Tiago v John Hopkins Property Pty Ltd

[2014] FCCA 2822

FEDERAL CIRCUIT COURT OF AUSTRALIA

TIAGO v JOHN HOPKINS PROPERTY PTY LTD [2014] FCCA 2822

Catchwords:
INDUSTRIAL LAW – Application under s.548 of the Fair Work Act 2009 (Cth) – alleged failure to pay commission on termination of employment – Clause 17 of the Real Estate Industry Award 2010 [MA000106] considered – whether contract of employment applied – whether contract term
‘specified otherwise’ for the purpose of cl.17.3(b) of the Award – application dismissed.

Legislation:

Estate Agents Act 1980 (Vic)

Fair Work Act 2009 (Cth)

Real Estate Industry Award 2010 [MA000106], cl.17

Mark Irving, The Contract of Employment (1^st ed, 2012)

Applicant: ISABEL TIAGO

Respondent: JOHN HOPKINS PROPERTY PTY LTD

File Number: MLG 1686 of 2014

Judgment of: Judge Whelan

Hearing date: 14 November 2014

Date of Last Submission: 14 November 2014

Delivered at: Melbourne

Delivered on: 5 December 2014

REPRESENTATION

Counsel for the Applicant: Applicant in person

Counsel for the Respondent: Mr Williams as Managing Director of the Respondent

ORDERS

1. The Application – Fair Work Division filed by the Applicant on

   
   

   19 August 2014 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1686 of 2014

ISABEL TIAGO

Applicant

And

JOHN HOPKINS PROPERTY PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application brought under the Small Claims provisions

   
   

   of the Fair Work Act 2009 (Cth) (“the Act”) by the Applicant

   
   

   Ms ISABEL TIAGO (“the Applicant”). The Applicant claims that, contrary to the provisions of the Real Estate Industry Award 2010 [MA000106] (“the Award”), and in particular cl.17 of that Award,

   
   

   she was not paid commission owing to her at the time

   
   

   that her employment terminated with the Respondent, John Hopkins Property Pty Ltd (“the Respondent”).

2. In response to the application,[1] the Respondent states that the employment agreement which covered the Applicant’s employment included a provision which expressly dealt with the payment of commissions and other bonuses after termination of the employment. The Award deals with the payment of commission after the termination of employment in cl.17.3 of the Award. In particular, cl.17.3(b) of the Award provides:

   Unless the written agreement specifies otherwise, the portion of the commission referred to in clause 17.3(a) must be the same as that with which the employee would have been entitled to be credited if employment had continued.[2]

   [1] Application – Fair Work Division filed by Isabel Tiago on 19 August 2014.

   [2] Real Estate Industry Award 2010 [MA000106], p.18 at cl.17.3(b).

3. The Respondent states that, as the employment agreement

   
   “specifies otherwise”

   ,[3] no commission was therefore payable after the termination of the employment.

   [3] Ibid.

Background

1. On 26 April 2012, the Applicant received a letter of offer for the position of Graduate Property Investment Advisor with the Respondent (“letter of offer”).[4] The letter of offer contained certain details about the remuneration the Applicant would receive should she accept an offer of employment. Those provisions included a base salary, retainer, and commission. The letter also included a paragraph headed ‘Induction Program’. It stated the following:

   It is usual standard for a comprehensive Induction Program to be carried out at JHG for your first week of employment. This is to ensure you have a full understanding of the history, philosophies and workings of all departments at JHG at the outset of your employment. An Induction Program will be presented to you closer to your commencement date in this regard.[5]

   [4] Form 5 – Small claim under the Fair Work Act 2009 filed by Isabel Tiago on 19 August 2014, at Annexure A.

   [5] Ibid, at p.2.

2. The letter also contained a paragraph headed ‘Contract’ which stated “[y]our contract and other formal documentation will be arranged during your first few weeks of employment”.[6]

   [6] Ibid, at p.4.

3. The Applicant was requested to sign both copies of the letter of offer if she agreed to the terms and return one copy to the office of the Respondent. It is uncontested that the Applicant signed the letter of offer on 26 April 2012.

