Ross Turnbull v Eliott Group Pty Ltd

[2014] FWC 1112

[2014] FWC 1112

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ross Turnbull
v
Eliott Group Pty Ltd
(U2013/12511)

COMMISSIONER LEE MELBOURNE, 7 MARCH 2014

Application for relief from unfair dismissal - jurisdictional objection - high income threshold.

[1] Ross Turnbull (the Applicant) has made an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). The Applicant was formerly employed by Elliot Group Pty Ltd (the Respondent).

[2] The Applicant states in his Form F2 - Application for unfair dismissal remedy that he was employed by the Respondent in November 2004 and that his employment was terminated on 4 August 2013. He was employed as a General Manager of the Mechanical Engineering Corporation Workshop Pty Ltd up until its liquidation on 31 July 2013. The Applicant claims the same business opened the next day named as Australian Mechanical Engineering. In any case, it is not disputed by the Respondent that the Eliott Group Pty Ltd was in fact his employer at the time of dismissal.

[3] The Respondent has raised objections to the application. These objections were not raised in the Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy but were raised subsequently in a Form F4 - Objection to Application for Unfair Dismissal Remedy lodged by the employer on 4 October 2013. The objection raised was as follows:

“1. The Applicant was employed as the General Manager of the Respondent’s Workshop.

2. The Applicant was paid the rate of $54.0907 per hour for a contracted period of 46.5 hours per week.

3. The Applicants Remuneration was therefore $130,791.31 per annum an amount that exceeds the High Income Threshold. (see attached last three pay slips)

4. The applicant was a senior employee and was not covered by an award.”

The law to be applied

[4] As to the matters raised by the Respondent, the Act provides as follows:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following 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.”

[5] The matter was listed for hearing at 9.00 am on 11 December 2013. The day before the hearing, Mr. Addison for the Respondent notified my chambers that Mr. Eliott, the only witness for the Respondent, was to have surgery the following day and would be unavailable for at least 2 weeks. Further, due to the unavailability of Mr. Addison (the respondent’s representative) for a further time period, an adjournment was sought until after 18 February 2014.

[6] Ultimately it was determined that the jurisdictional objection would be determined on the papers with an opportunity for the Applicant and Respondent to file any further material. The Applicant and Respondent consented to the matter proceeding in this manner.

Is the applicant covered by an enterprise agreement?

[7] The Respondent contends that at the relevant time the Respondent was covered by an enterprise agreement. However, the Respondent contends that the Applicant was not covered by the terms of that enterprise agreement.

[8] The relevant enterprise agreement is the Mechanical Engineering Corporation Enterprise Agreement 2010-2014 1(the Agreement). The Agreement was approved on 9 April 2010 and has a nominal expiry date of 1 January 2014. The Agreement was therefore in operation at the time of the dismissal of the Applicant.

[9] The Agreement includes an application clause at clause 3 which reads as follows:

“This agreement shall apply at Mechanical Engineering Corporation Pty Ltd. of Yallourn Drive of Yallourn North Victoria 3825 and to the employees who are employed in the Classfications covered by the scope of the Metal, Engineering and Associated Award 1998, Part 1 and who are employed in the business.”

[10] According to the Applicants’ submissions, from November 2004 until 1 May 2007 he was paid by Mechanical Engineering Services. From 1 May 2007 he was paid by the Respondent. Further, the Applicant contends that the Eliott Group placed Mechanical Engineering Corporation Pty Ltd. into voluntary liquidation on 31 July 2013. The Applicant does not address the issue of the enterprise agreement and whether or not he was covered by it.

[11] It is clear that the Agreement applied to the Respondent at the time of the dismissal of the Applicant. It is also clear that the coverage of the Agreement is limited to classifications in the Metal, Engineering and Associated Industries Award 1998 (the award), Part 1. The Respondent submits that this award does not contain any classification of General Manager, nor do the duties of General Manager appear at any point of the award and as such the Respondent submits that the coverage of the Agreement does not extend to the Applicant.

[12] Having considered the terms of the award, especially the classification definitions in Schedule D, I agree with the submissions of the Respondent that the Applicant is not covered by the Agreement. There are no classifications that encompass the type of work undertaken by the Applicant.

