Sudesh Ranasinghe v Wesfarmers Chemicals, Energy & Fertilisers Limited
[2024] FWC 2100
•12 AUGUST 2024
| [2024] FWC 2100 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Sudesh Ranasinghe
v
Wesfarmers Chemicals, Energy & Fertilisers Limited
(U2024/6224)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 12 AUGUST 2024 |
Application for an unfair dismissal remedy
Issues and outcome
Mr Sudesh Ranasinghe (the Applicant) applied for an unfair dismissal remedy against the Respondent, Wesfarmers Chemicals, Energy & Fertilisers Limited, after having been dismissed by his former employer on 10 May 2024. At the time of his dismissal the high income threshold was $167,500.00. The Respondent says the Applicant’s annual rate of earnings was $174,022.00 when he was dismissed. This amount comprised of $158,202.00 base salary and $15,820.20, for an Afterhours Technical Support Allowance (10% base) (Technical Support Allowance). The Respondent objected to the application on the basis that the Applicant was not a person protected from unfair dismissal because he earned more than the high income threshold, he was not covered by a modern award and an enterprise agreement had not applied to him in his employment.[1]
The Applicant contends that at the time of his dismissal his annual rate of earnings was less than the high income threshold, observing that whilst the Respondent considered his Technical Support Allowance should be included as earnings, he considered it should not, because it was not a fixed allowance and was not paid as part of his regular pay.
It was apparent from the materials filed that an enterprise agreement did not cover and apply to the Applicant in his employment with the Respondent. In respect to whether the Applicant was covered by a modern award, he did not argue this to be the case noting that he was unsure[2] and the Respondent, for its part, submitted that an award had not covered the Applicant in his employment.
The Applicant is only afforded protection from unfair dismissal in circumstances where he was covered by a modern award, an enterprise agreement applied in relation to his former employment, or he earned less than the high income threshold. Based on the evidence before me, which was limited in respect of any argument of award coverage, I have concluded that no modern award covered the Applicant in respect of his employment. Further, I have found that the Applicant’s annual rate of earnings was not less than the high income threshold. It follows that the Applicant’s unfair dismissal application cannot proceed for want of jurisdiction. Therefore, the Applicant’s application is dismissed. An Order[3] to this effect issues concurrently with this decision. My detailed reasons follow.
Background
In support of his application, the Applicant provided a letter of termination, pay slips for 12 months and three screenshots of what was said to be ‘times when After hours allowance was not paid’. Further, the Applicant submitted an Outline of Argument on both Merits and Objections. The Respondent relied upon the evidence of Ms Kathleen Stewart, Senior HR Advisor, and multiple attachments to her statement, as referred to in the Respondent’s document list. Notwithstanding the materials filed, there was little evidence on the duties and responsibilities of the Applicant in his former role.
At hearing, I asked the Applicant to provide oral evidence on what one did as a Senior Cyber Security & GRC Specialist, a position he had secured by way of written contract dated 25 February 2022 (Employment Contract). The Applicant explained that his role was one of cyber security governance that required him to provide advice to the Respondent about the cyber security threats it faced, and to also provide a lens by which new products and services within the business were considered. The Applicant was, in addition, responsible for assessing the risk appetite of the business and tracking any deviations from that risk appetite.
The Applicant commenced his employment with the Respondent on 1 March 2022.
The Applicant’s Employment Contract provided the following in respect of his remuneration:
Your remuneration package is set out in Schedule 1. This provides details of your Annual Remuneration and incentive arrangements offered under this Agreement.
Unless otherwise specified in this Agreement, your remuneration and the other benefits provided to you under this Agreement shall constitute the entire consideration payable to you and will compensate you for all time worked to fulfil your duties under this Agreement regardless of the number, distribution and timing of the hours of work, and will compensate you for all expenses and costs incurred by you in carrying out such duties. Unless otherwise specified in this Agreement, nothing in this clause or in this Agreement should be taken to infer that any modern award or other industrial instrument(s) has/have been incorporated into this Agreement as a contractual term.
Your salary is provided to you in specific contemplation of, and to fully and finally compensate
you for:•the provision of services under this Agreement, including all costs and expenses incurred by you in carrying out your duties under this Agreement; and
•any and all benefits and entitlements, to which you may otherwise be entitled to under any relevant modern award or other instrument.