4. It would appear from the evidence that the Applicant actually commenced employment on 7 May 2013. An email produced by

   
   

   Mr MICHAEL WILLIAMS, Managing Director of the Respondent (“Mr Williams”) from Ms TAHLI STRAUGHAIR, who at the time was the HR Coordinator, stated:

   In accordance with John Hopkins Group procedure, all new employees are taken through an induction program at the beginning of their employment to ensure they have a full understanding of the company. As part of this induction program, I confirm I met with Isabel on 7^th May 2013 and went through the Employee Handbook in detail, which outlines all policies and procedures of the company. I confirm I explained to Isabel the termination process of John Hopkins Group (as detailed in the Employee Handbook), which includes information relating to the non-payment of commission following an employee’s termination, given the employee is no longer servicing the client. Isabel signed the Employee Handbook on 7^th May 2013, indicating she understood and agreed to all policies and procedures within.[7]

   [7]

5. Mr Williams told the Court that the typical process was that a

   
   

   letter of offer was provided and once that was confirmed, the employee is provided with the employment contract. He stated that the company was unable to find the original employment contract given to the Applicant in May 2012. He suggested that it was sent to the Applicant and not returned. The normal process included the HR Coordinator providing the employee with a copy of the employment contract during the induction process.

6. The Applicant initially denied having received a copy of the

   
   

   Employee Handbook but subsequently accepted that it was her signature on a document which indicated that she had read and understood the John Hopkins Group policies and which was dated

   
   

   7 May 2012.

7. In June 2013, the Applicant was the subject of a review of her remuneration and position. She sought to negotiate an increase in her retainer. Following discussions, it was agreed that the Applicant should be offered a new remuneration package and a new title of property advisor. On 27 June 2013, the Applicant was sent a letter confirming the increase in the retainer and some new key performance indicators that were to apply (“second letter of offer”).[8] The second letter of offer stated that the arrangement would be effective from the next pay period which was 19 July 2013.[9] The Applicant was requested to sign and return one original executed copy of the second letter of offer if she agreed to the terms and conditions detailed therein. It is not disputed that, as from 19 July 2013, and until the time of her resignation, the Applicant was paid the retainer as set out in the second letter of offer.

   [8] Letter from Pip Almond, HR Coordinator to Isabel Tiago dated 27 June 2013 and titled ‘Remuneration and Position Review – Isabel Tiago’.

   [9] Ibid.

8. On 12 August 2013, the HR Coordinator for the Respondent,

   
   

   Ms PIP ALMOND (“the HR Coordinator”), sent an email to the Applicant in the following terms:

   I have your Employment Contract finalised, but I was wondering if you needed to talk about the Updated Remuneration letter I gave you a couple of weeks ago to consider? If not, are you able to please sign and return to me?

   I’ll bring up your Contract either this afternoon or in the morning.[10]

   [10] Email from Pip Almond to Isabel Tiago dated 12 August 2013 4:39 PM with the subject line ‘Employment Contract’.

9. The Applicant initially stated that she did not receive this email or the second letter of offer and that she had not received the employment agreement. She later stated that she could not recall whether she had received the second letter of offer, although she “probably did see” it.[11]

   
   

   The Applicant stated that she “didn’t recall signing it”.[12]

   [11] Transcript of Proceedings, 14 November 2014, p.5 at line 44.

   [12] Ibid, at line 47.

10. On 12 August 2013, the Applicant sent the following email to the

    
    

    HR Coordinator in response to her email:

    Sorry, I have been so busy with work that I have forgotten about it. It is still sitting on my desk along with an annual leave form I need to give you :-O

    I will get it all to you tomorrow.d [sic][13]

    [13] Email from Isabel Tiago to Pip Almond dated 12 August 2013 5:14 PM with the subject line ‘RE: Employment Contract’.

