Reinhard Wolfer v Computer Associates Pty Ltd
[1995] IRCA 150
•12 Apr 1995
IN THE INDUSTRIAL RELATIONS ) No. WI 538 of 1994
COURT OF AUSTRALIA )
WESTERN AUSTRALIA DISTRICT REGISTRY )
BETWEEN:Reinhard Wolfer
Applicant
AND:Computer Associates Pty Ltd
Respondent
BEFORE: Boon JR
PLACE: Perth
HEARING DATE: 2 March 1995
JUDGMENT DATE: 12 April 1995
REASONS FOR JUDGMENT
This notice of motion by the respondent to a claim of unlawful termination of employment seeks an order that the substantive application be dismissed for want of jurisdiction. The respondent alleges that this court has no jurisdiction to hear the substantive application because the applicant's relevant wages for the period of 12 months before the termination day exceeded the applicable amount of $60,000 pursuant to section 170CD of the Industrial Relations Act 1988.
BACKGROUND
The applicant worked as an account manager for mostly large accounts in computer software marketing. He started work with the respondent on 4 January 1993 and his employment was terminated on 16 November 1994.
According to an affidavit filed by the respondent and sworn by Ken Lucas, regional manager of the respondent's business in Perth, under the applicant's contract of employment with the respondent he was entitled to receive a basic wage, a car allowance and commission on sales achieved by him. During the period of 12 months immediately before the termination of the applicant's employment the applicant received monetary payments from the respondent in terms of such contract totalling $109,432.40. These payments were made up as follows:
Base Salary (December 1993 - November 1994) Total: $42,117.10
Car Allowance (December 1993 - November 1994) Total: $2,499.96
Commission (December 1993 - November 1994) Total: $67,815.34
In addition, the respondent provided superannuation benefits to the applicant in the sum of $387.50 per month as at 16 November 1994.
A further affidavit filed by the respondent states that the employer was not bound by any relevant state or federal award in respect of the applicant's employment.
Section 170CD (1) of the Act states "the following Subdivisions do not apply to a termination of employment of an employee who is not employed under award conditions if:
(a)in respect of an employee who was continuously employed by the employer during the period of 12 months immediately before the termination day - on the termination day the employee's relevant wages exceeded the applicable amount; ..."
Under Section 170CD (2) the applicable amount in this instance is $60,000.
Sub-section (4) of section 170CD defines "relevant wages", in relation to an employee, as meaning:
"... the total amount of the wages that the employee received, or was entitled to receive, from the employer in respect of:
(a)if para (1) (a) applies to the employee - the period of 12 months referred to in that para...
but, in relation to an employee whose contract of employment prescribes normal hours for the performance of work (whether by prescribing the number of hours in which, or the times at which, work is normally to be performed in a particular period), does not include any wages, additional to normal wages, in respect of additional hours of work performed in respect of work performed at other times".
THE RESPONDENT’S SUBMISSIONS
The respondent’s written submissions state that the issue is whether the various components of the payments made to the applicant cumulatively constitute his “relevant wages” for the period in question.
The respondent submitted that as there is no definition in the Act of the term “wages” it should be accorded its ordinary meaning: Ardino v Count Financial Group Ltd (1994) 126 ALR 49 at p55 per Wilcox CJ. The two dictionary definitions of the word “wages” as quoted by Wilcox CJ with approval in Ardino v Count Financial Group Pty Ltd were cited. They are:
-the Shorter Oxford English Dictionary - “a payment to a person for service rendered; now esp. the amount paid periodically for the labour or service of a workman or servant. Freq. pl.”
