1
Fair Work Act 2009
s.604 - Appeal of decisions
Sharon Parsons
v
Pope Nitschke Pty Ltd ATF Pope Nitschke Unit Trust t/a Pope Nitschke
First National
(C2015/7649)
VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT HAMBERGER
COMMISSIONER SAUNDERS SYDNEY, 11 MARCH 2016
Appeal against decision [2015] FWC 8090 of Commissioner Wilson at Melbourne on 4
December 2015 in matter number U2014/13331.
Introduction and background facts
[1] Ms Sharon Parsons has applied for permission to appeal and appealed a decision
issued by Commissioner Wilson on 4 December 20151 (Decision). In that Decision the
Commissioner dismissed an unfair dismissal remedy application lodged by Ms Parsons
pursuant to s.394 of the Fair Work Act 2009 (FW Act) on the basis that Ms Parsons had not
been dismissed by her former employer, Pope Nitschke Pty Ltd ATF Pope Nitschke Unit
Trust t/a Pope Nitschke First National (Pope Nitschke), within the meaning of s.386 of the
FW Act. Ms Parsons contends in her appeal that the Commissioner erred in finding that she
had not been dismissed by Pope Nitschke.
[2] Ms Parsons had been employed as a real estate agent by Pope Nitschke, which
operates a real estate business in Mount Barker, South Australia. Her employment, and that of
other real estate agents employed by Pope Nitschke, was covered by the Pope Nitschke First
National Employee Collective Agreement (Agreement), an employee collective agreement
entered into under the Workplace Relations Act 1996 (WR Act) and preserved in operation by
item 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential
Amendments) Act 2009 (Transitional Act).
[3] A dispute arose between Pope Nitschke and a number of its employees covered by the
Agreement about the provisions and the continued operation of the Agreement. This included
a dispute about employees’ entitlements, if any, to long service leave under the Agreement.
We will discuss the relevant provisions of the Agreement concerning long service leave in
greater detail later, but in short the nature of the dispute was as follows. A number of the
1 [2015] FWC 8090
[2016] FWCFB 375
DECISION
E AUSTRALIA FairWork Commission
[2016] FWCFB 375
2
employees including Ms Parsons were remunerated on a commission-only basis. Pope
Nitschke’s position was that any payments it was required to make to employees when taking
long service leave would be set off against any commission payments it had to make to
employees (with the result that there was, effectively, no net payment required to be made to
employees while taking long service leave). The employees disagreed.
[4] In 2014 one of Pope Nitschke’s employees made an application to this Commission
for the Agreement to be terminated. This application was supported by a number of other
employees including Ms Parsons. The application was heard by the Commission (Hampton
C) in July 2014, and in a decision issued on 8 September 20142 (Termination Decision) the
Agreement was terminated effective from 7 December 2014.
[5] The issue of what, if any, payments were to be made when leave entitlements
including long service leave were taken specifically arose during the hearing before
Commissioner Hampton. Pope Nitschke’s general position was that, under the Agreement, the
commission payments made to commission-only employees included an element that was
said to pre-pay for annual leave and personal/carer’s leave entitlements, meaning that no
requirement for any further payment arose when leave was actually taken. However it made it
clear in its case that if any payment was required at the time any leave entitlement was taken,
it believed it could be debited from future commission payments. In a submission filed on 31
July 2014, Pope Nitschke stated that, in light of the Full Bench decision in Canavan Building
Pty Ltd3 it would “(if the Collective Agreement continues) henceforward be paying the value
of leave entitlements at the time when leave is taken”. Understood in the context of the
proceedings, we do not consider that in advancing this position Pope Nitschke was resiling
from the proposition that any such payments could be debited from future commission
payments. Ms Parsons was aware of this aspect of the submission, since she referred to it in
her evidence below.
[6] It appears that prior to the Termination Decision being issued, Pope Nitschke
apprehended that the Agreement might be terminated and, in that event, it would then be
required to pay employees for any long service leave they had accrued, presumably as a result
of the Long Service Leave Act 1987 (SA) (SA LSL Act) becoming fully applicable to it and
its employees. Consequently, at least in respect of Ms Parsons if not others, it took steps to
have accrued long service leave taken and exhausted as far as possible before that eventuality
could occur. To that end on 7 August 2014 Pope Nitschke sent Ms Parsons a letter directing
her to commence taking her accrued long service leave (quantified as 15.6 weeks based on 12
years’ service) on 6 October 2014 (LSL Direction).