11. The Applicant stated that she did not sign the second letter of offer or return it to the HR Coordinator. She stated initially that she had not received the employment agreement. The Applicant later stated that:

    … I did know the envelope was sitting on my desk and I didn’t read it and I resigned that week. So that’s why it never got opened, that’s why I never looked at it and that’s why there was never a signed copy, because I didn’t actually read it.[14]

    [14] Transcript of Proceedings, 14 November 2014, p.7 at lines 24-27.

12. The employment agreement which was attached to a letter dated

    
    

    13 August 2013[15] contained the following clause:

    [15] Letter from Pip Almond to Isabel Tiago dated 13 August 2013 titled ‘Employment Agreement’.

    11. TERMINATION OF EMPLOYMENT

    …

    11.6On termination of employment, the Employee will forego any commissions or bonus owing to him/her which would have been due and payable following the formal date of termination. This includes any back half property commission, ongoing trail commission, performance bonus or any post dated payments whatsoever. All commissions owing to an Employee up to the date of termination will be paid to the Employee in their final salary and the Employee is not entitled to any other claim of payment whatsoever, unless otherwise agreed upon in writing by the Employer.

    
    

    The Employee undertakes not to make any claims or demands for or issue any legal proceedings with respect to any unpaid monies following termination.[16]

    [16] Employment Agreement between John Hopkins Property Pty Ltd and Isabel Tiago, pp.10-11 at cl.11.6.

13. Mr Williams stated that the above clause was not a new condition which only applied to the contract offered to the Applicant in

    
    

    August 2013, but was part of all employment contracts when an employee commenced employment. Mr Williams stated that the only changes to the Applicant’s employment conditions were those that related to the amount of her retainer and the Key Performance Indicators, otherwise the employment conditions were the same as what she was originally employed on and which were explained to her in 2012.

14. Mr Williams explained that part of the Respondent’s business was to recommend residential investment properties to clients. Most of the clients will purchase a residential investment property that is

    
    

    off-the-plan, not yet completed and ready, and there are two parts to the process. Part one is the property advisor, in this case the Applicant, giving advice to clients as to:

    ·How the property fits into a portfolio;

    ·The appropriateness of it;

    ·How property works; and

    ·Making a recommendation as an estate agent as to which property is most appropriate.

    In the first part, the client signs a contract. That contract is an

    
    

    off-the-plan contract. Mr Williams’ understanding was that that contract is effectively an option to purchase and 50% of the commission is paid on the signing of that contract and a 10% deposit being paid. The second half of the commission is not due until the property actually settles. It can be up to two or three years later that that property will be ready for completion and will settle.

    
    

    The second part of the process involves work within the team to:

    ·Meet with the clients;

    ·Explain the process;

    ·Attend pre and post-settlement meetings;

    ·Defect rectification;

    ·Help with finance; and

    ·Help the client through the process.

    Mr Williams submitted that, in terms of the Estate Agents Act 1980 (Vic), the option to purchase was not a legally enforceable binding contract; that part of the process had not yet occurred.

15. Mr Williams stated that all of the 50% of the up-front commission had been paid to the Applicant during her employment and there were no outstanding payments due to her with respect to those commissions. The second part of the settlement occurred, in some circumstances,

    
    

    15 months after the Applicant left her employment, and several of those have not yet settled. The Applicant was not employed during that process and therefore was not entitled to that payment.

Conclusions

1. The matter in dispute here concerns the application of cl.17 of the Award to the Applicant’s conditions of employment. That clause in its entirety reads as follows:

   17.Matters relating to commission, bonus or incentive payments

   17.1  Written agreements generally

   (a)Once a written agreement has been made with respect to clause 15—Payment by wages with commission, bonus or incentive payments or clause 16—Commission-only employment, any subsequent agreement to vary the employee’s commission, bonus or incentive payment arrangements must be evidenced in a further written agreement between the employer and the employee. Provided that where an employee agrees to a change in his or her commission, bonus or incentive arrangement, the employee will be entitled to receive sales commission, bonus or incentive payments calculated in accordance with the written agreement (whether made under this clause or clause 15) which was in force on the date the contract for sale or lease of property became legally enforceable

   (b)A signed copy of every written agreement regarding commission, bonus or incentive payment arrangements must be provided by the employer to the employee.

