Fair Work Act 2009
s.394—Unfair dismissal

Lisha Herc
v
Hays Recruitment
(U2022/1147)

Application for an unfair dismissal remedy – jurisdictional objections – high income threshold – whether a modern award covers the applicant.

[1] Ms Herc made an application under s.394 of the Fair Work Act 2009 claiming that she has been unfairly dismissed by Hays Recruitment (Hays or the Respondent).

[2] The Respondent has four jurisdictional objections to the application:

a. Ms Herc was not an employee of Hays;

b. Ms Herc was not dismissed;

c. Her application was out of time; and

d. She earned more than the high income threshold.

[3] After a number of conferences with the parties, it was decided that the jurisdictional objection relating to the high income threshold be determined first because, prima facie, she earned more than the high income threshold. A hearing to determine this jurisdictional objection was held on 28 July 2022.

[4] At the hearing Ms Herc was represented by Mr Tom Hakkinen of Adero Law and the Respondent by Ms Cassandra Botha (Legal Counsel of Hays). Ms Herc was granted permission to be represented pursuant to s.596 of the Act on the basis that the jurisdictional objection involved some complexity and it would provide efficiency in dealing with the matter.

[5] Hays maintains that Ms Herc was not an employee of Hays. In order to determine whether she earned more than the high income threshold, there is in one sense an assumption that she was an employee, but her employment status is in dispute and is not determined in this decision.

Issue for determination

[6] The Respondent’s objection arises from s.382 of the Act which establishes when a person is protected from unfair dismissal:

“A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[7] There is no suggestion that an enterprise agreement applied to Ms Herc.

[8] Ms Herc contended that she did not earn more than the high income threshold and she was covered by a modern award, and these are the issues for determination.

[9] For the reasons that follow, I find that Ms Herc was not covered by a modern award, and she did earn more than the high income threshold. Accordingly, she is not a person protected from unfair dismissal and her application will be dismissed.

Earnings – high income threshold

[10] The high income threshold for dismissals after 1 July 2021 was $158,500.

[11] Earnings include wages, such other amounts worked out in accordance with the Regulations, amounts dealt with on the employee’s behalf or as the employee directs, and the agreed money value of non-monetary benefits. Earnings do not include compulsory superannuation contributions, reimbursements, and payments that cannot be determined in advance such as commissions and bonuses and overtime (except guaranteed overtime) 1.

[12] In determining a person’s annual rate of earnings, earnings are not pro-rated according to the actual time period worked by the person if such period was less than 12 months. 2

[13] It is necessary to briefly mention the contractual arrangements that were applicable to the work performed by Ms Herc. Ms Herc had entered a contract with a company called PayMe in May 2017 to provide what is in effect a payroll service to her for the ‘price’ of 2.75% of her gross pay.

[14] In November 2020 Ms Herc contracted through PayMe to provide her services to a client of Hays named Filosoph-e. Her assignment with Filosoph-e commenced on 16 November 2020 and she was paid an hourly rate of $104.50, which had increased to $104.97 at the time her engagement ended. Hays made weekly payments to PayMe in relation to the hours worked by Ms Herc while she was on the assignment. Her weekly hours averaged just less than 35 per week.

[15] The contractual arrangements provided an hourly rate of pay and did not specify an annual salary. The contractual arrangements also specified the number of hours that could be worked as part of the assignment, being 880 for the first six months of the assignment, and a further 880 hours for the second six months, totalling 1760 hours.

[16] While Hays acknowledges there was no express annual salary specified in the contractual arrangements, it submitted that a fair and reasonable approach to determine her annual earnings is to apply the agreed hourly rate to an estimate of her hours over the relevant annual period, being the 12 months immediately prior to the cessation of her assignment. Doing so gives an annual rate of earnings of approximately $191,000.

[17] Ms Herc contended that “there was no firm advance commitment” to pay an annual rate of earnings to her. She contended that the contractual terms, while disavowing an employment relationship between Hays and Ms Herc, otherwise clearly indicated a casual form of engagement between them. Without a firm advance commitment, she argued, it could not be said that an hourly rate paid to her could constitute earnings for the purposes of the high income threshold.

[18] I do not accept this submission. The schedule to the Provider Agreement, and an email exchange between Ms Herc, the client and a Hays representative, makes it abundantly clear that her allocated work hours were 880 for the first six months of the assignment, and a further 880 hours for the second six months, totalling 1760 hours. As a part of the email exchange, Ms Herc queried the “number of hours I have left” towards the end of the assignment period. It is clear that this was not a casual employment relationship, and that 1760 hours were specifically provided for over the 12 month period. Further, it is clear Ms Herc had an understanding and expectation that she would work (or be able to work) this number of hours at her hourly rate.

