Welch v Erica's Aesthetics Pty Ltd

[2017] ACAT 68

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

WELCH v ERICA’S AESTHETICS PTY LTD (Civil Dispute) [2017] ACAT 68

XD 1232/2016

Catchwords:             CIVIL DISPUTE – jurisdiction of the Tribunal to hear and determine claims for enforcement of a contract of employment – source of the right to be enforced – no jurisdiction where rights or entitlements to be enforced arise under the Fair Work Act 2009 (Cth) or an award or enterprise agreement made under that Act

Legislation cited:      ACT Civil and Administrative Tribunal Act 2008 ss 16 17

Fair Work Act 2009 (Cth) ss 12, 13, 14, 26, 27, 535, 539, 545

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 10

Subordinate
Legislation cited:      Fair Work Regulations 2009 (Cth) regs 3.36, 3.44. 3.45

Hair and Beauty Industry Award 2010 (Cth) cl 33.1

Cases cited:Byrne & Frew v Australian Airlines Limited (1995) 185 CLR 410

Ervin v Smipat Pty Ltd t/as L J Hooker Burleigh Heads [2013] QCATA 153
Ford v Thexton trading as Family Legal and Thexton Lawyers [2014] QCATA 180
JF Hodge Pty Ltd v Brown [2013] QCATA 36
Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 186
McGarry v Coates [2013] QCATA 32
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
R v Moodie; Ex parte Mithen (1977) 17 ALR 219
Rail Corporation of NSW v Nebax Constructions [2012] NSWSC 6
Wall v The Queen; Ex parte King Won (No 1) (1927) 39 CLR 245

Tribunal:                  Presidential Member G McCarthy

Date of Orders:  11 September 2017

Date of Reasons for Decision:         11 September 2017

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1232/2016

BETWEEN:

EMMA WELCH

Applicant

AND:

ERICA’S AESTHETICS PTY LTD

Respondent

TRIBUNAL:  Presidential Member G McCarthy

DATE:11 September 2017

ORDER

The Tribunal orders:

1.The application is dismissed.

………………………………..

Presidential Member G McCarthy

REASONS FOR DECISION

1.The applicant, Ms Welch, is a former employee of the respondent, Erica’s Aesthetics Pty Ltd. Ms Welch was employed as the manager of the respondent’s Kingston salon. She commenced work in July 2013 on a permanent part-time basis, and later worked on a full-time basis. She resigned from her employment in February 2016.

2.The applicant contends that at the time of her resignation she had accrued leave entitlements in excess of 200 hours, evidenced by a statement to that effect on her payslips, and that the respondent has failed to pay out those entitlements. She seeks an order that the respondent pay her an amount referable to the value of the entitlements.

3.The respondent came to the hearing prepared to defend the claim on the basis that the applicant did not have any accrued leave at the time she resigned and that the statements on the payslips were incorrect.

4.The respondent did not query the jurisdiction of the ACT Civil and Administrative Tribunal (the ACAT) to hear and determine the matter, but that is not to the point. The ACAT is a subordinate body established under statute and may order only that which it is empowered to order under statute. The rule of law demands that the ACAT be vigilant to ensure that it acts within power.

5.In Wall v The Queen; Ex parte King Won (No 1)[1] the High Court per Isaacs J said:

It is very clearly settled that, where the Legislature creates a new jurisdiction, dependent on the existence of stated facts, and confers the jurisdiction of finding the existence or non-existence of those facts on a named and selected tribunal, it is not within the competency of another tribunal, however high, to arrogate to itself the inquiry as to whether those facts exist or not, unless in some way authorized by the Legislature.

[1] (1927) 39 CLR 245, 257

6.Agreement, silence or acquiescence of parties cannot confer jurisdiction on the ACAT beyond that which statute gives.[2] Nor can it accept jurisdiction that the parties request it exercise. The ACAT must reach its own independent conclusion on the issue.[3]

[2] Rail Corporation of NSW v Nebax Constructions [2012] NSWSC 6 at [35]; McGarry v Coates [2013] QCATA 32 at [6]

[3] R v Moodie; Ex parte Mithen (1977) 17 ALR 219, 225; Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 186, 195

7.Mr Reid, solicitor for the applicant, submitted that the ACAT has jurisdiction in this matter because the applicant’s claim “is simply a pure common law contract claim.”[4] Mr Reid relied on section 17 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act), which provides:

a person may make a civil dispute application to the tribunal.