   17.2  Account to employee

   The employer must account to the employee in written form for any commission, bonus or incentive payment-based entitlement as it becomes due and payable in accordance with the terms of any written agreement.

17.3  Entitlements after employment ends

(a)The employee is entitled to be credited with a portion of the commission paid to the employer, incentive payments or bonuses calculated in accordance with a written agreement, for any transaction where:

(i) there was an existing legally-enforceable contract either:

·before the cessation of the employee’s employment;

·if the employer gave notice to the employee, during the notice period; or

·if the employer asked the employee to waive the notice period and the employee agrees, during the notice period to which the employee would have been otherwise entitled; and

(ii)    the employer is paid commission by the client in respect of the existing legally-enforceable contract referred to in clause 17.3(a)(i); and

(iii)   the commission payment referred to in clause 17.3(a)(ii) is cleared into the employer’s bank account.

(b)Unless the written agreement specifies otherwise, the portion of the commission referred to in clause 17.3(a) must be the same as that with which the employee would have been entitled to be credited if employment had continued.

17.4  Disputes

Where there is a dispute between the employer and the employee as to whether all or any part of the commission is due to an employee pursuant to clauses 15—Payment by wages with commission, bonus or incentive payments or 16—Commission-only employment, the matter will be dealt with in accordance with clause 9—Dispute resolution.

17.5  Calculation of NES entitlements

(a)Any commission entitlement calculated in accordance with a commission-only agreement may also allow for annual leave and personal carer’s leave or any other entitlements under the NES to be paid in advance. Provided that the monetary component for each of those entitlements must always be in addition to the minimum commission-only rate.

(b)Any inclusions as referred to in clause 17.5(a) must be clearly set out in a written agreement.

(c)The base rate of pay in relation to entitlements under the NES for an employee, who is paid on a commission-only basis, is the minimum wage in clause 14.1 for the employee’s classification level.

(d)The full rate of pay in relation to entitlements under the NES for an employee, who is paid on a commission-only basis, is:

(i) the minimum wage in clause 14.1 for the employee’s classification level; or

(ii)    the employee’s average weekly remuneration over the 12 months (or, if the employee has been employed less than 12 months, that period) immediately prior to when the full rate of pay is to be calculated,

whichever is the greater.[17]

[17] Real Estate Industry Award 2010 [MA000106], pp.17-19 at cl.17.

1. The Applicant’s argument relies on essentially two premises:

   ·First, that the letter of offer dated 26 April 2012 constituted the entirety of the contract of employment; and

   ·Second, that she had not signed, at the time of the termination of the employment, the employment agreement which was attached to the letter of 13 August 2013.

2. The difficulty with that position is that the letter of offer clearly contemplates and indicates that there will be a contract of employment which it is intended the parties should execute. Further, that part of the letter of offer under the heading ‘Commission’ states that the payment of commission is paid in respect of the employee meeting their obligations and carrying out the duties as per the position description.[18] The letter of offer itself does not contain a position description, but the employment agreement of 13 August 2013 clearly does. It is reasonable to assume that the letter of offer of 26 April 2012 was only part of the terms under which the Applicant was engaged and that there was a contract which set out the position description.

   [18] Form 5 – Small claim under the Fair Work Act 2009 filed by Isabel Tiago on 19 August 2014, at Annexure A.

3. In addition, the Employee Handbook specifies:

   In addition to this handbook, you will receive an

   
   

   Employment Contract. Your Employment Contract sets out the Terms and Conditions of your employment including your job description. Please keep your Employment Contract in a safe place for future reference. The Employee Information Handbook also forms part of your Employment Contract. Any breaches of the Employee Information Handbook or your Employee Contract may result in disciplinary action and/or dismissal.[19]

   [19] John Hopkins Group Employee Handbook at p.8.

4. I am satisfied that it is more probable than not that there was an employment contract which dealt with matters, including the Applicant’s job description and other matters relating to the terms and conditions of her employment, but which the Applicant did not sign and return to the Respondent.

