Wood v Semantic Software Asia Pacific Pty Ltd
[2021] FCCA 1006
•14 May 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Wood v Semantic Software Asia Pacific Pty Ltd [2021] FCCA 1006
File number(s): SYG 1054 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 14 May 2021 Catchwords: PRACTICE AND PROCEDURE – Industrial Law – application under r 15.30 of the Federal Circuit Court Rules 2001 (Cth) for orders based on admissions made by the respondent in an amended points of defence and admissions the respondent is taken to have made by not disputing facts stated in a notice to admit facts – whether the admissions are clear and unambiguous – whether on the basis of those admissions the respondent has contravened s 323(1) and s 44(1) of the Fair Work Act 2009 (Cth) – whether on the basis of the admissions it made the respondent failed to make 9.5% superannuation contributions in breach of a contract of employment – orders made. Legislation: Fair Work Act 2009 (Cth) ss 44, 61(3), 90(2), 117, 323(1), 340(1), 341, 543, 545(2)(b), 547(2)
Federal Circuit Court of Australia Act 1999 (Cth) ss 8, 15(a)
Federal Circuit Court Rules 2001 (Cth) rr 15.30, 15.31(1), 15.31(2)
Cases cited: Coote v Mainline Access Pty Ltd & Anor (No.3) [2019] FCCA 383
Moon v Mun [2013] NSWCA 217
Shop, Distributive and Allied Employees Association v Haridemos (No 2) [2021] FCCA 857
Number of paragraphs: 41 Date of hearing: 10 May 2021 Place: Sydney Counsel for the Applicant: Ms A Perigo Solicitor for the Applicant: Haywards Solicitors Solicitor for the Respondent: Mr S Gupta of Gupta & Co ORDERS
SYG 1054 of 2020 BETWEEN: GRAEME WOOD
Applicant
AND: SEMANTIC SOFTWARE ASIA PACIFIC PTY LTD ACN 134 067 691
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
14 MAY 2021
THE COURT DECLARES THAT:
1.The respondent contravened s 323(1) of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay to the applicant amounts totalling $231,901, being the amounts which, together with amounts the respondent did pay the applicant, were payable by the respondent to the applicant in relation to the performance of work for the years ending 30 June 2016, 30 June 2017, 30 June 2018, 30 June 2019, and the period 1 July 2019 to 25 November 2019, under the terms of a contract of employment recorded in a letter dated 18 August 2015 from the respondent to the applicant (Contract of Employment).
2.The respondent contravened s 44(1) of the FW Act by failing, contrary to s 90(2) of the FW Act, to pay to the applicant on the termination of his employment with the respondent annual leave entitlements of $11,736 that had accrued as at the date on which the applicant’s employment with the respondent had terminated.
3.The respondent is liable:
(a)to orders pursuant to s 545(2)(b) of the FW Act that the respondent pay to the applicant $231,901 and $11,736, which represent the loss the applicant suffered because of the contraventions identified in declarations 1 and 2 respectively; and
(b)to orders pursuant to s 547(2) of the FW Act that the respondent pay interest of $29,020.37 and $1,446.02 on the amounts of $231,901 and $11,736 respectively.
THE COURT ORDERS THAT:
4.Pursuant to s 545(2)(b) of the FW Act, within 21 days after the day on which these orders are pronounced the respondent pay to the applicant $274,103.39.
5.Pursuant to s 543 of the FW Act, the respondent specifically perform the term of the Contract of Employment under which the respondent agreed to pay 9.5% of the applicant’s gross salary into a superannuation fund by paying $45,845.15 to a superannuation fund nominated by the applicant by notice in writing to the respondent.
6.Subject to order 7 the respondent must make the payment required by order 5 by whichever of the following two days occurs last:
(a)a day being seven days after the day on which the applicant communicates the nomination to the respondent; or
(b)a day being 21 days after the day on which these orders are pronounced.
7.The time by which the respondent must make the payment required by order 5 may be extended if the applicant so agrees in writing, or if, on an application made pursuant to order 8, the Court extends the time by which such payment must be made.