[4] Transcript of proceedings, page 3, lines 20-22

8.A ‘civil dispute application’ is defined in section 16 of the ACAT Act and includes “a contract application”.

9.Mr Reid relied on the applicant’s payslips to contend that the respondent:

…was contractually bound, as evidenced by the pay slips, to pay the applicant for[her] accrued leave.[5]

[5] Transcript of proceedings, page 4, lines 23-24

10.In answer to my enquiry about the contract that conferred the applicant’s leave entitlements, Mr Reid advised that there was or may have been a written contract of employment but that his client has never seen a signed copy.[6] Mr Reid stated that the applicant was engaged under the Hair and Beauty Industry Award 2010 (the Award),[7] and that her leave entitlements arose under the Award.[8]

[6] Transcript of proceedings, page 3, line 33; page 17, lines 24-25

[7] The transcript of proceedings, page 17, line 26, records Mr Reid stating that the applicant was engaged under the Health and Beauty Modern Award, 2010. I presume this to be an error in the transcript in circumstances where there is no such award. I presume the applicant was engaged under the Hair and Beauty Industry Award 2010 which was the applicable modern award

[8] Transcript of proceedings, page 7, line 3

11.He submitted, however, that it was not necessary to consider the Award or any provision of the Fair Work Act 2009 (the FW Act) under which the Award was made. It was sufficient, he submitted, to rely on the payslips provided to the applicant which, he said, recorded her leave entitlements that, he said, remain unpaid. As he put it:

The documents are prepared by the respondent and are saying to the applicant, with her payslips, this is the record that I have of your accrued leave … Nothing could be simpler.[9]

[9] Transcript of proceedings, page 4, lines 35 - 41

12.From there, he submitted, the ACAT can order the respondent to pay those entitlements as a contractual entitlement under section 16(a) of the ACAT Act.

13.Regarding the reliability of the payslips, Mr Reid referred to section 535 of the FW Act under which the respondent was required to make and keep records, including the kinds of records described in Part 3-6, Division 3 of the Fair Work Regulations (the FW Regulations).

14.Under regulation 3.36 of the FW Regulations, the respondent was required to make and keep records concerning the applicant’s leave. Under regulation 3.44, the respondent was required to ensure that a record it was required to keep was not false or misleading to the respondent’s knowledge. Regulation 3.45 specifies the mandatory content of a payslip, although this does not include information about leave entitlements. Mr Reid submitted that by reference to these statutory obligations, and that the applicant’s payslips stated her leave entitlements, I can and should presume the payslips to be accurate.

15.At hearing, I queried with Mr Reid how I could determine whether any payout of the applicant’s alleged leave entitlements had been underpaid, overpaid or not paid without reference to the source of the entitlements. In answer, Mr Reid submitted:

With respect, I’m not arguing from the point of view that she’s been overpaid or underpaid, what I’m saying is there is an acknowledgement prepared by the respondent that the applicant is owed a certain number of hours of leave. The applicant has ... happily accepted the evidence on the payslips [as stating] … what her entitlements were, her accrued leave entitlements.[10]

[10] Transcript of proceedings, page 5, lines 1-7

16.Mr Reid noted the respondent’s submission (with reliance on its books and records) that the applicant took her leave entitlements from time to time whilst employed so that there was a “zero accrued value”[11] when the applicant resigned, but submitted that the evidence of the respondent is a “shambles”[12] and does not displace the respondent’s primary and best record of the applicant’s leave entitlements, namely the hours of accrued leave “contractually admitted”[13] on her payslips.

[11] Written submissions of the applicant dated 14 July 2017 at [6]

[12] Written submissions of the applicant dated 14 July 2017 at [9]

[13] Written submissions of the applicant dated 14 July 2017 at [10]

17.In my view, the submission was misconceived at several levels.

18.A payslip is a representation by an employer to an employee of the employee’s periodic entitlements including accrued leave as at the date of the payslip. However, in my view a payslip does not, by itself, prove the truth of any of the representations stated on the payslip.