[7] Ms Parsons objected to the LSL direction on the basis that she believed that it meant
that she would receive no income from at least 25 November 2014 until perhaps late May
2015. Her rationale for this view appears to have been that she would have received any
commission payments which were owing to her by 25 November 2014, and that once she
returned to work in about late January 2015 it would take her some time to achieve new sales
and thus generate any further commission income. On 11 August 2014 Ms Parsons made an
application to the Commission for it to deal with her objection to the LSL direction under the
dispute resolution procedure in the Agreement. The Commission dealt with the matter by way
of conferences held on 3 and 15 September 2014, but was unable to resolve the matter
2 [2014] FWCA 4876
3 [2014] FWCFB 3202
[2016] FWCFB 375
3
because Pope Nitschke took the position that under the dispute resolution procedure
participation was voluntary, and it did not wish to participate.
[8] There was a conversation between Ms Parsons and Mr Nitschke, one of the principals
of Pope Nitschke, on 12 August 2014. Ms Parsons alleged in the hearing below that during
this conversation Mr Nitschke said that he didn’t “want to have anything to do with” her; that
“[w]e are going to make it very difficult for you”; “[y]ou can go and tell Andrew Knox but
I’m going to make it hard for you”; and “[y]ou need to think about leaving” (Mr Knox from
Cognisage Australia Industrial Relations was Ms Parsons’ representative, and had acted for
the employees in the proceedings before Commissioner Hampton). Mr Nitschke denied this,
and said that he merely expressed his disappointment in the way she handled the situation.
[9] 6 October 2014 was a public holiday in South Australia. Ms Parsons attended for work
as normal on 7 October 2014 on the basis that she had been rostered as normal on the internal
work roster. This caused Pope Nitschke’s lawyers to write a letter to Mr Knox later that day
stating that there had been no withdrawal of the LSL direction. Mr Knox responded the
following day to the effect that by rostering Ms Parsons for duty, Pope Nitschke had
rescinded the LSL direction. On 10 October 2014 Pope Nitschke’s lawyers wrote to Mr Knox
stating, among other things:
“To be very clear, there has been no withdrawal of the requirement to take long service
leave either express or implied. The direction to take leave stands. Although my client
does not accept the explanation that Ms Parsons provided, through you, for presenting
at work, it will in the circumstances defer the requirement to take leave until Monday
13 October 2014. She must commence leave that day although, if she prefers, my
client will consider a “cash out” of the value of the leave. My client maintains that it is
entitled to apply a debit in respect of the value of the leave.
I am instructed that if Ms Parsons does not accept the direction take leave, my client
will view that as a serious disciplinary issue.”
[10] There followed a further letter from Mr Knox rejecting this further direction and
stating that Ms Parsons would continue to attend for work as normal. On 13 October 2014
Pope Nitschke wrote directly to Ms Parsons. That letter reviewed the history of the dispute
and contended that Ms Parsons had a responsibility to take constructive steps to resolve the
dispute. The letter then stated:
“The fact that you are not prepared to take such constructive steps as an alternative to
simply refusing to accept the direction to take long service leave is a serious matter.
We must decide how we respond to that. While we do so, we direct you to not attend
the office until further notice.
While we consider our position, we ask that you consider the following proposal.
Proposal
As we understand, you have two concerns about the requirement to take leave. First,
you are concerned about not being involved with selling activities during the period of
leave. Second you are concerned about our expressed intention to apply a debit in
[2016] FWCFB 375
4
respect of the value of leave according to our interpretation of the Collective
Agreement that applies to our business.
In relation to the first of these concerns, we would agree to cash out the value of your
leave if you request that. In relation to the second of your concerns, you could take
your leave or cash it out while reserving your right to bring a legal claim based on any
alleged breach of the Collective Agreement or the Long Service Leave Act that you
believe has occurred. In other words, we would not treat the taking of long service
leave or cashing it out as involving a concession by you in relation to your rights.
We ask for your response to our proposal by midday on Wednesday, 15 October
2014.”
[11] Mr Knox replied on Ms Parsons’ behalf on 14 October 2014. He described the
position facing Ms Parsons as “‘Hobson’s choice’: leave without pay or payment in lieu of
such leave with her making the payment in lieu, in the full knowledge that is unlawful after 7
December 2014 and is in breach of the [Agreement] at present”. Mr Knox’s letter requested
that Pope Nitschke rescind the direction for Ms Parsons not to attend work, since this would
deny her any ability to earn income, or alternatively allow her to work at home. It also
confirmed that Ms Parsons “will not proceed on leave for which the employer will not pay
her, i.e. leave without pay purporting to be long service leave” and that she would not “apply
for payment in lieu at this time, as is necessary under the Long Service Leave Act 1987”.