8.The parties have liberty to apply on such notice as the circumstances warrant.
REASONS FOR JUDGMENT
INTRODUCTION
In this proceeding the applicant, Mr Wood, claims that on 25 November 2019 the respondent (Semantic) dismissed him from his employment in contravention of s 340(1) of the Fair Work Act 2009 (Cth) (FW Act) because Mr Wood exercised a “workplace right” within the meaning of s 341 of the FW Act. Mr Wood also claims that Semantic contravened s 323(1) of the FW Act by failing to pay to him in full amounts to which Mr Wood was entitled under his contract of employment; Semantic breached Mr Wood’s contract of employment by failing to pay into his superannuation fund amounts equal to 9.5% of his gross salary; and Semantic failed to pay Mr Wood amounts it ought to have paid under s 90(2) and s 117 of the FW Act.
On 11 March 2021 I set the matter down for hearing for two days on 10 and 11 May 2021. On 5 May 2021, however, Semantic applied to vacate the hearing of 10 and 11 May 2021, and for leave to file an amended points of defence and counter claim. In the course of that hearing Ms Perigo, counsel for Mr Wood, applied under r 15.30 of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) for orders based on admissions Semantic made or intended to make in the amended points of defence it sought leave to file, and also on admissions Semantic is taken to have made under r 15.31(2) of the FCC Rules by not disputing any of the facts stated in the notice to admit facts Mr Wood served on Semantic on 12 November 2020.
The application for an adjournment was resolved by my granting Semantic leave to file an amended points of defence, my vacating the hearing on 10 and 11 May 2021, but my ordering that on 10 May 2021 there be determined separately the question whether Mr Wood is entitled to declarations and orders on the basis of the admissions Semantic made in its amended points of defence, or the admissions said to arise by Semantic’s not disputing the notice to admit facts. On 10 May 2021 I heard submissions on whether, and if so to what extent, I should make orders pursuant to r 15.30 of the FCC Rules.
PRINCIPLES AND ISSUES
Whether I should make any orders based on Semantic’s admissions turns on the application of r 15.30 of the FCC Rules, which provides:
If an admission is made by a party, the Court may, on the application of another party, make an order to which the party applying is entitled on the admission.
An equivalent rule was considered by Barrett JA in Moon v Mun:[1]
[1] Moon v Mun [2013] NSWCA 217, at [40]-[43]
Two key points must be made about the court’s power to order judgment on admissions contained in pleadings: first, the admissions must be clear and unambiguous; and, second, the power is discretionary.
As to the first matter, it was said in Ellis v Allen [1914] 1 Ch 904 at 909 that judgment on admissions is permissible where “there is a clear admission of facts in the face of which it is impossible for the party making it to succeed”. The matter was put thus in Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503:
“A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted; he is not entitled to ask the Court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission.”
The discretionary nature of the power was referred to by this Court in Termijtelen v Van Arkel [1974] 1 NSWLR 525 and is consistent with the purpose of the power as explained by Barwick CJ in Re the Trade Marks Act 1955-1958 and the Registered Trade Marks “Certina” and “Certina DS” (1970) 44 ALJR 191 at 192:
“The power which the rule gives to a Justice in chambers must be exercised with great caution. . . . But in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense.”
The power to award judgment on admissions on the pleadings is properly exercisable only where the court can see that a clear and unanswerable case is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial. The evaluative question relevant to exercise of the discretion is whether it is just to award judgment without regard to the merits of the parties' contentions.
The following questions, therefore, arise:
(a)Has Semantic made clear and unambiguous admissions?
(b)To the extent (a) is answered in the affirmative, do those admissions establish Semantic contravened any provision of the FW Act or has otherwise failed to comply with its obligations under the contract of employment it made with Mr Wood?
(c)To the extent (b) is answered in the affirmative, what, if any, orders should be made?
I begin by identifying the admissions Semantic has made or is taken to have made.