If a modern award, other legislation or industrial instrument applies to your employment, then the salary (which is greater than amounts due to you under an Award) paid by the Company to you is agreed to be paid in full satisfaction of any and all of your entitlements, benefits or payments arising under the Award, legislation or industrial instrument and is to be applied first towards any entitlements arising as to ordinary time, then to overtime, then to penalty rates, then to any allowances, then to annual leave loading, and then to any other entitlement, benefit or payment arising under the Award or any other modern award, legislation or industrial instrument.
You agree that the Company is entitled to apply your salary paid to you under this Agreement, to the fullest extent permitted by law, against any and all entitlements, benefits or payments that may otherwise be owing to you under the terms of an Award, legislation or industrial instrument.
The Company may apply your salary to any and all entitlements, benefits or payments that may otherwise be owing to you under an Award, legislation or industrial instrument in accordance with the terms of this Agreement and irrespective of the pay period in which the entitlement, benefit or payment arose compared to the pay period in which the salary was paid to you.
Nothing in this Agreement shall be taken to constitute an annualised wage arrangement for the purposes of an Award.
Schedule 1 of the Employment Contract sets out the Applicant’s remuneration package as follows:
SCHEDULE 1 – REMUNERATION
Your remuneration comprises Fixed Annual Remuneration (FAR) and variable pay in the form of an annual cash incentive and participation in a share plan. Details are provided below.
Fixed Annual Remuneration
Your FAR will be $165,000.00. Your FAR includes the following components:
•Cash salary.
•Company superannuation contributions (which includes the statutory minimum contribution the company must make on your behalf under the applicable legislation to avoid the imposition of a levy charge).
Your FAR will be reviewed annually.
Further detail regarding each component of your FAR is provided below.
Cash Salary
Your cash salary will be the amount remaining after deducting the amounts for superannuation and novated lease (if applicable), and any other pre-tax deductions as agreed with you. Your cash salary less tax and any post-tax deductions nominated by you will be paid into a bank account of your choice in twelve equal monthly payments on the 15th of each month.
After Hours Technical Support Allowance
Where After Hours Technical Support is provided, you will be entitled to an afterhours
allowance in accordance with the IT&S After Hours Technical Support Policy. This is
currently 10% of your base (cash) salary less tax.The scope and extent of afterhours technical support work is contained in the conditions of the IT&S After Hours Technical Support (AHTS) Policy, which may be varied by the Company from time to time to meet business needs. Enclosed is a copy of the IT&S AHTS Policy for your records. This policy may be revised on a periodic basis….
REMUNERATION SUMMARY
Figures based on Full Time Employment (100% FTE)
1. Fixed Annual Remuneration (FAR) $165,000.00
Superannuation (company contribution: 10.0% of cash
salary) $15,000.00CASH $150,000.00
2. Short Term Incentive Plan (STIP)
% of FAR
Target 7.5 % $12,375.00
Maximum 15 % $24,750.00
3. Wesfarmers Employee Share Acquisition Plan
(WESAP)$5,000.00
4. After Hours Technical Support Allowance $15,000.00
Superannuation (company contribution: 10% of After $1,500.00
Hours Technical Support Allowance)After Hours Technical Support Allowance (inclusive of
superannuation) $16,500.005. Total Target Remuneration
Fixed Annual Remuneration $165,000.00
Short Term Incentive (at target) $12,375.00
WESAP $5,000.00
After Hours Technical Support Allowance $16,500.00
TOTAL $198,875.00
Ms Stewart said that as of 10 May 2024, the total sum of the Applicant’s cash component of his wages (excluding superannuation) was $174,022.00. As observed, the cash component was said to consist of: (a) base salary of $158,202.00 per annum; and (b) Technical Support Allowance of $15,820.20 (10% of base salary per annum).[4]
According to the Respondent, the Technical Support Allowance is a non-variable allowance calculated on 10% of eligible employees’ base salary as specified in the Applicant’s Employment Contract and Salary Increase letter.[5] This allowance is said to be paid as part of eligible employees’ regular remuneration.
By letter of 12 August 2020, the Respondent advised the Applicant of the following:
Effective 1 September 2020, you will be eligible for the After Hours Technical Support Allowance in accordance with the IT&S After Hours Technical Support Policy. This is currently 10 per cent of your base salary ($12,762.50 per annum) less tax.
The scope and extent of afterhours technical support work is contained in the conditions of the IT&S After Hours Technical Support (AHTS) Policy, which may be varied by the Company from time to time to meet business needs. Enclosed is a copy of the IT&S AHTS Policy for your records. This policy may be revised on a periodic basis.