[12] Pope Nitschke’s lawyers replied the same day. In their letter they stated:
“Our client maintains that the direction that she take long service leave is lawful and
reasonable. Our client also maintains that it is within its rights to apply a debit in
respect of the value of Ms Parsons’ long service leave because of the terms of the
Collective Agreement.”
[13] The letter went on to say that Pope Nitschke did not rescind its direction that Ms
Parsons not attend for work, and given that Ms Parsons did not accept Pope Nitschke’s
proposal to resolve the matter or engage in any discussions, Pope Nitschke would regard Ms
Parsons as being on long service leave, directed her not to undertake any work, and would not
provide her with remote access to its computer system.
[14] On 16 October 2014 Pope Nitschke sent Ms Parsons the following email:
“Hi Sharon
Could you please as a matter of urgency return to the office any files, keys or
documentation
You may have at home for us to continue looking after these properties
In particular [address] and [address]
We can arrange for someone to pick them up if thats more convenient
Additionally pays have been done today and i will forward to you your payslip and our
calculations
To LSL shortly
[2016] FWCFB 375
5
Regards,
Darren Pope
Director”
[15] On 17 October 2014 Ms Parsons’ unfair dismissal remedy application was filed on her
behalf by Mr Knox. That application was somewhat ambiguous as to the manner in which it
was said that dismissal had occurred. In identifying the date of dismissal, the application said:
“14 October 2014 by exclusion from the workplace by the employer without pay”. However
the application elsewhere said that as a result of Ms Parsons “being forced onto purported,
long service leave” she was left with “no alternative but to resign her employment in order to
live, as a consequence of the conduct and course of conduct engaged in by her
employe[r]”. In respect of this latter position, there was no evidence that Ms Parsons had ever
communicated a resignation from her employment to Pope Nitschke.
[16] On the same day that the unfair dismissal remedy application was filed, there was a
further exchange of correspondence between Pope Nitschke’s lawyers and Mr Knox. Pope
Nitschke initiated the exchange when it sent a letter stating the following:
“Although not clear, you seem to think that Ms Parsons will not be paid at all during
her period of long service leave. If so, that is not our client’s position.
Our client’s position is that Ms Parsons must (and will) be paid during her period of
long service leave. However, our client intends to apply a debit in respect of those
payments in keeping with its view of the terms of the Collective Agreement. In
keeping with that position, our client has today made an initial payment to Ms Parsons.
I understand that a pay slip has been forwarded to her but I attach a copy for your
information. While I have not checked the calculations, I understand that the amount
paid to Ms Parsons has been calculated in accordance with the method described
during the hearing before Commissioner Hampton on 3 September 2014.”
[17] Mr Knox replied as follows:
“I fail to understand how it is your client does not understand his own words given
under oath.
MR KIDMAN: Long service leave – it didn’t apply to them or something to that effect?
– Yes.
Do you have any response to that evidence? – My response to that is that the terms
that were used when that question was first – sorry, the terms that were used were
incorrect and it was a misuse of terms, but in fact the long service leave is paid out
and then it is debited against the commission account and therefore having the same
net result as not receiving it.
I also rather doubt $422 for a 14 day pay period, when the employee’s average for this
FY has been $2031 per 14 days, computes with the CA and the calculations you and I
agreed was the thread through the CA.
Courtesy obliges me to advise, as we are in contact, that proceedings have been filed
this afternoon, as encouraged by your client, in the first instance, in the Commission.”
[2016] FWCFB 375
6
[18] Pope Nitschke’s commission records show that Ms Parsons was paid $422.49 on 16
October 2014 on account of long service leave, and that this was entered as a debit on her
commission account. The same records show that Ms Parsons received a further amount of
$1408.30 on account of long service leave on 30 October 2014, and another $9154.00 on 13
November 2014.4 These amounts were also entered as debits. The payment of 13 November
2014 appears to have represented a final payout of Ms Parsons’ accrued leave entitlements,
since a payment on account of annual leave was also made on that day. The long service leave
payments made by Pope Nitschke for 15.6 weeks’ long service leave therefore totalled
$10,984.79, or about $704 per week. The payment of $1408.30 made on 30 October 2014
appears to have covered a full fortnight’s pay period, and corresponds with the weekly
amount identified.