-the Macquarie Dictionary - “that which is paid for work or services, as by the day or week; hire; pay”
Counsel for the respondent referred to the following cases in determining what the ordinary meaning of “wages” is: Commissioner of Payroll Tax v Reserve Bank of Australia (1986) 66 ALR 677; Terry Shields Pty Ltd v Chief Commissioner of Payroll Tax (1989) 98 ALR 559 and Re Earle’s Shipbuilding and Engineering Co, Barclay and Co v Earle’s Shipbuilding and Engineering Company (1901) WN 78. It was submitted that on these authorities and on dicta of Wilcox CJ in Ardino v Count Financial Group Pty Ltd the ordinary meaning of the word “wages” is any monetary payment which an employee is contractually entitled to receive in respect of the services he or she renders to the employer, and that commissions are accordingly part of the “wages” of an employee within the ordinary meaning of the word.
It was further submitted that it is the clear intention of S170CD (1) of the Act that it is aimed at excluding non-award employees at the higher income levels from the protection afforded by the Act, and that this appears from the second reading speech of the Industrial Relations Amendment Bill (No 2) 1994 on Thursday, 9 June 1994:
“the amendments will confine the termination provision to employees who are either employed under a federal or state award or whose base wage is no more than $60,000 per annum ... the exclusion of high income earners who are not covered by awards is intended to ensure that the court’s resources are fully available to address matters involving the lower-paid and non-managerial employees who contribute to the vast majority of the Australian workforce”.
It was submitted that this intention was confirmed by Wilcox CJ in Ardino’s case when he said that “the purpose of S170CD was to exclude highly paid non-award employees from the benefits of DIV 3. If that purpose was to be fulfilled, Parliament
had to fix a remuneration level beyond which the exclusion would apply” (the respondent’s emphasis).
Wilcox CJ said at p55 “I think that these definitions’ emphasis on payment make it difficult to argue that benefits that do not take the form of money payments are “wages” ". It was submitted that the difference between “wages” and “remuneration” is, therefore, the element of non-pecuniary benefits such as the use of a company vehicle, access to holiday homes, etc. Thus “wages” was argued to include all monetary benefits and “remuneration” to include monetary and non-monetary benefits.
The case of Thomas Gordon Brown v Listaglen Pty Ltd (No VI 1072 of 1994 Industrial Relations Court of Australia, unreported) was referred to, in which Murphy JR held that the concept of “commission” is not encompassed in the ordinary meaning of the term “wages”. It was submitted that this judgment is wrong. Murphy JR stated at p3 of that judgment “from these authorities (Ardino v Count Financial Group Pty Ltd; Mutual Acceptance Co Ltd v Federal Commissioner of Taxation; Commissioner of Payroll Tax v Reserve Bank of Australia and Terry Shields Pty Ltd v Chief Commissioner of Payroll Tax) it can be stated that common law has always recognised the difference between “wages”, “salary” and “commissions” “.
It was submitted that this statement is incorrect for the following reasons:
"In Ardino v Count Financial Group Limited Wilcox CJ makes no such distinction and clearly states that:
"Insofar as money payments are concerned (superannuation, school fees, etc.) the critical question is whether the employee ever had an entitlement to receive the money himself or herself."
(At page 55)
The Payroll Tax cases (being the other three cases referred to) all dealt with a statutory definition of the word "wages" which included "wages, salary, commission, bonuses or allowances paid or payable..."
The learned Registrar has wrongly understood the reference to each of those terms in the judgments as meaning that there is a distinction between "wages", "salary" and "commissions". In this regard, he has ignored the warning of Rich J in Mutual Acceptance Company Limited v Federal Commissioner of Taxation 69 CLR 389:
"A definition of this kind is not an exercise in philology. It is a mechanical device to save repetition. It's purpose is not to endow the word "wages" with a new meaning, but to enable the expression "wages, salary, commission, bonuses or allowances paid or payable" to be supplied by a single word whenever it is desired to legislate in this Act for anything which is included in that expression."
(At page 398)
In Mutual Acceptance Co. Ltd v Federal Commissioner of Taxes Latham CJ, referring to the statutory definition of "wages" which listed "wages" and "allowances" separately, said at page 397:
"Tropical allowances, overtime allowances, and extra pay by way of "dirt money" are allowances as compensation for unusual conditions of service. The latter class of allowances represents higher wages paid on account of special conditions, and may fairly be described as part of wages in the ordinary sense."