5. The Applicant, when before the Court, was reluctant to concede that she had received any documentation from the Respondent and only agreed that she had done so when evidence was produced indicating that this was the case. I am therefore satisfied that it is more probable than not that the Applicant did receive an employment contract in

   
   

   May 2012 and that this contract, along with the Employee Handbook and the Award, governed the conditions of her employment.

6. In June 2013, arising from a review of the Applicant’s remuneration and position, there was a variation to her contract agreed. Part of that variation included an increase in her retainer which was payable from 19 July 2013. It is accepted that the Applicant received that increase from 19 July 2013. The fact that she signed neither the second letter of offer referred to by the HR Coordinator as the ‘Updated Remuneration Letter’,[20] nor the contract, which I accept was delivered to her on

   
   

   13 August 2013, does not mean that the other contractual terms did not apply to her.

   [20] Email from Pip Almond to Isabel Tiago dated 12 August 2013 4:39 PM with the subject line ‘Employment Contract’.

1. An employee may indicate agreement to the terms of a contract by taking the benefits offered. The employee’s intent is ascertained using the ordinary objective approach in contract:

   [T]he ultimate issue is whether a reasonable bystander would regard the conduct of the [employee], including his or her silence, as signalling to the [employer] that its offer has been accepted (footnote omitted).[21]

   [21] Mark Irving, The Contract of Employment (1^st ed, 2012), p.103 at para.3.26.

2. The general principle is that the performance of a contract after the receipt of an offer is a means of accepting the offer by conduct.

   
   

   In this case, the Applicant accepted the increase in retainer and I am satisfied, on 12 August 2013, that she indicated she would sign the second letter of offer. I am therefore satisfied that, at the time that the Applicant ceased her employment with the Respondent, the terms of the contract offered to her, dated 13 August 2013, were applicable.

3. With respect to the provision of cl.17 of the Award, the Respondent contends the following:

   ·First, with respect to cl.17.1(a) of the Award, the contract entered into by the client at stage one of the process is effectively an option to purchase and not a legally enforceable contract for sale of property;

   ·Second, with respect to cl.17.3(a)(i) of the Award, there was therefore not an existing legally enforceable contract for sale in existence at the time of the cessation of the Applicant’s employment; and

   ·Third, cl.17.3(b) of the Award would apply in any event because the written agreement specifies that any commission or bonus owing, which would have been due and payable following the formal date of the termination, is foregone.

4. Clause 17.1(a) of the Award refers to the payment of commission calculated in accordance with the written agreement which was in force “on the date the contract for sale or lease of property became legally enforceable”.[22] The written agreement, in this case, deals with the calculation of commission in a schedule to the agreement.[23] The Court did not have before it an example of the contracts entered into by clients with respect to off-the-plan property. I accept, however, that a contract of that type, on its own, may only be an option to purchase and not a legally enforceable contract for sale. If such were the case and legal enforceability only arose at the second stage of the process then the written agreement between the employer and the employee would not be ‘in force’ on the date the contract for sale became legally enforceable, as the employment had terminated.

   [22] Real Estate Industry Award 2010 [MA000106], p.17 at cl.17.1(a).

   [23] Employment Agreement between John Hopkins Property Pty Ltd and Isabel Tiago, at pp.20-21.

5. If, however, such a contract is an “existing legally-enforceable contract” for sale within the meaning of cl.17.3(a)(i) of the Award,[24] I am satisfied that, by virtue of cl.11.6 of the employment agreement,[25] on termination of the employment, that agreement specifies that the employee will forgo any commissions which would have been due and payable following the formal date of termination.

   [24] Real Estate Industry Award 2010 [MA000106], p.18 at cl.17.3(a)(i).

   [25] Employment Agreement between John Hopkins Property Pty Ltd and Isabel Tiago, pp.10-11 at cl.11.6.

6. For these reasons, I am satisfied that the application in this matter should be dismissed.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Whelan

Associate: 

Date: 5 December 2014

Email from Tahli McClure to Michael Williams and Pip Middleton dated 13 November 2014
3:10 PM with the subject line ‘Statement’.