The Decision
[19] In his Decision the Commissioner at the outset touched upon the issue of when Ms
Parsons’ employment with Pope Nitschke commenced:
“[7] Ms Parsons contends that she was employed by a company named Korsten Pty
Ltd, trading as Nitschke First National, in January 2002. Her evidence is that she
remained employed by that entity until 20 January 2006. Further, her evidence is that
after January 2006 her employment continued with another company, being the
Respondent in this matter, Pope Nitschke Pty Ltd. Ms Parsons’ evidence is that the
two entities shared the same registered address and at least one common director,
being Mr David Nitschke. She therefore regards herself as having been employed
continuously since January 2002.
[8] For its part, the Respondent claims Ms Parsons was employed by it only since
“around February 2006”. Mr Nitschke’s evidence on the subject notes that the
Respondent company was formed by him and another real estate agent, Mr Darren
Pope, in February 2006 and that the business has traded as First National Pope
Nitschke since that time.
[9] It is unnecessary for the purposes of this matter, and for the reasons that follow, to
resolve the conflict between the parties on the subject of the starting date of Ms
Parsons’ employment.”
[20] The Commissioner then framed the question to be determined on the basis of the
following finding that Ms Parsons had resigned from her employment:
“[34] The overall circumstances of this matter allow me to find that Ms Parsons’
employment ended between 14 and 17 October 2014. While her employment did not
end through an explicit statement of resignation, the evidence leads to a finding, which
I make, that Ms Parsons was not prepared to accept the LSL direction and withdrew
from employment. There is not an explicit point or explicit communication in which
she advised of her resignation. However, by at least 17 October 2014, when her unfair
dismissal application was lodged, she regarded herself as having resigned. Her
application used that term, referring to the date on which dismissal was notified as
4 There was a further payment of $1408.30 made on 4 November 2014, but it appears to have been in error and re-balanced
by a debit of the same amount made that day.
[2016] FWCFB 375
7
being 14 October 2014. Her subsequent conduct and submissions clarify that she
understood she had resigned, albeit with Ms Parsons contending that a resignation on
her part was necessary in order for her to secure other employment and income. The
balance of probabilities lead me to find that the employment relationship ended on 14
October 2014.”
[21] The question to be determined was therefore whether, for the purposes of that part of
the definition of “dismissed” in s.386(1)(b), Ms Parsons had been forced to resign from her
employment because of conduct or a course of conduct engaged in by Pope Nitschke.
[22] In addressing this question, the Commissioner discussed what was said in the
Termination Decision concerning the dispute about payment for long service leave which
ultimately led to the termination of Ms Parsons’ employment as follows:
“[47] In his decision, Commissioner Hampton identified firstly that a commission-only
salesperson’s payment for LSL would be upon their “basic rate of pay”, calculated in
accordance with certain mechanisms, but did not resolve the question of whether LSL
payments could be debited from sales commissions. In relation to the first proposition,
the Commissioner held the following;
‘[66] I note that Clause 17 of the Collective Agreement states that LSL is not
payable on Commissions/incentives/bonuses. It is apparent that at least at some
earlier stage, Pope Nitschke understood that this meant that commission-only
salespersons were not entitled to LSL. However, the better view, and the one
now apparently being adopted by the employer, is that such salespersons are
entitled to LSL based upon their “basic rate of pay”. On that view, clause 17 in
relation to commission-only salespersons refers to the same basis of calculating
payments as adopted for annual leave.