SEMANTIC’S ADMISSIONS
The points of claim allege a number of causes of actions based on or arising out of Mr Wood’s contract of employment. Three of those causes of action are relevant to these reasons for judgment. The first is Semantic’s not paying to Mr Wood in full amounts Semantic was liable to pay to Mr Wood under his contract of employment. Mr Wood alleges as follows:
(a)From 27 July 2015 to January 2016 Semantic employed Mr Wood to work for four days of the week at an annual salary of $124,800, plus 9.5% superannuation.
(b)On or about 18 August 2015 Semantic provided to Mr Wood a contract of employment (Contract of Employment), and Mr Wood continued with his employment on the basis of its terms.
(c)From January 2016 until Mr Wood’s employment ended on 25 November 2019 Semantic employed Mr Wood to work five days a week at the annual salary of $156,000, plus superannuation.
(d)It was a term of the Contract of Employment that Mr Wood could elect to apply an amount of his gross salary (salary sacrifice) towards superannuation.
(e)In the year ended 30 June 2016:[2]
[2] In paragraphs 1-3 of the Notice to Admit Facts, it is stated that for the financial year ended 30 June 2016 Mr Wood was due to be paid a gross salary of $123,599; Mr Wood elected to make salary sacrifice payments to his superannuation fund; in a “pay as you go” statement for the year ended 30 June 2016 Semantic stated it paid Mr Wood a salary of $115,191 which included salary sacrifice payments of $8,408.
(i)Mr Wood elected to salary sacrifice $8,408 towards superannuation “in addition to compulsory superannuation payments required under the Superannuation Guarantee legislation”, but Semantic did not pay this amount to any superannuation fund;
(ii)by failing to pay the $8,408 to Mr Wood’s superannuation Semantic contravened s 323(1) of the FW Act; and
(iii)Mr Wood suffered loss, being Semantic’s failure to pay the $8,408 to his superannuation fund.
(f)For the year ended 30 June 2017:
(i)Mr Wood was due to be paid a gross salary of $156,000;
(ii)Mr Wood elected to make salary sacrifice payments to his superannuation fund “in addition to compulsory superannuation payments required under the Superannuation Guarantee legislation”;
(iii)in a “pay as you go” (PAYG) statement for that year Semantic stated it paid Mr Wood a salary of $129,999 which included salary sacrifice payments of $16,816;
(iv)Semantic failed to pay $16,816 to Mr Wood’s superannuation fund and, by so failing, Semantic contravened s 323(1) of the FW Act;
(v)Semantic also failed to pay to Mr Wood $26,001, being the difference between Mr Wood’s gross salary and the $129,999 the PAYG statement represented had been paid, including the superannuation salary sacrifice payments of $16,816; and by failing to pay the $26,001 Semantic contravened s 323(1) of the FW Act; and
(vi)by failing to pay the $16,816 and $26,001 Mr Wood suffered damage in the amount of $42,817.
(g)For the year ended 30 June 2018:
(i)Mr Wood was due to be paid a gross salary of $156,000;
(ii)Mr Wood elected to make salary sacrifice payments to his superannuation fund “in addition to compulsory superannuation payments required under the Superannuation Guarantee legislation”;
(iii)in a PAYG statement for that year Semantic stated it paid Mr Wood a salary of $103,279 which included salary sacrifice payments of $18,498;
(iv)Semantic failed to pay $18,498 to Mr Wood’s superannuation fund and, by so failing, Semantic contravened s 323(1) of the FW Act;
(v)Semantic also failed to pay to Mr Wood $52,721 being the difference between Mr Wood’s gross salary and the $103,279 the PAYG statement represented had been paid, including the superannuation salary sacrifice payments of $18,498; and by failing to pay the $52,721 Semantic contravened s 323(1) of the FW Act; and
(vi)by failing to pay $18,498 and $52,721 Mr Wood suffered damage in the amount of $71,219.
