman and Fair Work Redundancy and Payment in Lieu calculator results. She also provided a witness statement from a co-worker, who confirmed that she worked regular shifts throughout her employment with Photo Corporation of Australia, working on Thursday and Friday nights, Saturday and Sunday.
Approximately six weeks before the date of hearing of this matter the Fair Work Commission, consisting of three Commissioners, had handed down on 15 August 2016 its decision in the matter of Automotive, Food, Metal, Engineer, Printing and Kindred Industries Union, (known as the Australian Manufacturing Workers’ Union (AMWU)) v Donau Pty Ltd [2016] FWCFB 3075. The Respondent immediately notified the Tribunal of the publication of this decision and after due consideration, the Tribunal invited further submissions on the impact of this decision on Ms Reardon’s claim. Ms Reardon was informed of this decision and copied all correspondence between the Tribunal and the Respondent. The Tribunal considers the Respondent’s actions to have been taken in the interests of the matter as a whole and their responsibilities as a model litigant.
At the hearing Ms Reardon was self-represented and Mr Matthew Follet, instructed by Ms Simone Krauss of the Australian Government Solicitor, appeared for the Respondent. The Respondent provided the documentation required under section 37 of the Administrative Appeals Tribunal Act 1975 (T-documents - Exhibit R1) and had obtained a further opinion from the Fair Work Ombudsman in light of the decision in Donau. Ms Reardon filed the original advice from the Fair Work Ombudsman case service officer, Nicholas Whyte, and a further Fair Work Commission, single Commissioner, decision of Mr Cori Ponce v DJT Staff Management Services Pty Ltd T/A Daly’s Traffic [2010] FWA 2078 dated 15 March 2010 addressing casual employment in the setting of an unfair dismissal claim wherein employment was less than six months.
BACKGROUND TO THE APPLICATION
It was agreed that Ms Reardon was only seeking an increase in the FEG payment with respect to redundancy and payment in lieu notice and that the dates of her employment, initially casual and then permanent, were correct and had been confirmed by the insolvency practitioner BCR Advisory.
At the time she was classified as a casual, Ms Reardon had worked between two and four days per week in accordance with a roster set monthly. It was confirmed by Ms Reardon and by the records available to BCR Advisory that she had been paid a loading of 25 per cent throughout the five plus years when she was a casual employee. In 2010 Ms Reardon had been offered a position as a part-time employee but had rejected the offer given the attendant decrease in the hourly rate of pay.
Ms Reardon has made all the necessary statements and completed all the application forms in accordance with section 10 of the FEG Act.
Ms Reardon sought the advice of the Fair Work Ombudsman in July 2015 and based on the information she had provided was advised that she was entitled to four weeks’ pay in lieu of notice and 11 weeks of redundancy pay. This advice was qualified as there were pending cases before the Federal Circuit Court which could require the Fair Work Ombudsman to revisit its position.
The facts as outlined above are not in dispute. The issue before the Tribunal is the interpretation of various sections of both Acts, in particular sections 22, 117 and 119 of the FW Act.
DOCUMENTARY EVIDENCE BEFORE THE TRIBUNAL
The documentary evidence that is relevant to this matter has been referred to under BACKGROUND TO THE APPLICATION and is not in dispute.
RELEVANT LEGISLATION
Both the Fair Work Act 2009 and the Fair Entitlements Guarantee Act 2012 are attracted.
The relevant sections of the FW Act are:
22 Meanings of service and continuous service
General meaning
(1)A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).
(2)The following periods do not count as service:
(a)any period of unauthorised absence;
(b)any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2 2 (which deals with community service leave); or
(ii) a period of stand down under Part 3 5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c)any other period of a kind prescribed by the regulations.
(3)An excluded period does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service.
(3A)Regulations made for the purposes of paragraph (2)(c) may prescribe different kinds of periods for the purposes of different provisions of this Act (other than provisions to which subsection (4) applies). If they do so, subsection (3) applies accordingly.
Meaning for Divisions 4 and 5, and Subdivision A of Division 11, of Part 2 2
(4)For the purposes of Divisions 4 and 5, and Subdivision A of Division 11, of Part 2 2:
(a)a period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include:
(i) any period of unauthorised absence; or
(ii) any other period of a kind prescribed by the regulations; and
(b)a period referred to in subparagraph (a)(i) or (ii) does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service; and
(c)subsections (1), (2) and (3) do not apply.