The use of the word "wages" is clearly not intended to exclude "salary". There is no reason to exclude "commission" from the ordinary meaning of "wages".
The learned Judicial Registrar also referred to the use of the word "remuneration" in section 170EE and concludes at p3 that:
" "Wages" must therefore relate to the ordinary base wage of an employee."
It is submitted that this is an incorrect conclusion for the following reasons:
"remuneration" includes all forms of monetary and non-monetary benefits available as a consequence of employment. Remuneration would include such matters as use of a car, use of facilities such as squash courts, low interest loans;
"wages", on the other hand, means any cash payment due in terms of the contract of employment.
The use of the word "remuneration" in section 170EE is justified in that the court is entitled to consider, when making an award of compensation, all benefits of employment including non-monetary payments.
In all circumstances, it is submitted that commissions fall within the ordinary meaning of "wages" for the purposes of the Act. If this were not the case, it could lead to an anomalous situation where highly paid executives on performance related remuneration packages would have remedies under the Act, whereas non-executive employees earning a fixed salary of, say, $65,000 would be excluded."
THE APPLICANT’S SUBMISSIONS
Counsel for the applicant submitted that the respondent faces two difficulties:
the question of whether commission is to be included in the term “relevant wages” has already been decided in Thomas Gordon Brown v Listaglen Pty Ltd. In general one should adopt the general principle that it is highly undesirable for two courts in the same jurisdiction to disagree, and to hold that Murphy JR was wrong would put this court in an impossible position.
In determining the meaning of an undefined word in a statute one must look to its common meaning. Where two different words are used in a statute, one must take it that Parliament intended a different meaning;
thus “wages” as used in S170CD must be taken to have been intended to have a meaning different from “remuneration” in S170EE.
It was stated that the authorities referred to by counsel for the respondent as the ordinary meaning of “wages” are irrelevant as they relate to “wages” as defined in the Pay-roll Tax Assessment Act 1941. That statute defines “wages” to include commission and allowances and it was the clear intention of Parliament to include commission by artificially extending the ordinary meaning of wages. No such definition is included in the Industrial Relations Act. If other than the ordinary meaning is intended, then a definition is provided.
Counsel for the applicant stated that “commission” is remuneration in respect of performance - a percentage on the amount of sales achieved. A characteristic of commission is that it is irregular in quantity and quality. It was pointed out that it was clear from the figures supplied by the respondent that the commission earned by the applicant varied greatly from month to month. If “commission” were to be included in the definition of “relevant wages” the applicant would be in the incongruous position that in one year he might come within the provisions of the Act and in another year he would not, depending on the date of termination. It was argued that the thrust of the Industrial Relations Act is not to unreasonably exclude people, and there would be complete uncertainty on the part of an employee if commission were to be held to be included in the term “wages”.
THE MEANING OF “RELEVANT WAGES”
I have carefully considered the submissions of both parties, and have come to the conclusion that commission should not be included in the calculation of “relevant wages” within the meaning of that term in S170CD.
In the first place, I consider that when looking at the previous decisions relating to the meaning of “wages” in pay-roll tax legislation great caution should be used in
attempting to apply those cases to S170CD of the Industrial Relations Act. Not only does the pay-roll tax legislation define “wages” in a way which specifically includes commission, but the learned judges considered the meaning of “wages” in the light of what type of remuneration was intended by Parliament to be taxed. That involves a quite different perspective and different considerations from those which this court has to take into account; namely, which employees were intended to be excluded from the jurisdiction of this court.
Secondly, the matter has already been decided in this court by Murphy JR in Brown v Listaglen Pty Ltd. I have already said that I am not convinced that the taxation cases are necessarily applicable to the Industrial Relations Act and I am therefore not prepared to accept the arguments of the respondent that Murphy JR erred on the basis of dicta from these cases.