(h)For the year ended 30 June 2019:
(i)Mr Wood was due to be paid a gross salary of $156,000;
(ii)Mr Wood elected to make salary sacrifice payments to his superannuation fund “in addition to compulsory superannuation payments required under the Superannuation Guarantee legislation”;
(iii)in a PAYG statement for that year Semantic stated it paid Mr Wood a salary of $112,126 which included salary sacrifice payments of $20,180;[3]
[3] The particulars to paragraph 56 of the points of claim incorrectly allege that the PAYG statement stated that Semantic paid Mr Wood $91,946 including the salary sacrifice of $20,180. Paragraph 19 of the notice to admit facts states that the PAYG statement for 2019 stated Mr Wood “was paid a gross cash salary of $91,946 and, in addition, a reportable employer superannuation contribution of $20,180 (together totalling $112,126)”.
(iv)Semantic failed to pay $20,180 to Mr Wood’s superannuation fund and, by so failing, Semantic contravened s 323(1) of the FW Act;
(v)Semantic also failed to pay to Mr Wood $43,874 being the difference between Mr Wood’s gross salary and the $112,126 the PAYG statement represented had been paid, including the superannuation salary sacrifice payments of $20,180; and by failing to pay the $43,874 Semantic contravened s 323(1) of the FW Act; and
(vi)by failing to pay $20,180 and $43,874 Mr Wood suffered damage in the amount of $64,054.
(i)For the period 1 July 2019 to 25 November 2019:
(i)Mr Wood was due to be paid a gross salary of $65,000;
(ii)Mr Wood elected to make salary sacrifice payments to his superannuation fund “in addition to compulsory superannuation payments required under the Superannuation Guarantee legislation”;
(iii)Semantic paid Mr Wood only $19,597;
(iv)by failing to pay the balance of the $65,000, namely, $45,403, Semantic contravened s 323(1) of the FW Act; and
(v)Mr Wood suffered damage in the amount of $45,403.
The second cause or set of causes of action is based on Semantic’s failure to pay to Mr Wood’s superannuation fund amounts equal to 9.5% of Mr Wood’s gross salary. The points of claim allege that for each of the years ended 30 June 2016, 2017, 2018, and 2019, and the period 1 July 2019 to 25 November 2019, Semantic was required to pay to Mr Wood compulsory superannuation payments equal to 9.5 % of the gross amount Semantic was liable to pay to Mr Wood under the Contract of Employment (guaranteed superannuation payments). The points of claim allege, and the notice to admit facts states, that Semantic did not make these payments.
The third cause of action is based on Semantic’s not having complied with s 90(2) of the FW Act. Mr Wood alleges that when his employment ended he had accrued 148.6552 hours of annual leave, as a consequence of which he became entitled to be paid $11,736. Semantic did not, however, pay Mr Wood this amount and, for that reason, Semantic contravened s 44(1) of the FW Act.
I then turn to the notice to admit facts. The notice was served pursuant to r 15.31(1) of the FCC Rules, which provides that a party to a proceeding (first party) may by notice in accordance with the approved form ask another party (second party) to admit, for the proceeding, the facts or documents specified in the notice. Subrule 15.31(2) of the FCC Rules provides that if the second party does not within 14 days serve a notice on the first party disputing the fact or the authenticity of the document, the second party is taken to admit, for the proceeding only, the fact or the authenticity of the document. The notice to admit facts Mr Wood has issued states most of the facts alleged in the points of claim. Semantic has not served on Mr Wood a notice disputing any of the facts asserted in the notice to admit facts; and, for that reason, Semantic is taken to have admitted those facts.
In its amended points of defence Semantic admits Mr Wood entered into the Contract of Employment; that under that contract Semantic agreed to pay to Mr Wood a gross annual salary of $124,800 up to January 2016, and then an annual gross salary of $156,000; Semantic paid the amounts the points of claim allege Semantic paid to Mr Wood, and it did not pay the amounts the points of claim allege Semantic did not pay to Mr Wood or to his superannuation fund; Semantic, in breach of the Contract of Employment, did not make the guaranteed superannuation payments; and Mr Wood had accrued 148.6552 hours of leave which entitled him under s 90(2) of the FW Act to be paid $11,736 gross when his employment with Semantic ended.