Note: Divisions 4 and 5, and Subdivision A of Division 11, of Part 2 2 deal, respectively, with requests for flexible working arrangements, parental leave and related entitlements, and notice of termination or payment in lieu of notice.
(4A)Regulations made for the purposes of subparagraph (4)(a)(ii) may prescribe different kinds of periods for the purposes of different provisions to which subsection (4) applies. ...
117Requirement for notice of termination or payment in lieu
Notice specifying day of termination
(1)An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).
Note 1:Section 123 describes situations in which this section does not apply.
Note 2:Sections 28A and 29 of the Acts Interpretation Act 1901 provide how a notice may be given. In particular, the notice may be given to an employee by:
(a)delivering it personally; or
(b)leaving it at the employee’s last known address; or
(c)sending it by pre-paid post to the employee’s last known address.
Amount of notice or payment in lieu of notice
(2) The employer must not terminate the employee’s employment unless:
(a)the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b)the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
(3)Work out the minimum period of notice as follows:
(a) first, work out the period using the following table:
Period
Employee’s period of continuous service with the employer at the end of the day the notice is given
Period
1
Not more than 1 year
1 week
2
More than 1 year but not more than 3 years
2 weeks
3
More than 3 years but not more than 5 years
3 weeks
4
More than 5 years
4 weeks
(b)then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.
Subdivision B—Redundancy pay
119Redundancy pay
Entitlement to redundancy pay
(1)An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:
(a)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b)because of the insolvency or bankruptcy of the employer.
Note:Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.
Amount of redundancy pay
(2)The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:
Redundancy pay period Employee’s period of continuous service with the employer on termination
Redundancy pay period
1
At least 1 year but less than 2 years
4 weeks
2
At least 2 years but less than 3 years
6 weeks
3
At least 3 years but less than 4 years
7 weeks
4
At least 4 years but less than 5 years
8 weeks
5
At least 5 years but less than 6 years
10 weeks
6
At least 6 years but less than 7 years
11 weeks
7
At least 7 years but less than 8 years
13 weeks
8
At least 8 years but less than 9 years
14 weeks
9
At least 9 years but less than 10 years
16 weeks
10
At least 10 years
12 weeks
121 Exclusions from obligation to pay redundancy pay
(1)Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):
(a)the employee’s period of continuous service with the employer is less than 12 months; or ..
Subdivision C—Limits on scope of this Division
123Limits on scope of this Division
Employees not covered by this Division
(1)This Division does not apply to any of the following employees:
(a)(b)and (d) not relevant.
(c)a casual employee;
(e)an employee prescribed by the regulations as an employee to whom this Division does not apply.
As previously stated, the requirements of section 10 of the FEG Act have been met and therefore the relevant sections for consideration are sections 6(4), 6(5) and 121(1)(a). It is agreed that the governing instrument attracted by this matter is the FW Act, the National Employment Standards (NES) as defined in part 2-2 of the FW Act and the General Retail Industry Award 2010. A contract of employment with the Photo Corporation of Australia is said to have existed but cannot be found.
SUBMISSIONS
Ms Reardon the Applicant
Ms Reardon submitted that based on her interpretation of the FW Act, she had continuous service with the Photo Corporation of Australia from 16 June 2007 until 29 July 2013, amounting to just over six years. Her employment had consisted of over five years as a casual and just less than one year as a permanent full-time employee.
Ms Reardon contended that, based on the information she had provided, the Fair Work Ombudsman had advised her that her interpretation was correct and that she was entitled to four weeks’ pay in lieu of notice of termination and 11 weeks of redundancy pay. This advice from Mr Nicholas Whyte, Fair Work Adviser, did state that while this was the current view of the Fair Work Ombudsman it was also currently under review. Ms Reardon contended that she should have been given one week’s notice of termination as provided under the NES and had this occurred her period of permanent employment would have exceeded the 12 months required.