All other terms and conditions of your employment agreement remain unchanged.
Please contact me if you have any queries in relation to this letter.
Thank you for your valuable contribution to the business and I look forward to continued results and business success.[6]
The letter of 12 August 2020, referred to the Respondent’s IT&S After Hours Technical Support Policy (the Policy). The purpose of the Policy is stated as being to provide guidelines and financial recognition for regular, ongoing After Hours Technical Support (AHTS) provided to the organisation by Information Technology & Systems.[7] The Policy was stated to apply to WA based employees within Information Technology & Systems who are required to provide AHTS in accordance with a roster system.
The Policy set out the following in respect of guiding principles:
4.1.1 The Company recognises that due to the nature of the business, some roles in IT&S will be required to provide AHTS to deal with matters considered to be critical to the business.
4.1.2 The Company may vary this policy from time to time to meet business needs. Employees will be given one month’s notice of any changes that affect their employment conditions.
4.1.3 The Company may determine that there is no longer a requirement for the after hours arrangement, in this situation employees’ will be provided with one months notice of the removal of the allowance.
4.1.4 Consideration will be given to personal circumstances with regards to the frequency and duration of AHTS.
4.1.5 The allowance is not intended to be an 'hour for hour’ rate of pay but rather recognition of the additional requirements of roles which require out of hours support. The nature of on call work is that on occasions, being on call may result in no contact, and on other occasions the person may be contacted several times.
In respect of the Policy itself, it stated:
5.1.1 Employees providing AHTS will generally be required to work to a roster of 1 week in every 6 or when a work colleague is on leave, 1 week in every 5 or as otherwise directed.
5.1.2 The roster for AHTS will commence at 5.30pm on the first working day of the week(usually a Monday) and end at 7.30am on the first working day of the following week.
5.1.3 The roster may change in accordance with business requirements.
5.1.4 For the week that employees are rostered on and during other times as required by the company, employees providing AHTS must be available to take technical support calls between 5.30pm and 7.30am, on all days from Monday to Friday and 24 hours per day on Saturdays, Sundays and public holidays.
5.1.5 Employees providing AHTS will ensure they are fit for work in accordance with Company Fitness for Work policies and be able to travel to the office within 1 hour of receiving a technical support call, if required to do so.
5.1.6 During a roster period, employees required to provide AHTS must respond to telephone calls within 30 minutes of receiving each call. Employees must advise their Team Leader or Manager if for any reason they are unable to provide the required service.
5.1.7 Employees required to provide AHTS, will assist each other with the resolution of IT technical support problems at all times, including during periods when they are not rostered on.
5.1.8 Employees required to provide AHTS will record in the AHTS logbook, all calls for after hours support received, the nature and duration of each call and the outcome.
5.1.9 All employees providing AHTS must maintain strict confidentiality with regards to the AHTS roster and allowance.
5.1.10 Employees who provide AHTS in accordance with the roster, will be paid an allowance equivalent to 10% of their base salary. The allowance will be paid as a gross annual allowance with regular monthly salary, in equal taxable monthly instalments.
5.1.11 Continued payment of the allowance is dependent on employees occupying their current position and remaining an active participant on the roster arrangement. Employees who elect to withdraw from providing AHTS by the giving of one month’s notice, will no longer be eligible to receive the AHTS allowance.
5.1.12 To withdraw from providing AHTS in accordance with the roster, an employee must provide one months notice to their Manager and confirm details of an alternative IT employee who is capable of replacing them on the roster.[8]
Ms Stewart stated that the Applicant took a period of employer-funded parental leave from 29 May 2023 – 22 August 2023 and that whilst there was no legal entitlement to payment from the Respondent for parental leave, as per internal policy, the Applicant received a form of payment (benefit) during his parental leave prior. Ms Stewart noted that the parental leave benefit received by the Applicant was calculated on his base rate of pay plus superannuation.
As to the Applicant not receiving the Technical Support Allowance, Ms Stewart highlighted that the Respondent’s Policy provides that continued payment of the allowance is dependent on employees occupying their current position and remaining an active participant on the roster arrangement.[9]
Ms Stewart stated that whilst on a period of the employer-funded parental leave, the Applicant was:
a) not occupying his position;
b) not performing normal paid duties; and
c) not an active participant on the roster arrangement.