Paragraph 73 of the amended points of defence alleges that paragraph 73 of the points of claim is embarrassing because Mr Wood “does not have standing to seek the relevant declaration under “Superannuation Guarantee” legislation”. Paragraph 73 of the points of claim alleges that by failing to make the guaranteed superannuation payments Semantic “failed to meet its obligations under the Superannuation Guarantee legislation”. In paragraph 74 of its amended points of defence, however, Semantic admits that by failing to pay amounts equal to 9.5% of Mr Wood’s gross salary to a superannuation fund Semantic “breached its contractual obligation under the Contract of Employment to pay superannuation of 9.5% on [Mr Wood’s] gross salary”. Thus Semantic has admitted that it failed to pay amounts the “Superannuation Guarantee legislation” required it to pay, and that Semantic’s failure to do so constituted a breach of the Contract of Employment.
At the hearing before me Mr Gupta, who appeared for Semantic, said he had instructions that Semantic’s admissions in relation to the period 1 July 2019 to 25 November 2019 were not correct. Mr Gupta said that the admissions were based on an accounting entry, but it was not clear whether that entry could be verified by reference to other records. Mr Gupta requested Semantic be given time to determine whether the admissions it made in relation to this period are correct.
I am not prepared to grant Semantic any further time. There is no evidence to suggest that the accounting entry on the basis of which Semantic admitted the matters in relation to the period 1 July 2019 to 25 November 2019 is incorrect; there is no evidence that could explain why in the amended points of defence filed on 7 May 2021 Semantic made the admissions it did in relation to that period; and there is no explanation why Semantic did not file a notice disputing the notice to admit facts which included statements in relation to payments Semantic made and did not make from 1 July 2019 to 25 November 2019.
CLEAR AND UNAMBIGUOUS ADMISSIONS?
The points of claim advance a clear case Semantic entered into the Contract of Employment under which it agreed to pay to Mr Wood a gross annual salary of $124,800 up to January 2016, and then a gross annual salary of $156,000, together with a 9.5% guaranteed superannuation payments; Semantic did not pay the amounts the points of claim allege Semantic was obliged under the Contract of Employment to pay to Mr Wood; Semantic did not make the guaranteed superannuation payments; and Mr Wood had accrued 148.6552 hours of leave which entitled him under s 90(2) of the FW Act to be paid $11,736 gross when his employment with Semantic ended. Semantic has admitted all of these facts.
The points of claim to a large extent imply that the Contract of Employment contained a term that Semantic would make the guaranteed superannuation payments. The points of claim allege, however, that under the Contract of Employment Semantic agreed to pay 9.5% of Mr Wood’s gross salary. That is apparent from the particulars to paragraph 22 of the points of claim:
The Contract of Employment states “You [the Applicant] will be paid a gross salary of $124,800 per annum for four days per week with an additional $11,856 (9.5% of $124,800.”
It is true the particulars do not use the word “superannuation”. The notice to admit facts, however, annexes the Contract of Employment the authenticity of which the notice required Semantic to admit.[4] The Contract of Employment contains the following:
You will be employed four days per week at this stage, with the potential to increase that to five days in the future. You will be paid a gross salary of $124,800 per annum for four days per week with an additional $11,856 (9.5% of $124,800) paid to your nominated super account. You have the option to salary sacrifice additional superannuation contributions at your discretion. Salary payments are made monthly, in arrears, less deductions required by law, paid in accordance with the Company policy and procedures. Any days worked in addition to the stipulated 4 days per week, as agreed in advance by both parties, will be paid monthly in arrears at the rate of $600 per day plus applicable SGC contribution. Superannuation will be paid according to law to your nominated superannuation fund.
[4] Notice to Admit Facts, [38]
CONTRAVENTIONS OF FW ACT?
Mr Wood submits that on the basis of its submissions Semantic has contravened s 323(1) and s 90(2) of the FW Act. Mr Wood also claims that Semantic breached the Contract of Employment.
Contravention of s 323(1) of the FW Act?
Section 323 of the FW Act provides:
(1)An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b)in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
(2)The methods are as follows:
(a) cash;
(b) cheque, money order, postal order or similar order, payable to the employee;
(c) the use of an electronic funds transfer system to credit an account held by the employee;
(d) a method authorised under a modern award or an enterprise agreement.