Ms Reardon argued that the FEG Act and the FW Act were in conflict and that the decision-maker had not addressed the relevant sections of the FW Act in arriving at their decision. It was also argued that section 123 which excludes the application of sections 117 and 119 to casual employees was not attracted as she was a permanent employee at the time of her termination, the employer having entered into administration.
In her Statement of Issues, Facts and Contentions and again in her submissions Ms Reardon referred to the Fair Work Commission decision in Ponce, this having addressed the question of continuous service and in particular, section 384 that provides that a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i)the employment as casual employee was on a regular and systematic basis; …
Ms Reardon contended that her employment as a casual employee was on a regular and systematic basis as verified by her log book and her manager’s witness statement. She also contended that she had, as found in Ponce, a reasonable expectation of continuing her employment with the employer on a regular and systematic basis given her loyalty to the company over a period of six years.
Ms Reardon further submitted that on her review of the Respondent’s Statement of Issues, Facts and Contentions they had misinterpreted the legislation in stating that in order to arrive at the correct or preferable decision the FEG Act should only have one consistent interpretation in relation to the FW Act.
Mr Follet for the Respondent
At the request of the Tribunal, Mr Follet opened the proceedings and provided a detailed overview of the relevant legislation and the applicable common law in order to assist Ms Reardon who was not represented. Mr Follet identified the issue as being whether casual employment can be joined with a period of permanent employment of less than one year in order to attract greater advance payments under the FEG Act by satisfying the FW Act in relation to continuous service.
As Ms Reardon’s permanent employment was less than one year at the time of her termination her payments under the FEG Act had been limited to one week in lieu of notice and four weeks’ redundancy payment. Mr Follet stated that both the FEG Act and the FW Act relied to a varying extent on common law decisions as not all relevant terminology had been defined in either Act. In the FW Act, the term continuous service was defined basically in terms of exclusion.
In Ms Reardon’s case, it was not in dispute that she had been employed as a casual in accordance with the National Employment Standards and the relevant Retail Award, both of which have been identified as governing instruments as defined in section 5 of the FEG Act. In accordance with the National Employment Standards and the General Retail Industry Award 2010, the term casual is defined as one employed as such. It was pointed out that Ms Reardon had not challenged the conclusion that she was a casual employee. As such, she was eligible for a casual loading of 25 per cent on her normal hourly working rates to compensate for lack of entitlements to such things as annual leave and sick leave.
This loading had been based on the reasoning in the Re Metal, Engineering and Associated Industrial Award 1998—Part I (2002), 110 IR 247 that recommended a casual loading of 30 per cent but was subsequently determined at the rate of 25 per cent, which remains the rate today. Given the nature of this compensatory loading it has been established that to pay these extra entitlements already included in the casual loading, amounts to double dipping (Telum Civil (Queensland) Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 230 IR 30).
Mr Follet also drew attention to the fact that as section 123 does not apply to a casual employee, as stated in section 123(1)(c), there is no entitlement to redundancy payment as determined in Schumen v Pace Trading Pty Ltd (2007) 169 IR 101 and Transport Workers’ Union of Australia v Q Catering Limited [2014] FWC 6160.
Mr Follet distinguished the decision in Donau, wherein the majority decision was determined on the basis of the terms of the Enterprise Agreement and not a consideration of sections 117(3) and 119(2) of the FW Act. He also pointed out that in the dissenting decision of Commissioner Cambridge in relation to the concept of continuous service, the Commissioner had argued that if continuous service included the casual service of an employee then there was no need for the Act to provide for specific entitlement as set out in section 65(2)(b) for as an example Parental Leave, this being one of many such entitlements. In addition, at paragraph 31, he contended that the effect that of the accrual of a period of casual employment prior to permanent employment as service would result in an entitlement to paid annual leave already catered for in the casual pay loading.
In his formal submissions, Mr Follet asserted that all relevant sections of the FEG Act and the FW Act had been considered by the decision maker and that the advice given to Ms Reardon by the Fair Work Ombudsman’s advisor was incorrect. Mr Follet advised that the most recent advice of 22 September 2016 has been that the Ombudsman’s opinion has not altered as a result of the decision in Donau. In article K252419, dated 7 September 2016, the Fair Work Ombudsman advised that there had been no change in their considered final advice but pointed out that exceptions might arise if an award or agreement provided for casuals to have qualifications for redundancy pay and notice.