[67] This basis for annual leave payments is provided by Schedule 2.8(b) of the
Collective Agreement and this in turn refers to the “formula in the regulations
for piece workers”. That formula, in effect, is provided by the Workplace
Relations Act Regulations 2006 and this also apparently requires the
consideration of the average earnings over the preceding 12 months. In that
regard, the definitions within the former regulations are very complex and
require consideration of the various partially circular definitions of the terms
applicable to piece workers within the WR Act itself. I note that the clearer
provisions under the Fair Work Regulations 2009, that would apply in relation
to annual leave and other direct NES entitlements for pieceworkers, would not
appear to apply to the LSL calculation given the preserved terms of the
Collective Agreement.’ (references omitted)”
[23] The Commissioner then concluded that the assessment as to whether Pope Nitschke’s
conduct forced Ms Parsons to resign hinged on three matters: the LSL direction; the parties’
relationship and the discussion between Ms Parsons and Mr Nitschke on 12 August 2014; and
Pope Nitschke’s participation in the dispute resolution proceedings before the Commission.5
5 Decision at [53]
[2016] FWCFB 375
8
[24] In assessing these matters, the Commissioner preferred the evidence given by Mr
Nitschke to that of Ms Parsons.6 In giving diminished weight to Ms Parsons’ evidence, the
Commissioner placed emphasis on Ms Parsons’ lack of candour as to how she obtained
alternative employment a little over two weeks after her employment with Pope Nitschke
terminated and her reluctance to comply with an order for production of documents and
earnings in relation to that alternative employment.7
[25] The Commissioner identified Pope Nitschke’s motivation in issuing the LSL direction
as being the exercise of a right which it considered it held under the Agreement and the SA
LSL Act in order to deal with the possibility that at some time in the future it might not have
the capacity which it believed it currently had to offset long service leave payments against
commission payments.8 The Commissioner considered that the making of the LSL direction
was lawful, and then framed the question as being “whether on any reasonable view its
conduct would probably have the effect of prompting Ms Parsons’ resignation?”9
[26] The Commissioner answered this question in the negative. His reasoning was as
follows (footnotes omitted):
“[72] The context of the LSL Act includes both that a long serving employee should be
rewarded with additional leave and that employees should be given the leave in one
block, close to the time that the period of leave accrues. The policy of the LSL Act,
unmodified by the Collective Agreement, is clear when it stipulates both that LSL
should be granted by an employer to a worker as soon as practicable (taking into
consideration the needs of the employer's business or undertaking) after the worker
becomes entitled to the leave as well as preferring that LSL should be taken in one
continuous period. To the extent that the operation of the LSL Act is not modified,
employees may be fined if they work during the period of leave and similarly
employers may be fined if they employ persons who are at that time on LSL.
[73] It is entirely foreseeable within the unmodified context of the LSL Act that there
will be numerous occasions in which employees may be required to proceed on leave,
even though they do not want to. This might include being required to take leave at
times that are inconvenient to the employee (such as being at a time of year they do
not want, or even in a year they do not want) as well as potentially being against their
financial interests (such as for a person who is directed to take leave when that person
instead was hoping to take a payment in lieu perhaps upon resignation or retirement).
There is no policy in the LSL Act, or the Collective Agreement, that leave should be
taken only at mutually agreed times.
[74] The Collective Agreement countenances payments in lieu of the taking of LSL
where agreement is in writing, with there being no regulation of the circumstances in
which agreement can be sought. Plainly, neither party needs to agree to an approach
from the other to have LSL paid in lieu of the time being taken off as leave. The
myriad circumstances in which leave is paid in lieu include those where it is mutually
6 Decision at [55]
7 Decision at [57]-[59]
8 Decision at [63]-[67]
9 Decision at [68]-[69]
[2016] FWCFB 375
9
convenient for payment to be taken instead of the leave being given, as well as those
in which one party wants to do so, but has to persuade the other to agree to payment.
[75] Within this context, it would be difficult to find that, by requiring Ms Parsons to
commence on leave, that Pope Nitschke was doing anything other than exercising
rights given to it by the combination of the LSL Act and its Collective Agreement. The
possibility that Pope Nitschke was defending its interests, whether financially or
legally, by issuing the direction to Ms Parsons, perhaps in anticipation of a later
change to its understanding that the LSL payments that were made could perhaps be
later offset against sales commission earnings through the debit and credit system is in
itself also not an unreasonable action on the part of the company. Such change in its
legal requirements might come shortly, or in several years, or never at all. At least at
the time the direction was given, in August 2014, a month prior to the Commission’s
decision in the Agreement Termination Case, but after the evidence had been given in
the matter, Pope Nitschke was entitled to seek to protect its interests in accordance
with its understanding of the then prevailing Collective Agreement, albeit with the
attendant risk that its understanding may later be corrected, such as by a finding in a
Court.
[76] The second proposition, relating to the likelihood that she would have no
commission income for a considerable period after returning from leave, also does not
resolve in favour of Ms Parsons since such feature is not unique to her employment.
Instead it is likely to be a feature of the employment of any commission salesperson.
Predictably, almost to the point of certainty, a salesperson remunerated to some degree
through commission payments who takes leave of any kind would find a lag in
payments once they returned to work. Although this may possibly be exacerbated in
the case of a person who was a commission-only salesperson, in all likelihood it would
be a feature of the employment of any person whose remuneration was at least
partially contingent upon sales being achieved.”