(3)Despite paragraph (1)(b), if a modern award or an enterprise agreement specifies a particular method by which the money must be paid, then the employer must pay the money by that method.
Section 324 of the FW Act provides:
(1) An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:
(a)the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or
(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or
(c) the deduction is authorised by or under a modern award or an FWC order; or
(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.
(2) An authorisation for the purposes of paragraph (1)(a):
(a) must specify the amount of the deduction; and
(b) may be withdrawn in writing by the employee at any time.
(3) Any variation in the amount of the deduction must be authorised in writing by the employee.
Mr Wood submits that Semantic contravened s 323(1) of the FW Act in two ways. The first is by Semantic failing to pay into Mr Wood’s nominated superannuation fund the salary sacrifice deductions the PAYG statements represented Semantic had paid into Mr Wood’s nominated superannuation fund; and the second is Semantic’s not paying in full the difference between Mr Wood’s salary and the salary sacrifice amounts Semantic represented it had deducted from Mr Wood’s salary and paid into his nominated superannuation fund. Counsel for Mr Wood relies on my judgment in Shop, Distributive and Allied Employees Association v Haridemos (No 2), where, on an application for default judgment, I granted a declaration to the effect that the employer contravened s 323(1) of the FW Act by failing to pay to the applicant union amounts the employer was authorised to deduct from its employee’s wages and which the employer misrepresented it did deduct for that purpose.[5]
[5] Shop, Distributive and Allied Employees Association v Haridemos (No 2) [2021] FCCA 857
Two questions arise. The first is whether an employer’s failure to pay in full amounts owing to an employee constitutes a contravention of s 323(1) of the FW Act. Assuming that is answered in the affirmative, the second question is whether Semantic has committed two distinct classes of contravention of s 323(1) of the FW Act, as Mr Wood submits it did.
Scope of s 323(1) of the FW Act
I considered the scope of s 323(1) of the FW Act in Coote v Mainline Access Pty Ltd & Anor (No.3), where I concluded:[6]
On this analysis, s.323(1) of the FW Act does not per se require an employer to pay amounts an employer is otherwise liable to pay under a term of a contract to an employee for work the employee performs. Paragraphs (a) and (b) of s.323(1) require an employer to do things at the point at which the employer tenders money or some other thing to an employee on or purportedly on account of work the employee has performed; and paragraph (c) of s.323(1) requires that the employer pay at least monthly whatever amounts the employer owes or may come to owe the employee for work performed.
[6] Coote v Mainline Access Pty Ltd & Anor (No.3) [2019] FCCA 383, at [45]
On this analysis, an employer will contravene s 323(1) of the FW Act if the employer tenders payment for work done in an amount that is less than the amount the employer is liable to pay for the work performed.
Two or one class of contraventions of s 323(1) of the FW Act
It is perhaps easy to regard the declaration I made in Haridemos as being premised on the view that an employer’s failure to apply an amount the employer deducted from an employee’s wages for the purpose for which the employer was authorised to deduct the amount constitutes a distinct contravention of s 323(1) of the FW Act. On that view where, as is the case before me, it is alleged the employer failed both to apply deductions from wages for an authorised purpose, and the employer also failed to pay amounts to the employee the employer was not authorised to deduct, the employer will have committed two distinct contraventions of s 323(1) of the FW Act. That, however, is not the view on the basis of which I made the declaration in Haridemos. In Haridemos there was but one contravention of s 323(1) of the FW Act. That contravention consisted in the employer’s failure to pay in full the amounts payable to the employee in relation to the performance of work; and the employer failed to do so by failing to pay the amounts the employees authorised the employer to deduct from their wages for the purposes for which the employer was authorised to deduct the amounts.
In the case before me, Semantic’s not paying at least once a month the salary sacrifice amounts Mr Wood authorised Semantic to deduct, and Semantic’s not paying in full at least once a month the difference between the amounts payable to Mr Wood and the salary sacrifice amounts Mr Wood authorised Semantic to deduct, constituted but one class of contravention of s 323(1) of the FW Act. Mr Wood’s authorising Semantic to deduct the salary sacrifice amounts was a direction as to the manner in which Semantic would pay money that would become payable to Mr Wood for work performed under the Contract of Employment; and Semantic’s deducting from Mr Wood’s salary, but not paying as directed, the salary sacrifice amounts, constituted a failure to pay in full an amount payable to Mr Wood for work he performed.