19.For example, if the wages paid to an employee was in dispute, the amount paid would be proved by the parties’ bank statements, not a representation on a payslip. In the same way, if an employee’s wage entitlement was in dispute, it would be proved by the relevant provision in the employment contract and/or the applicable award, not a representation on a payslip.

20.The information stated on a payslip about an employee’s wages will be proved right or wrong, depending on the amount proved to have been paid and the employee’s wage entitlements proved under the contract or award.

21.In the same way, relevant to this case, the representations of accrued leave on the applicant’s payslips will be proved right or wrong depending on the amount of leave proved to have been taken and her legal entitlements to leave proved under the Award.

22.The representations on the applicant’s payslips might be relevant when quantifying the amount of leave taken or accrued and questions of misrepresentation might arise, but I reject the proposition that simply because her payslips stated an amount of accrued leave she was therefore entitled to the leave stated.

23.I have reached the same conclusion about the respondent’s statutory obligation to ensure that its records including its payslips are accurate to the best of the respondent’s knowledge. Compliance (or otherwise) with that obligation does not cause a statement of entitlement on a payslip to become an actual entitlement.

24.I also reject Mr Reid’s submission about the accuracy and reliability of the payslips. If the respondent’s records are a “shambles”, as he submits, why not also the payslips?

25.Where I am satisfied that the applicant’s leave entitlements must be determined by reference to the Award, the question arises whether the ACAT has jurisdiction to make that determination. I have considered the FW Act and the ACAT Act as possible pathways.

Eligible State or Territory court

26.Under clause 33.1 of the Award, the applicant’s annual leave “is provided for in the NES”, meaning the National Employment Standards.

27.The NES are set out in Part 2 – 2, Divisions 2 – 12, of Chapter 2 of the FW Act (comprised of sections 59 – 125 of the FW Act). The NES state the minimum standards that apply to the employment of national system employees. They cannot be displaced.[14]

[14] FW Act, section 61

28.Under section 13 of the FW Act, a national system employee is an individual so far as he or she is employed, or usually employed, by a national system employer. Under section 14 of the FW Act, a national system employer includes “a person who carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person employs, or usually employs, an individual in connection with the activity carried on in the Territory.”[15]

[15] FW Act, section 14(1)(f)

29.Applying sections 13 and 14 of the FW Act, it is clear that at all material times the applicant was a national system employee.

30.Under the NES, section 87(1), for each year of her service the applicant was entitled to four weeks of paid annual leave. If, when her employment ended, she had a period of untaken paid annual leave, the respondent was required under the NES, section 90(2), to pay her an amount that would have been payable to her had she taken that period of leave.

31.Section 44(1) of the FW Act provides that the respondent must not contravene a provision of the NES, and section 45 provides that the respondent must not contravene a provision of a modern award.[16]

[16] The Hair and Beauty Industry Award 2010 is a modern award

32.Sections 44 and 45 are “civil remedy provisions”.[17]

[17] FW Act, section 539

33.Regarding enforcement, section 545(3) of the FW Act provides:

3) An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:

a) the employer was required to pay the amount under this Act or a fair work instrument; and

(b) the employer has contravened a civil remedy provision by failing to pay the amount.

34.An eligible State or Territory court is defined in section 12 of the FW Act (the Dictionary to the FW Act) as follows:

eligible State or Territory court means one of the following courts:

(a) a District, County or Local Court;
          (b) a magistrates court;
          (c) the Industrial Relations Court of South Australia;
         (ca) the Industrial Court of New South Wales;

(d) any other State or Territory court that is prescribed by the regulations.

35.Paragraphs (a) – (ca) are clearly inapplicable. Regarding paragraph (d) of the definition, the FW Regulations do not prescribe any other court or tribunal to be an eligible State or Territory court. It follows that the ACAT is not empowered to order an employer, and in this case the respondent, to pay untaken paid annual leave owing to a former employee, and in this case the applicant, under the FW Act.

A contract application

36.The second possibility (relied on by the applicant) is that the ACAT has jurisdiction under sections 16(a) and 17 of the ACAT Act to determine the applicant’s claim for unpaid leave entitlements as a “contract application”.