Is the applicant covered by a modern award?

[13] The Respondent submits that as a senior employee effectively having the short, medium and long term control of the business, (subject to reporting to the director of the business) that the Applicant is beyond the scope of any award. Further, the Respondent contends that no modern award has the coverage capacity to cover senior employees, at the General Manager level, within the private sector metal manufacturing industry. The witness statement of Mr. Elliott asserts that the Applicant was a senior employee and was not covered by any award.

[14] The applicant made no submissions as to whether he was covered by a modern award.

[15] Mr. Addison for the Respondent suggested the relevant modern award covering the industry is the Manufacturing and Associated Industries and Occupations Award 2010. This award is likely to apply to the employees of the Respondents business if an enterprise agreement did not apply. I agree with the submissions of the Respondent that a General Manager is not covered by the terms of that award. I also agree that there is no modern award that has the coverage capacity to cover senior employees at the General Manager level within the private sector manufacturing industry.

High income threshold

[16] As to the Respondent’s objection concerning the high income threshold, the evidence established that, as at the date of dismissal, the Applicant received wages of $54.0907 per hour. The statement of Mr. Eliott, was that the Applicants contract of employment was for 46.5 hours per week. Therefore, his annual earnings at the time of dismissal were $130,791.31. Copies of the Applicants’ payslips for June, July and August 2013, attached to the statement of Mr. Eliott are consistent with the claims of Mr. Eliott. The high income threshold, at the time of the dismissal of the applicant, was $129,300.

[17] The Applicant submitted the following in respect to whether he was paid more or less than the high income threshold:

“4/ As for the Objection to my application by the Eliott Group. I have previously presented my Group Certificate for the year ending 30th June 2013 which outlines my gross income @ $124,418-00 which is well inside the threshold allowed. (Please find attached) RT3

If my pay increase is taken into account for July 2013 this adds only another $419 to the $124,418-00. This brings my immediately preceding 12 month income to $124,837-00 which is still within the allowable threshold.”

[18] This raises the question as to whether, in applying the high income threshold, the Commission is to consider the “actual” remuneration earned in the 12 months prior to dismissal (or the previous financial year) or the rate of remuneration at the time of the dismissal. The Respondent referred me to a Full Bench of Fair Work Australia (as it then was) that dealt with this issue in Francesco Zappia v Universal Music Australia Pty. Ltd. T/A Universal Music Australia 2where it was stated;

“[9] On the appeal, Mr I Latham, of counsel, who appeared for the appellant both at first instance and on the appeal, submitted that his Honour had erred in his construction of the expression ‘annual rate of earnings’. In our view his Honour was clearly correct. Section 382 of the Act relevantly provides that a person is protected from unfair dismissal at a time if, at that time, 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. It is clear that the time at which the annual rate of earnings must be ascertained is at the time of the termination of the person's employment. What needs to be ascertained is the annual rate of earnings at that time, not the annual earnings to that time (the amount earned in the 12 months to that time).” 3

[19] It is clear from this decision that the proper test is to consider the annual rate of earnings at the time of the dismissal. It is not in contest that the rate of earnings of the Applicant at the time of dismissal was $130,791.31. Therefore, the Applicant’s earnings are above the high income threshold. While the Applicant, who I note was not represented at all in these proceedings, has misunderstood the manner in which the threshold has applied, he is not the first to do so as the decision referred to above makes abundantly clear.

Conclusion

[20] As I have found that the Applicant was not a covered by a modern award; that an enterprise agreement did not apply to the Applicant in relation to the Applicant’s employment and the Applicant’s annual rate of earnings is more than the high income threshold I do not consider the Applicant was, pursuant to s.382 of the Act, a person protected from unfair dismissal.

[21] An order [PR548460] dismissing the application has been issued in conjunction with the publication of this decision.

COMMISSIONER

Final written submissions:

Applicant, 19 January 2014

Respondent, 7 January 2014

 1   AE877046

 2   [2012] FWAFB 6108

 3   Francesco Zappia v Universal Music Australia Pty. Ltd. T/A Universal Music Australia, [2012] FWAFB 6108, [9]

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