Thus, on the admissions it has made, Semantic has contravened s 323(1) of the FW Act at least once in each of the years ending 30 June 2016, 2017, 2018, 2019, and during the period 1 July 2019 to 25 November 2019, and those contraventions were constituted by Semantic not paying to Mr Wood in full amounts to which he was entitled to be paid for work performed under the Contract of Employment, either because Semantic deducted but failed to apply as directed by Mr Wood the salary sacrifice amounts, or because Semantic failed to pay to Mr Wood other amounts to which he was entitled to be paid for work performed under the Contract of Employment.
Failure to pay 9.5% superannuation
I am satisfied that on the admissions Semantic made it was a term of the Contract of Employment that Semantic would pay 9.5% of Mr Wood’s gross salary into a superannuation fund nominated by Mr Wood; Semantic was obliged but failed to pay into a superannuation fund Mr Wood had nominated amounts totalling $45,845.15; and by failing to make such payments Semantic breached that term.
Accrued annual leave
Subsection 90(2) of the FW Act provides:
If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
On the basis of Semantic’s admissions, Mr Wood had accrued 148.6552 hours of annual leave which entitled him under s 90(2) of the FW Act to be paid $11,736 gross when his employment ended, but Semantic failed to pay Mr Wood that amount. Subsection 90(2) of the FW Act is a provision of the “National Employment Standards” within the meaning of s 61(3) of the FW Act, and a contravention of a provision of the National Employment Standards is a contravention of s 44 of the FW Act.[7] By failing to pay Mr Wood $11,736, therefore, Semantic contravened s 44 of the FW Act.
SHOULD ORDERS BE MADE?
Mr Gupta did not submit I should not make orders. Mr Gupta, however, made three submissions. First, he submitted that any orders I make should be net of tax. The basis of that submission appears to be the matters to which Mr Gupta refers in his affidavit of 30 April 2021, which I read for the purpose of Semantic’s application to vacate the hearing. In that affidavit Mr Gupta deposes that a dispute in the Administrative Appeals Tribunal has been resolved which will result in the Australian Taxation Office (ATO) issuing amended assessments that will result in money being paid to Semantic.
The only basis that could conceivably justify my making an order that Semantic pay to Mr Wood amounts net of tax is if Semantic were obliged to retain an amount on account of tax for which Mr Wood might become liable to pay on the gross amounts Semantic admits it failed to pay but ought to have paid to Mr Wood. Mr Gupta has not suggested Semantic is under any such obligations. Nor has Mr Gupta identified any statutory provision that would authorise Semantic to retain any money on account of any tax liability Mr Wood might have in relation to the payment of the amounts Semantic is liable to make.
Second, Mr Gupta submitted that any order requiring payment of the amounts Semantic admits it is liable to pay Mr Wood should be stayed pending the determination of the counter claim. By that counter claim Semantic claims an order that Mr Wood return to it 1 million shares in Semantic that had been issued to Mr Wood. The counter claim, however, does not claim any monetary relief, and it does not assert any set off against the amounts Semantic admits it is liable to pay to Mr Wood. I am therefore not satisfied it is appropriate that I stay execution of any orders I propose to make until such time as the counter claim is determined.
Third, Mr Gupta submitted that any orders I make should be stayed until the ATO issues amended notices of assessment, and Semantic is refunded the amounts it expects will be refunded to it on the issuing of the amended notices. There is no evidence before me, however, about the amounts Semantic expects it will be refunded, or when Semantic will receive such refunds. There is therefore no evidence that could justify my staying orders I would otherwise make. That is not to say, however, that circumstances may not arise that could justify this Court staying execution of the orders I propose to make. But if any such circumstances arise, Semantic will bear the onus of establishing them by evidence.