Ms Stewart’s final observation was that the parental leave benefit, which eligible employees may access, is in no way intended to reflect the total remuneration that the employee would have been entitled to during the same period: (a) had that employee not been on a period of employer-funded parental leave; (b) had the employee been in attendance at work; and (c) had the employee been carrying out normal duties including participation in the AHTS roster.
The Applicant gave evidence that he had payslips over a period of almost three months from late last year, where the Respondent did not pay him the Technical Support Allowance and therefore, he remained below the income threshold to qualify for this process.
Consideration
Whether a person was protected from unfair dismissal is a matter that the Commission must be satisfied about before proceeding to hear and determine the merits of an application for an unfair dismissal remedy. Generally speaking, it is the Applicant that bears the onus of satisfying the Commission that she or he is protected from unfair dismissal.
3.1 High income threshold
As observed, one of the criteria for a person to be protected from unfair dismissal, if not covered by an industrial instrument, is that the sum of their annual rate of earnings, and such other amounts (if any) worked out in relation to them in accordance with the regulations, is less than the high income threshold.
It has been accepted by the Commission that the term ‘earnings’ derives its meaning, in part, from s 332 of the Act.[10] The Act, at s 332, defines ‘earnings’ as follows:
(1) [Meaning of earnings]
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) [Excluded amounts]
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.
(3) [Meaning of non-monetary benefits]
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 valued has been agreed by the employee and the employer but does not include a benefit prescribed by the regulations.
(4) [Extent to which subsection applied to superannuation contributions]
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.
Whilst no regulations have been made for the purposes of s 332(1)(d) or s 332(2)(d) of the Act, regulation 3.05(6) of the Fair Work Regulations 2009 (Cth) (Regulations) has been made in respect of s 382(b)(iii) of the Act. Regulation 3.05(6) provides:
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.
In the decision of Sam Technology Engineers Pty Ltd v Bernadou (Sam Technology), the Full Bench concluded that the definition of ‘earnings’ in s 332 is non-exhaustive and as such, ‘earnings’ should be given its ordinary meaning.[11] In the course of its reasoning, the Full Bench qualified that the meaning of ‘earnings’ was subject to the payments and benefits referred to in s 332(1) being included in the meaning of ‘earnings’ and the payment and benefits referred to in s 332(2) being excluded from its meaning.[12]
The Full Bench in Sam Technology further explained that parliament had made a conscious choice to use an employee’s ‘earnings’, rather than their ‘base rate of pay’ or ‘full rate of pay’, to define the cut-off point at which an employee is excluded from protection against unfair dismissal in circumstance where they are not covered by a modern award, or an enterprise agreement does not apply to their employment.[13] The Full Bench clarified that an employee’s ‘earnings’ are higher than the employee’s ‘base rate of pay’ but are narrower in scope than the ‘full rate of pay’ of the employee, because ‘earnings do not include the…payment of amounts which cannot be determined in advance’ such as incentive based payments, bonuses and overtime (unless the overtime is guaranteed).[14]
While the Full Bench in Sam Technology considered the word ‘earnings’ in the context of determining whether a car allowance fell within its scope, its reasoning remains relevant here. Drawing upon what Lord Davey expressed in Midland Railway Co v Sharpe,[15] the Full Bench in Sam Technology stated:
Now what does a man earn? He earns the sum which is the fruit of his labour; whatever he receives by way of remuneration for the services he gives, or as Lord Macnaghten said in Abram Coal Co v Southern [1903] AC 306, a man’s ‘earnings’ are ‘the full sum for which the man is engaged to work’.[16]
The Full Bench observed that Lord Davey’s definition of ‘earnings’ had been applied in several Australian cases. It reiterated that in the context of s 382(b)(iii), ‘earnings’ are what an ‘employee receives for the work done by the employee in the course of their employment, rather than an amount paid to an employee to meet an expense incurred by the employee in undertaking such work…’.[17]
It is clear from s 332 that the word ‘earnings’ is limited to those components of s 332(1) and excludes those payment and benefits referred to in s 332(2). Further, the ordinary meaning of ‘earnings’ is to be adopted and from that meaning it can be concluded that earnings are the fruit of labour, that is, they are whatever is received by way of remuneration for the services provided. Furthermore, it is understood that the term ‘annual rate of earnings’ as referred to in s 382(b)(iii) of the Act refers to the annual rate of earnings at that time, and not the annual rate of earnings to that time (that is the amount earned in the 12 months to that time).[18]
The Technical Support Allowance was a payment made to compensate the Applicant for the matters expressly referred to in the Policy, including the working hours associated with his role and roster. The Policy provided that employees providing AHTS would generally be required to work a specific roster of one week in six commencing at 5:30PM on the first working day of the week and ending at 7:30AM on the first working day of the following week. Further, employees providing AHTS were required to be available to take technical support calls between 5.30PM and 7.30AM, on all days from Monday to Friday and 24 hours per day on Saturdays, Sundays and public holidays. As an employee working AHTS, the Applicant was required to be fit for work and to be able to travel to the office within one hour of receiving a technical support call – if required. It is therefore evident that the Technical Support Allowance was directly made in consideration for the Applicant performing his role.