Thirdly, the dicta of Wilcox CJ in Ardino’s case that “the critical question is whether the employee ever had an entitlement to receive the money himself or herself” and that “Parliament had to fix a remuneration level beyond which the exclusion would apply” were made in the context of considering payments such as superannuation which were the matters under consideration in that case. It does not appear that His Honour addressed his mind to the question of payments of commission.
Next, under the dictionary definitions of “wages” referred to by the respondent, which must serve as a guide as to the ordinary meaning of the word, it is clear that wages are an amount paid periodically for the services of an employee. It implies some regularity and consistency. This is not the case with commission, which as is clear from the present case may fluctuate widely from month to month depending on the value of sales actually achieved. The amount of commission an employee receives may have little bearing on the actual effort expended or “services rendered” by the employee.
Further, the Explanatory Memorandum to the Industrial Relations Amendment Bill (No 2) 1994 stated that the provisions of Part VIA are to “be confined to employees who are either employed under an award (federal or state) or have a base wage of no more than $60,000.00”. This makes it clear that Parliament intended the cut-off to apply to base wages of $60,000.00 only and would not seem to include payments on top of base wages such as commission.
Finally, section 170CD of the Act uses the term “wages”, whereas other sections of the Act (such as S170EE) use the term “remuneration”. Parliament must have intended these terms to have different meanings. I am unable to accept the respondent’s submission that “remuneration” should be taken to encompass monetary and non-monetary forms of remuneration and that “relevant wages” should be taken to encompass all forms of monetary remuneration. If this is so, then “relevant wages” would encompass all superannuation payments, over-time, leave loadings and bonus payments and this is, in my view, clearly not the intention of Parliament. In Ardino’s case Wilcox CJ said that it was arguable that a bonus would not form part of “relevant wages”. Further, I do not consider that a car allowance could be said to form part of the relevant wage within the meaning of S170CD. A car allowance is intended to compensate an employee for the use of his or her vehicle used in the course of his or her employment.
In the present case, the applicant’s wage was $42,117.10. For the reasons stated above, I am not prepared to include his car allowance and commission in the calculation of his relevant wage. The applicant’s relevant wage is then clearly under the $60,000.00 limit set by Parliament. The respondent’s application on notice of motion is accordingly dismissed.
I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment of Judicial Registrar Boon.
Associate:
Date:
APPEARANCES:
Counsel for the Applicant: Mr J. Picton-Warlow
Solicitors for the Applicant: Picton-Warlow & Company
Counsel for the Respondent: Mr S.P. Kemp
Solicitors for the Respondent: Parker & Parker
Date of Hearing: 2 March 1995
Date of Judgment: 12 April 1995
IN THE INDUSTRIAL RELATIONS ) No. WI 538 of 1994
COURT OF AUSTRALIA )
WESTERN AUSTRALIA DISTRICT REGISTRY )
BETWEEN:Reinhard Wolfer
Applicant
AND:Computer Associates Pty Ltd
Respondent
BEFORE: Boon JR
PLACE: Perth
DATE: 12 April 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The respondent's application on notice of motion filed 21 February 1995 be dismissed.
The matter be listed for a mediation conference on a date to be advised by the District Registrar.
Note:Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - claim of unlawful termination - application to dismiss for want of jurisdiction - applicant's relevant wages alleged to exceed $60,000 - commission received - meaning of "relevant wages".
INDUSTRIAL RELATIONS ACT 1988, SS 170CD, 170EE
Ardino v Count Financial Group Ltd (1994) 126 ALR 49
Thomas Gordon Brown v Listaglen Pty Ltd (No VI 1072 of 1994 Industrial Relations Court of Australia, unreported)
REINHARD WOLFER v COMPUTER ASSOCIATES PTY LTD
No. W1 538 of 1994
BEFORE:Boon JR
PLACE:Perth
DATE:12 April 1995
3
0