WHAT ORDERS SHOULD BE MADE?
I propose to make a declaration to the effect that Semantic contravened s 323(1) of the FW Act by failing to pay $231,901 to Mr Wood. That is the sum of the amounts the points of claim describe as “salary sacrifice payments” (which total $63,902) and the amounts the points of claim described as “PAYG amounts” (which total $167,999). I also propose to make declarations to the effect that: Semantic, in breach of the Contract of Employment, failed to make superannuation contributions in the sum of $45,845.15; Semantic contravened s 90(2) of the FW Act by failing to pay annual leave of $11,736 that had accrued when Mr Wood’s employment with Semantic ended; and Semantic is liable to an order under s 545(2)(b) of the FW Act that it pay Mr Wood the amounts of $231,901 and $11,736 together with interest of $29,020.37 and $1,446.02 respectively on those amounts.[8]
[8] I have adopted the interest calculations contained in the document titled “Applicant’s Claims – Summary” and, in the absence of any objection from Semantic, I have assumed the calculations are correct.
Next I propose to make an order under s 545(2)(b) of the FW Act that within 21 days Semantic pay to Mr Wood $274,103.39, being the sum of the $231,901 it failed to pay in contravention of s 323(1) of the FW Act, interest of $29,020.37 on that amount, the $11,736 Semantic failed to pay Mr Wood in contravention of s 90(2) of the FW Act, and interest of $1,446.02 on that amount.
That, then, leaves for determination the remedy in relation to Semantic’s failure to pay the $45,845.15 worth of superannuation contributions. There are two potential remedies.[9] One is damages. Mr Wood is entitled to be paid the amount that would place him in the position he would have been in had Semantic made the superannuation contributions. That amount, however, would not be represented by the $45,845.15 because, had Semantic made the contributions, Mr Wood would not have received the payment itself; the $45,845.15 would have been paid into a superannuation fund to which Mr Wood would not have immediate access. The amount of damages, therefore, would need to be discounted to take into account Mr Wood’s not being immediately entitled to receive the amount. The calculation of the discount, however, would be difficult and, at best, produce an imprecise estimate. Assumptions would therefore have to be made about the superannuation fund into which the $45,845.15 would have been paid, the time by which Mr Wood could access the money, the returns Mr Wood would have earned had the amount been paid into a superannuation fund, and the discount that should be applied to take into account Mr Wood’s receiving the money in advance of his entitlement to receive it. For these reasons, an award of damages would not be an adequate remedy.
[9] I repeat here the substance of my analysis in Coote v Mainline Access Pty Ltd & Anor (No.3) [2019] FCCA 383, at [65]-[66]
That leads to the consideration of another potential remedy, and that is an order for specific performance. This Court has jurisdiction under s 543 of the FW Act to grant such general law remedies the Court otherwise has power to grant. Under s 8 of the Federal Circuit Court of Australia Act 1999 (Cth) this Court is a court of record, and is a court of law and equity; and under s 15(a) of that Act this Court has power in relation to matters over which it has jurisdiction to “make orders of such kinds” the Court “thinks appropriate”. Given the inadequacy of damages as a remedy for Semantic’s breach of the Contract of Employment by failing to make the superannuation contributions it had agreed to make, I propose to make an order that Semantic specifically perform the Contract of Employment by paying $45,845.15 to a superannuation fund nominated by Mr Wood. The order cannot require Semantic to pay an amount for interest because the points of claim do not allege the Contract of Employment contains a term that Semantic pay interest. Damages, however, would nevertheless remain an inadequate remedy compared with an order for specific performance.
I propose, therefore, to order that Semantic specifically perform the Contract of Employment by paying $45,845.15 into an approved superannuation fund nominated by Mr Wood by no later than seven days after it receives such notice from Mr Wood, or by no later than 21 days after the day I pronounce these orders, whichever occurs last. I will also provide that Mr Wood may agree in writing to extend the time by which Semantic must make the payment, and reserve to the Court the power to extend such time on application by Semantic.
DISPOSITION
I will make orders to this effect, and will reserve to the parties liberty to apply.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 14 May 2021
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