Stephen Sandy v Innotech Site Services Pty Ltd

[2016] FWC 4263

[2016] FWC 4263

The attached document replaces the document previously issued with the above code on 28 June 2016.

The Decision has been refiled to correct an error.

Associate to Commissioner Roe

Dated 28 June 2016

[2016] FWC 4263

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Stephen Sandy
v
Innotech Site Services Pty Ltd
(U2016/6303)

COMMISSIONER ROE MELBOURNE, 28 JUNE 2016

Application for relief from unfair dismissal - high income threshold.

[1] Mr Sandy has made an unfair dismissal application and Innotech Site Services Pty Ltd argued that there is no jurisdiction to hear the application because Mr Sandy earned more than the high income threshold of $136,700 and is not covered by an Award or Agreement. There are two issues in dispute in this case.

● What were Mr Sandy’s annual earnings?
● Was Mr Sandy’s employment covered by an Award?

[2] The Fair Work Act 2009 (the Act) provides that a person is protected from unfair dismissal if:

“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.”

[3] The Act defines earnings as follows:

“332 Earnings

(1) An employee’s earnings include:

(a) the employee’s wages; and
(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and
(c) the agreed money value of non-monetary benefits; and
(d) amounts or benefits prescribed by the regulations.

(2) However, an employee’s earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;
(b) reimbursements;
(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;
(d) amounts prescribed by the regulations.

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and
(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;
(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;
(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.”

[4] The Fair Work Regulations 2009 prescribe the following in respect to non-monetary benefits:

“3.05 Benefits other than payment of money

(1) If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and
(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and
(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and
(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and
(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”

[5] Mr Sandy earned less than the high income threshold in the period before November 2014. After November 2014 his employment contract dated 21 November 2014 provided that he would be paid $130,000 not including superannuation. In addition he was provided with a company phone, company vehicle and fuel card. In the first quarter of 2015 the company provided vehicle and fuel card was replaced with a salary increase of $16,000. Mr Sandy agreed with the employer that this amounted to guaranteed earnings of $2800 per week or $146,000 per annum. I am satisfied that the term annual rate of earnings is a reference to the rate of annual earnings guaranteed at the time of the dismissal not the actual earnings over the previous twelve months. Section 382 specifically refers to “at that time”. However, in the period between November 2014 and the first quarter of 2015 I am satisfied that the value of the car and fuel card would have ensured that the annual rate of earnings was above the high income threshold. I am therefore satisfied that Mr Sandy’s annual rate of earnings is greater than the high income threshold.

[6] However, I am satisfied that Mr Sandy’ employment was covered by the Innotech Site Services Enterprise Agreement 2011 and that therefore the high income threshold is not relevant and that Mr Sandy is therefore protected from unfair dismissal.

[7] The Agreement was approved by DP McCarthy on 29 December 2011. The nominal expiry date of the Agreement was 29 December 2015. However, the Agreement has not been terminated or replaced. The relevant provisions of the Agreement are:

● Clause 2 Application which provides that the Agreement covers “the workshop and site based employees of the Company (including leading hands and supervisors)”.

● Clause 14 Classification and Salary Rates which provides that “full time salaried employees shall be paid no less than the following minimum rate of pay”. The table below includes the Classification “Site Supervisor” and a minimum annual salary for that classification.

[8] Mr Sandy was engaged as the Workshop Supervisor. I am satisfied that Mr Sandy’s employment was covered by the Agreement because he was a full time salaried employee engaged as a supervisor based in the workshop and the Agreement covered “workshop and site based employees of the Company including supervisors.

[9] Mr Sandy is therefore protected from unfair dismissal and the jurisdictional objection is dismissed.

[10] The Fair Work Commission received advice from the company that Administrators had been appointed under Section 436A of the Corporations Act on 18 May 2016. We received further notice on 10 June 2106 from KordaMentha that different receivers and managers had been appointed on 19 May 2016. They also advised that Neil Cribb of RSM had been appointed Liquidator of the company. The receiver manager participated in the hearing. Ms Ayres confirmed that the appointment arose from Court action and did not follow creditors voluntary winding up where the company was insolvent.

[11] An unfair dismissal application lodged against an employer who is declared insolvent by a Court or a provisional liquidator can proceed in the Commission. However, where there has been a resolution of creditors for voluntary winding up where the company is insolvent at the time of the resolution of creditors as provided for by Section 500(2) of the Corporations Act 2001, the matter is unable to proceed unless or until a Court grants leave. The information provided to date does not suggest that there has been a resolution of creditors for voluntary winding up and that the company was insolvent at the time of that resolution. On the information available there is no bar to the matter proceeding.

[12] However, the receiver managers not the liquidators participated in the hearing and Ms Ayres suggested that it may be appropriate to involve the liquidators in any future proceedings.

[13] For the reasons provided above the jurisdictional objection is dismissed. Directions will now be issued for the hearing of the matter.

COMMISSIONER

Appearances:

Mr S Sandy represented himself.

Ms J Ayers appeared for the Respondent.

Hearing details:

2016

Melbourne by telephone

June 23

Printed by authority of the Commonwealth Government Printer

<Price code C, PR582181>