37.A question is whether the FW Act, as a Commonwealth Act, leaves scope for the ACAT Act to be interpreted in that way. Relevant to this possibility, section 26(1) of the FW Act provides:

26 Act excludes State or Territory industrial laws

(1) This Act is intended to apply to the exclusion of all State or Territory industrial laws so far as they would otherwise apply in relation to a national system employee or a national system employer.

38.A “State or Territory industrial law” is defined in section 26(2) as meaning any of the kinds of laws described in section 26(2)(a) – (h). A question arising, therefore, is whether the ACAT Act is such a law.

39.In Ford v Thexton trading as Family Legal and Thexton Lawyers,[18] Judge Horneman-Wren and Judicial Member Cullinane QC sitting as the Queensland Appeal Tribunal considered that question in the context of the jurisdiction of the Queensland Civil and Administrative Tribunal (the QCAT) to hear and determine a “minor civil dispute” under sections 8 – 11 of the Queensland Civil and Administrative Tribunal Act (the QCAT Act). They concluded that the QCAT Act is not a law excluded by section 26 of the FW Act.

[18] [2014] QCATA 180

40.It would appear (although I make no finding) that the ACAT Act is similarly not a law excluded by section 26 of the FW Act, but that does not, by itself, mean the ACAT has power (or jurisdiction) to hear the applicant’s claim as a contract application.

41.In Ford v Thexton the Appeal Tribunal noted the importance of understanding “the true nature, and legal source, of the claimed entitlement.”[19] The Appeal Tribunal stated:

[13] Often a contract of employment will not expressly provide for the wages to be paid, and the rate of wages payable may be fixed by an award. The award may also determine other entitlements payable as incidents of the employment relationship. It has been observed by the High Court of Australia that:

... It is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award and ... the award operates with statutory force to secure those terms and conditions.[20] -

[14] In such circumstances, the statutory right to the payment of wages (and to other conditions fixed by the award) is imported into the employment relationship. The employment relationship is contractual in origin; but the entitlement to those award wages and other conditions remains statutory. It is the award which is the source of the entitlements, not the contract.

[19] [2014] QCATA 180 at [5]

[20] Citing Byrne & Frew v Australian Airlines Limited (1995) 185 CLR 410 at 419 at 420 – 421 per Brennan CJ, Dawson and Toohey JJ

42.In Ford v Thexton the Appeal Tribunal therefore concluded:

…where the debt (or other entitlement) owes it origin to statute, the statute must be examined ‘to determine whether it contains anything inconsistent with recovery by civil action’.[21] Such an examination of the FWA compels the conclusion that civil recovery of entitlements created by, or under, that Act, is prohibited.

The legislative scheme of the FWA is to create certain terms and conditions of employment; impose obligations to observe those terms and conditions; and to provide mechanisms of enforcement of those obligations. [22]

[21] Citing Byrne & Frew at 419

[22] [2014] QCATA 180 at [32] – [33]

43.In short, where the source of an entitlement is the FW Act, or an award made under the FW Act, the QCAT does not have jurisdiction to enforce the entitlement.

44.Regarding annual leave, the Appeal Tribunal stated:

Mr Ford’s claim for annual leave arises under the NES in the FWA. His contract is silent on the issue.

As such, for the reasons set out above, it was never a claim which was recoverable other than as provided for in the FWA. QCAT had no jurisdiction in respect of the claim.[23]

[23] 2014] QCATA 180 at [68] – [69]

45.In Ervin v Smipat Pty Ltd t/as L J Hooker Burleigh Heads,[24] Justice Wilson, then President of the QCAT, came to the same conclusion although by a different pathway. In that case, his Honour considered two questions referred to the Appeal Tribunal:

(a)Is the QCAT an eligible State or Territory Court within the meaning of section 12 of the FW Act? and

(b)Is the QCAT Act a law which deals with claims for enforcement of contracts of employment within the meaning of section 27(2)(o) of the FW Act?

[24] [2013] QCATA 153

46.His Honour answered the first question in the negative, finding that an eligible State or Territory court is defined in section 12 of the FW Act, exclusively, and that the definition does not extend to the QCAT. The Appeal Tribunal in Ford v Thexton agreed.[25] For the reasons set out in paragraphs 26 – 35 above, the same is true for the ACAT.