[19] Ms Herc also submitted in the alternative that deductions should be taken out of her hourly rate, that being the 2.75% fee she paid to PayMe, and 9.5% for superannuation contributions which PayMe also deducted from what it paid her. Further, Ms Herc contended a further 10% should be deducted for GST.

[20] Hays disputed these deductions.

[21] In terms of the 2.75% PayMe fee, Hays contended that this was a payment that met the criteria for ‘an amount dealt with on the employees behalf or as the employee directs’ and therefore should properly be included in her annual rate of earnings. I agree with this submission. Ms Herc has engaged and is paying for a payroll service for which there is a cost to her. This is not an amount that should be deducted from her hourly rate for the purpose of calculating her annual earnings.

[22] In terms of the deduction for GST, Hays referenced its business records and the Recipient Created Tax Invoices which confirmed Ms Herc’s hourly rate was exclusive of GST. Accordingly, no such deduction is justified.

[23] In terms of the deduction for superannuation contributions, Hays contended that it had no obligation to make superannuation contributions as there are no payments made by Hays direct to Ms Herc, and there are no ‘ordinary time earnings’ payable by Hays to her for which an obligation to make superannuation contributions arise. Again, I agree with Hays’ submission. None of the contractual arrangements that are in place require Hays to make any payments directly to Ms Herc.

[24] If I am wrong and the PayMe fee and superannuation contributions should be deducted (ie less 2.75% and 9.5%), then her hourly rate would be $92.11. This hourly rate multiplied by 1760 hours gives an annual earnings amount of $162,113.60, which is still above the high income threshold.

[25] For these reasons, I am satisfied that Ms Herc earned above the high income threshold. The next question then is whether she is covered by a modern award.

Award Coverage

[26] Section 48 of the Act sets out when a modern award applies and relevantly states:

“When a modern award covers an employer, employee, organisation or outworker entity

(1) A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity”.

[27] Ms Herc contended that one of three Awards could cover her, being:

a. Australian Government Industry Award 2016;

b. Clerks Private Sector Award 2020; or

c. Miscellaneous Award 2020.

[28] The Respondent submits that no Award covers the work performed by Ms Herc.

[29] Determination of whether an Award covers an employee for the purposes of s.382(b)(i) of the Act involves an assessment of “the nature of the work and the circumstances in which the employee is employed to do the work”  3.

[30] There are a number of factors which may be taken into account in undertaking a principal purpose assessment, none of which are singularly determinative. In Tucker v Digital Diagnostic Imaging 4, the Commission opined that factors relevant to determining whether the duties of the applicant in that case aligned to the description provided in the Award for the included:

“•  the contents of any job description, person specification or job advertisement

•  the level of remuneration assessed against award levels of remuneration and also considered in the context of remuneration levels within the employing organisation

•  the actual time occupied in different duties (a substantive role/function analysis)

•  the status and level of the position occupied within the organisational structure

•  possession or absence of particular qualifications and whether such qualifications are necessary to the exercise of the primary functions that are performed

•  the exercise of authority and direction over others including in particular, the extent of such authority

•  the level of importance and relevance of particular duties in the context of the employing organisation’s overall purpose

•  the level of decision-making capacity in the context of the employing organisation’s overall operation

•  the nature and extent of any role as representative of the employing organisation to third parties”. 5

[31] In this case, it is not possible to assess any of these factors given Ms Herc did not file any evidence or material that detailed the work she performed. The lack of evidence was raised both in the submissions filed by Hays and by the Commission during the hearing. The only document relied upon by Ms Herc in this regard was a document setting out the conditions of her assignment, which confirmed her position as a Project Manager, located at Campbell Park, and with a pay rate of $104.50 per hour. This document is insufficient to make any assessment of the factors set out above, and there is no suggestion in any of the material filed by either party that Ms Herc was covered by any award.

[32] Based on the limited material available, I am unable to find that Ms Herc was covered by a modern award.

Conclusion

[33] For the reasons set out above, I find that Ms Herc earned more than the high income threshold and is not covered by a modern award for the purpose of s.382(b)(i) of the Act and accordingly is not a person protected from unfair dismissal. As a result, I dismiss this application.

[34] An order to this effect will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

T Hakkinen for Lisha Herc.
C Botha for Hays Recruitment.

Hearing details:

2022.
By telephone:
July 28.

Printed by authority of the Commonwealth Government Printer

<PR744270>

 1   Section 332 of Fair Work Act 2009.

 2   Millis v WesTrac Cat Pty Ltd [2015] FWC 7557.

 3   [2003] AIRC 1161 at [10], PR938031.

 4   [2011] FWA 1767.

 5   Ibid at [22].