[27] In relation to the relationship between the parties, the Commissioner found it had
deteriorated over the period August to October 2014. However he preferred Mr Nitschke’s
account of the conversation which occurred on 12 August 2014 to that of Ms Parsons, taking
into account his general preference for his evidence over that of Ms Parsons, and concluded
that although the conversation was argumentative, there was no unreasonable behaviour on
the part of Mr Nitschke sufficient to be part of a course of conduct which would have the
probable effect of prompting Ms Parsons’ resignation.10
[28] As to Pope Nitschke’s participation in the dispute resolution proceedings in this
Commission, the Commissioner found that it had exercised a lawful right not to participate,
and that this was unremarkable and not likely to lead to Ms Parsons’ resignation.11 Finally,
the Commissioner found that Ms Parsons was not forced to resign because she had options
available to her other than resignation:
“[89] Those alternatives included filing a dispute with the Commission, which was
done but ultimately did not produce a result beneficial to Ms Parsons. Ms Parsons’
options also included seeking injunctive relief from a Court, which apparently was
10 Decision at [78]-[81]
11 Decision at [82]-[85]
[2016] FWCFB 375
10
contemplated but not undertaken. Her options also included proceeding on leave and
being paid at the basic rate of pay and then contesting whether through a Court or
elsewhere any endeavour on the part of Pope Nitschke to then later offset those
payments against sales commission earnings.
[90] I accept that each of the options available to Ms Parsons had its own difficulties
and uncertainties. However, those options provided an alternative to ending her
employment with Pope Nitschke.
...
[93] As referred to above, Ms Parsons saw two harms to her of being on LSL – that
she would be paid at the basic rate of pay, perhaps debitable against commission
earnings at some later time, and that, because of her absence on LSL, she would suffer
because sales would not be earned during the period, meaning that commission
earnings would be lower for a time when she returned.
[94] In context, while choosing to secure alternative employment may have avoided
the first of these concerns, it would not have avoided the second.
...
[97] This situation, coupled with the speed with which new employment was arranged,
means I am unable to exclude either that it simply suited Ms Parsons to change her
employment because the relationship was no longer viable, or even the possibility that
arrangements for her new employment were commenced prior to finishing at Pope
Nitschke.
[98] In any event, the evidence does not lead to the view of Ms Parsons being a person
with no choice other than to resign, or that on any view the decisions taken by Pope
Nitschke would probably have had the effect of prompting Ms Parsons’ resignation.
[99] I am satisfied that Ms Parsons had options available to her, and that she balanced
the pros and cons of them, choosing in the end to finish her employment with Pope
Nitschke, with the intention of soliciting other employment.”
[29] On this basis the Commissioner found that he was not satisfied that Ms Parsons had
been dismissed within the meaning of s.386(1) and dismissed her unfair dismissal remedy
application.
Grounds of appeal and submissions
[30] Ms Parsons’ notice of appeal contended that the Commissioner erred in that he:
(1) failed to make findings under the Agreement when it was silent on the inclusion
of long service leave within the commission structure and the right of Pope
Nitschke to debit long service leave in the same manner as personal/carer’s
leave;
(2) failed to take into account that the Agreement required commission to be paid as
soon as practicable after settlement, that commission could not be ‘spread’ into
periods when commissions were not earned, that there was no evidence that
Pope Nitschke intended or would pay any funds or income support to Ms
[2016] FWCFB 375
11
Parsons and therefore that the Commissioner erred in finding that Ms Parsons
would be paid anything once her commissions were exhausted and that
alternatives were available in order for Ms Parsons to support herself;
(3) incorrectly held that an employer giving a direction to an employee under a
workplace right could not be found to be acting unfairly, harshly or
unreasonably;
(4) failed to resolve the date of commencement of Ms Parsons’ employment without
which he could not find that Pope Nitschke could avail itself of s.7(3) of the SA
LSL Act;
(5) found that Ms Parsons would not have avoided the same non-earning period by
taking other employment;
(6) ignored Pope Nitschke’s failure to adhere to an undertaking given to the
Commission in July 2014 that it “would henceforth pay” long service leave and
not debit the same and that Pope Nitschke had unlawfully debited annual leave
from Ms Parsons’ commissions;
(7) failed to realise that Pope Nitschke did not pay Ms Parsons the correct quantum
required by the Agreement as the ‘basic rate of pay’;
(8) placed undue and unfair inference upon Ms Parsons’ failure to produce
documents;
(9) engaged in unfounded speculation about Ms Parsons gaining employment within
two weeks of her resignation and gaining employment without a written
application and was in some manner acting dishonestly and against her
responsibility to mitigate loss under s.392 of the FW Act;
(10) refused to consider evidence of the differential treatment of Ms Parsons; and
(11) made adverse findings against Ms Parsons for her inability to produce further
documents, in issuing a subpoena without dealing with Ms Parsons’ objections,
in disallowing certain questions to Pope Nitschke’s witnesses but allowing other
questions of Ms Parsons, and in accepting evidence of discussions from
mediation and conciliation proceedings before another member of the
Commission.