[25] 2014] QCATA 180 at [30]

47.Regarding the second question, his Honour proceeded from the implicit assumption in the question that the QCAT Act is a State industrial law for the purposes of section 26 of the FW Act,[26] and focused upon whether the operation of the QCAT Act is nevertheless preserved by section 27 of the FW Act which provides that “section 26 does not apply” to any of the laws listed in section 27. In particular, under section 27(1)(c), section 26:

does not apply to a law of a State or Territory so far as the law deals with any non—excluded matters. ...

[26] The Appeal Tribunal in Ford v Thexton at [26] said that the assumption was incorrect

48.For the purposes of section 27(1)(c), the non-excluded matters are listed in section 27(2) and include, under section 27(2)(o), claims for enforcement of contracts of employment save for an exception not here relevant.

49.The question in Ervin v Smipat was whether section 27(2)(o) preserved the QCAT’s jurisdiction to hear and determine a minor civil dispute arising out of a contract of employment. Likewise, the question in this case is whether section 27(2)(o) preserves the ACAT’s jurisdiction to hear and determine the applicant’s ‘contract application’ arising out of her contract of employment with the respondent.

50.Justice Wilson referred to an earlier decision of the Queensland Appeal Tribunal in JF Hodge Pty Ltd v Brown[27] where the presiding member, Dr J R Forbes, stated:

It is true that the FWA, in a list of State laws unaffected by it, refers to “claims for enforcement of employment contracts”, but in my respectful view that provision should be read strictly as a residuary clause preserving State jurisdiction over contracts of employment not governed by an FWA award. This is not an academic point; in practice, and despite the wide embrace of the FWA, such arrangements are not uncommon.

[27] [2013] QCATA 36 at [14]

51.Justice Wilson came to a similar conclusion. His Honour cited Project Blue Sky Inc v Australian Broadcasting Authority[28] as authority for the proposition that the FW Act must be interpreted in a way that will best achieve its purposes. Applying that principle, he was not persuaded that section 27(2)(o) should be interpreted so broadly as to permit the QCAT’s general jurisdiction to deal with a minor civil dispute as including jurisdiction to enforce a contract of employment. His Honour was not persuaded that such a broad interpretation would be consistent with the language and purpose of all of the provisions of the FW Act. Justice Wilson stated:

In my opinion … the courts referred to in the FWA form an exhaustive list of appropriate forums in which an employee may choose to commence proceedings against current and former employers.[29]

[28] (1998) 194 CLR 355, 381

[29] [2013] QCATA 153 at [30]

52.In Ford v Thexton, the Appeal Tribunal stated that “the essence” of Justice Wilson’s finding in Ervin v Smipat was that the FW Act:

provides, exclusively, for the bodies through which entitlements arising under the [FW Act] can be enforced.

53.I have set out the reasoning of the Appeal Tribunal in Ford v Thexton and Ervin v Smipat in some detail because, in my view, it applies equally to the ACAT Act. It follows that the ACAT does not have jurisdiction under sections 16(a) and 17 of the ACAT Act to hear and determine a claim for entitlements under the FW Act or under an award or enterprise agreement made under that Act.

54.I find that the ACAT does not have jurisdiction under sections 16(a) and 17 of the ACAT Act to hear and determine the applicant’s claim for alleged unpaid leave entitlements in circumstances where any leave entitlements arose under the Award.

55.In Ford v Thexton, the Appeal Tribunal concluded that claims for debts or liquidated demands arising from a contract of employment, but not the FW Act or any instrument made under it (for example an award), can be recovered in the QCAT in its minor civil dispute jurisdiction.[30]

[30] [2014] QCATA 180 at [39] – [52]

56.Whilst not relevant in this case because Mr Reid accepts that the applicant’s leave entitlements arose under the Award, the reasoning in Ford v Thexton suggests that the ACAT might similarly have jurisdiction to hear a claim arising solely from a contract of employment. These are not issues for me to decide in this case.

………………………………..

Presidential Member G McCarthy

HEARING DETAILS

FILE NUMBER:	XD 1232/ 2016
PARTIES, APPLICANT:	Emma Welch
PARTIES, RESPONDENT:	Erica’s Aesthetics Pty Ltd
COUNSEL APPEARING, APPLICANT	Mr R Reid
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Think First Act Last
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBER:	Presidential Member G McCarthy
DATE OF HEARING:	14 July 2017