Briefly stated, the Applicant appears to contend that the Technical Support Allowance was an at risk component of his earnings such that it could not be determined in advance, noting that for a period in 2023, when the Applicant took paid parental leave, he did not receive the allowance. However, it is evident that the Policy provides that the continued payment of the Technical Support Allowance is dependent on employees occupying their current position and remaining an active participant on the roster arrangement. This does not in turn mean that Technical Support Allowance could not, for example be determined in advance. It simply meant that if the Applicant did not endure the roster associated with AHTS or have to make himself available as prescribed by the Policy, he would not be compensated in accordance with the letter of 12 August 2020. This is because the Technical Support Allowance was provided to compensate the Applicant for the hardships of the AHTS.
The Technical Support Allowance was not excluded by the operation of s 332(2). It was not consideration to meet some sort of expense incurred that is open to be characterised as reimbursement. The payment was expressly calculated as a percentage of the Applicant’s base salary, rather than having any connection to any ‘actual cost’ that he may have incurred or would likely incur. It was a guaranteed payment under the Employment Contract of a fixed amount that could be determined in advance. Sections 332(2)(c) and (d) are not relevant in the circumstances.
Based on the abovementioned reasons, I have found that the Technical Support Allowance forms part of the Applicant’s ‘earnings’, as that term is understood for the purposes of the Act (see s 332(1)) and therefore the Applicant’s earnings exceed the high income threshold.
3.2 Award coverage
The Respondent submitted that as a business it was mainly engaged in the energy and natural resources industry and that the role the Applicant previously occupied whilst employed was neither an engineering nor scientific role. Insofar as the Professional Employees Award 2020[19] (PE Award) was relevant, the Respondent pressed that the Applicant had not been covered by this award.
The PE Award extends coverage to both industry and occupational groupings as follows:
4.1 This industry and occupational award covers employers throughout Australia as follows:
(a) Employers throughout Australia with respect to their employees performing professional engineering and professional scientific duties who are covered by the classifications in Schedule A —Classification Structure and Definitions of the award and those employees.
(b) Employers throughout Australia principally engaged in the information technology industry, the quality auditing industry or the telecommunications services industry and their employees who are covered by the classifications in Schedule A —Classification Structure and Definitions.
(c) Employers throughout Australia principally engaged as medical research institute s with respect to their employees performing professional medical research duties who are covered by the classifications in Schedule B —Medical Research Employees and those employees.
Based on the dearth of evidence before me and having considered the submissions made, I find that the PE Award did not cover the Applicant whilst employed.
Conclusion
The Applicant is a not a person protected from unfair dismissal and accordingly his application must be dismissed. An Order issues concurrently with this decision.
DEPUTY PRESIDENT
Appearances:
S Ranasinghe, the Applicant
K Stewart of the Respondent
Hearing details:
2024
Perth (by video):
7 August.
[1] Fair Work Act 2009 (Cth), s 382.
[2] Digital Hearing Book, 47 (DHB).
[3] PR778086.
[4] Witness Statement of Kathleen Stewart, 167 (Stewart Statement).
[5] Ibid.
[6] DHB (n 2) 134.
[7] Ibid 160.
[8] Ibid 161-162.
[9] Stewart Statement (n 4) 167.
[10] Sam Technology Engineers Pty Ltd v Bernadou (2018) 275 IR 419 (Sam Technology).
[11] Ibid 432 [54].
[12] Ibid.
[13] Ibid 435 [65].
[14] Ibid 435–6 [65].
[15] [1904] AC 349.
[16] Sam Technology (n 10) 433 [58], quoting ibid 351.
[17] Ibid 436 [66].
[18] Zappia v Universal Music Australia Pty Ltd[2012] FWA 3208, [8] (Zappia).
[19] MA000065.
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