[31] In her written and oral submissions Ms Parsons made the following arguments
concerning appeal grounds 1, 2, 6 and 7:
The Agreement contained no provision which expressly permitted long service
leave payments to be debited from commission payments.
The Commissioner was wrong in assuming that Pope Nitschke intended to pay Ms
Parsons a “living wage” while she was on long service leave, to be later debited
from commission; rather the evidence demonstrated that she was not to be paid
anything.
[2016] FWCFB 375
12
There was no logical basis for the Commissioner to determine that Ms Parsons
would be able to meet her household needs while on long service leave. Ms
Parsons was required to resign in order to meet her household needs after 25
November 2014.
The payments for long service leave which Pope Nitschke did make were less
than half of Ms Parsons’ average weekly earnings.
The option to cash out long service leave was not a viable alternative, since Pope
Nitschke did not intend to actually cash out the entitlement but instead intended to
pay, for all practical purposes, nothing. This was conduct repudiatory of the
contract of employment.
[32] In relation to ground 4, it was submitted that because the Commissioner had not
resolved the issue concerning Ms Parsons’ length of service, there was no basis for him to
find that the direction for Ms Parsons to take her long service leave was lawful under s.7(3) of
the SA LSL Act. In relation to ground 5, it was submitted that by resigning Ms Parsons could,
contrary to the Commissioner’s finding, avoid lower or no remuneration because she was in a
position to work and generate new commission payments while there were still past
commission payments owing to her and thus to ensure continuity in her income. In relation to
grounds 8 and 9, it was submitted that Ms Parsons had responded appropriately to the order to
produce documents and there was no evidence to sustain the proposition that Ms Parsons’
success in quickly obtaining new employment was demonstrative of duplicity. Ms Parsons
had a duty to mitigate her loss, and it should not have been held against her that she
discharged this duty.
[33] Ms Parsons submitted that permission to appeal should be granted in the public
interest because the Agreement was based on a template which was widely used in the South
Australian real estate industry, and therefore raised issues of wide application.
[34] Pope Nitschke submitted that:
The evidence demonstrated that Pope Nitschke had clearly communicated that it
intended to pay Ms Parsons’ leave entitlements when she took them, and would
subsequently debit them from commission payments.
The amount payable to Ms Parsons while taking leave was the minimum wage
under the relevant pay scale, which at the time of the direction to take long service
leave was to be derived from the applicable modern award.
Pope Nitschke therefore acted in conformity with the undertaking it had proffered
to Commissioner Hampton in its 31 July 2014 submissions.
It was not necessary for the Commissioner to determine whether, under the
Agreement, long service leave payments could be debited from future commission
payments. It was sufficient that the Commissioner found that the LSL direction
was lawful and that Pope Nitschke reasonably believed it could debit the
payments from future commission.
[2016] FWCFB 375
13
In any event, the Agreement clearly permitted such debiting to occur.
The date that Ms Parsons commenced employment was irrelevant, since the
parties had, in the hearing before the Commissioner, proceeded on the basis that
Ms Parsons had at least ten years’ continuous service and was therefore entitled to
take long service leave (and could therefore be directed to do so).
The Commissioner only found that Ms Parsons might not have avoided loss of
income by taking up alternative employment, not that she would certainly do so.
This conclusion was open to him given that the new employment was on a
commission-only basis.
The credit finding against Ms Parsons was open to the Commissioner, given that
in her evidence in cross-examination she identified the existence of documents
covered by the order for production which she had not produced and did not
subsequently produce. Her lack of candour in explaining how she obtained her
new employment and its terms also supported the credit finding.
The adverse credit finding meant that the Commissioner could not be satisfied that
Ms Parsons’ true motive for leaving her employment was directly connected to
Pope Nitschke’s conduct.
Because there was no error in the Commissioner’s findings, there was no public
interest in the appeal and accordingly permission to appeal had to be refused.
Consideration
Permission to appeal
[35] Under s.400(1) of the FW Act, permission to appeal may only be granted if it is in the
public interest to do so. Because we consider that a number of the grounds of Ms Parsons’
appeal are arguable, and raise issues of complexity that may have broader implications, we
consider that it would be in the public interest to grant permission to appeal.