TRIBUNAL’S DELIBERATIONS
It is agreed by the parties that Ms Reardon’s first five years of employment by Photo Corporation of Australia were as a casual employee attracting a 25 per cent loading of the normal hourly rate in accordance with the NEF and the relevant retail industry award. It was also agreed she was seeking an increase in advance FEG payments in relation to redundancy and in lieu of notice payments.
The major issues before the Tribunal are whether or not Ms Reardon has continuous service for a period of greater than six years and whether her employment as a casual can, on the basis that it is continuous service, be joined with her less than 12 months permanent employment so that sections 117 and 119 of the FW Act are satisfied.
In Telum Civil the Commissioners said at paragraph 46 :
It will be noted that a range of NES entitlements do not apply to a “casual employee”:
•parental leave and related entitlements (s 67(2)),
•annual leave (see s 96)
•personal/carer's (sick) leave and compassionate leave (s 86)
•notice of termination and redundancy pay (see s 123)
•public holidays
and at paragraph 48:
To adopt the construction of s 123(1)(c) adopted by the Commissioner would allow for double dipping by employees engaged as casuals and paid the casual loading, but who work regular and systematic hours, of the sort that the Full Bench in the Redundancy Case 2004 set its face against .... It is unlikely that the legislature intended that outcome. It is an outcome that is inconsistent with the purpose and objects of the FW Act. It is an outcome that would tend to impede productivity and flexibility ... for the reasons explained by the Full Bench in the Metals Casuals Case.
and at paragraph 49:
Other uses of the expression “casual employee” or the word “casual” in the FW Act support the conclusion that they refer to the characterisation of the employee under the applicable modern award or enterprise agreement.
The Tribunal finds that Ms Reardon is specifically excluded by section 123 of the FW Act from redundancy payments and notice beyond that attracted by not more than one year of employment.
The alternative argument or approach outlined by the respondent is for the Tribunal to consider whether Ms Reardon’s casual employment amounts to a period of continuous service that satisfies the requirements of sections 117 and 119 of the FW Act.
As previously stated, the FW Act does not provide a definition of continuous service, other than in section 12 of the FW Act which states that section 12 has a meaning affected by section 22.
In considering unfair dismissal, sections 383 and 384 of the FW Act use the term long term continuous casual employment and at section 2(a) the FW Act states:
(2)However:
(a)a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; ...
Ms Reardon has submitted that her employment was on a regular set basis as she worked Thursday nights, Friday nights, Saturdays and Sundays. She has provided a statement from her supervisor affirming these periods of work. However, her logbook which admittedly is at times difficult to interpret, indicates that she was paid primarily on a weekly basis but occasionally fortnightly and that the hours she worked per week were very variable, ranging from at a minimum six to a maximum of 27 hours per week. Additionally the nights she worked varied considerably over the five years. While most frequently she worked Thursday and Friday nights and Saturday and Sunday, she also worked occasionally on Monday and Wednesday nights. This does not amount to a regular and systematic pattern of casual employment sufficient to satisfy such a definition.
In the Fair Work Australia Full Board determination in Shortland v Smiths Snackfood Co Limited (2010) 198 IR 237 the Full Board stated at paragraph 10:
As a matter of the common law of employment, and in the absence of an agreement to the contrary, each occasion that a casual employee works is viewed as a separate engagement pursuant to a separate contract of employment. Casual employees may be engaged from week to week, day to day, shift to shift, hour to hour or for any other agreed short period. ...
Neither the National Employment Standards nor the General Retail Industry Award 2010 negate this general common law interpretation and thus Ms Reardon does not meet the definition of continuous service.
The Tribunal is satisfied on the evidence before it and the submissions provided by both parties that the decision under review was the correct and preferable decision and is therefore affirmed.
40. I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Miss E A Shanahan, Member
[sgd]..........................................................
Associate
Dated 15 December 2016
41. Date of hearing
29 September 2016
Applicant
In person
Advocate for the Respondent Simone Krauss Solicitors for the Respondent
Counsel for the Respondent
Australian Government Solicitor
Matthew Follet
APPENDIX - EXHIBITS
RESPONDENT
R1 T-Documents
R2List of Authorities
5
0