Whether a dismissal
[36] Under s.385(a) of the FW Act, it is a prerequisite for the making of a finding that a
person has been unfairly dismissed that the Commission first be satisfied that the person has
in fact been dismissed. Section 386(1) sets out the meaning of “dismissed” as follows:
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on
the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do
so because of conduct, or a course of conduct, engaged in by his or her
employer.
[2016] FWCFB 375
14
[37] Section 386(1) operates subject to a number of exceptions set out in s.386(2) which
are not relevant to the circumstances of Ms Parsons’ case.
[38] As earlier set out, the Commissioner in his Decision framed the question of whether
Ms Parsons had been dismissed by reference to whether that part of the definition in
s.386(1)(b) was applicable - that is, whether there was conduct or a course of conduct engaged
in by Pope Nitschke which forced Ms Parsons to resign. Neither party in the appeal submitted
that the Commissioner was wrong to approach the question in this way, nor was it submitted
that s.386(1)(a) may have been applicable. Therefore we will consider the question of whether
Ms Parsons was dismissed on the same basis.
[39] In O’Meara v Stanley Works Pty Ltd12 a Full Bench of the Australian Industrial
Relations Commission, having reviewed a number of previous authorities, set out what was
required by the statutory predecessor of s.386(1)(b) contained in the Workplace Relations Act
1996 in the following terms (underlining added):
“[23] In our view the full statement of reasons in Mohazab which we have set out
together with the further explanation by Moore J in Rheinberger and the decisions of
Full Benches of this Commission in Pawel and ABB Engineering require that there to
be some action on the part of the employer which is either intended to bring the
employment to an end or has the probable result of bringing the employment
relationship to an end. It is not simply a question of whether “the act of the employer
[resulted] directly or consequentially in the termination of the
employment.” Decisions which adopt the shorter formulation of the reasons for
decision should be treated with some caution as they may not give full weight to the
decision in Mohazab. In determining whether a termination was at the initiative of the
employer an objective analysis of the employer’s conduct is required to determine
whether it was of such a nature that resignation was the probable result or that the
appellant had no effective or real choice but to resign.”
[40] The reasoning in O’Meara was treated as fully applicable to s.386(1)(b) of the FW Act
by the Full Bench in Ryan v ISS Integrated Facility Services Pty Ltd.13
[41] It is clear that the termination of Ms Parsons’ employment was a consequence of Pope
Nitschke issuing the LSL direction and its subsequent enforcement of that direction by
directing her not to attend the workplace and cutting off her remote access to its computer
system. The LSL direction was made pursuant to s.7(3) of the SA LSL Act. Section 7 of that
Act relevantly provides:
7 - Taking of leave
(1) Long service leave should be granted by an employer to a worker as soon as
practicable (taking into consideration the needs of the employer's business or
undertaking) after the worker becomes entitled to the leave.
12 PR973462, [2006] AIRC 496 at [23]
13 [2014] FWCFB 8451 at [15]
http://www.austlii.edu.au/au/cases/cth/AIRC/2006/496.html#para23
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#worker
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#worker
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
[2016] FWCFB 375
15
(2) Long service leave should be taken in one continuous period.
(3) The employer should give a worker at least 60 days notice of the date from which
leave is to be taken.
(4) Despite the preceding provisions of this section, an employer and a worker may
agree on—
(a) the deferral of long service leave;
(b) the taking of long service leave in separate periods;
(c) the granting and taking of long service leave on less than 60 days notice;
(d) the taking of long service leave in anticipation of the entitlement to the
leave accruing to the worker.
...
[42] Under s.5(1) of the SA LSL Act the entitlement to take long service leave arises after
ten years’ service. “Service” is defined in s.3 to mean “continuous service with the
same employer or with related employers under a contract of service or a series of contracts
of service”.
[43] Ground 4 of Ms Parsons’ appeal challenges the lawfulness of the direction to her to
take her long service leave on the basis that because the Commissioner declined to make a
finding as to when she commenced her employment with Pope Nitschke, there was no basis
for the conclusion that she had become entitled to take long service leave such as to enliven
s.7 in her case. We do not consider that this challenge can succeed. Ms Parsons’ own evidence
was that she had been employed continuously by Pope Nitschke or a related entity since 2002,
meaning that she had approximately 12 years’ service at the date the direction was given. Mr
Nitschke, who gave evidence on behalf of Pope Nitschke, accepted in his evidence that Ms
Parsons’ service with a previous employing entity had “transferred over in relation to long
service leave.”14 The hearing before the Commissioner proceeded on the premise that Ms
Parsons had sufficient service to qualify for long service leave. Ms Parsons did not positively
submit, either at first instance or before us, that she did not have the requisite length of service
such as to found the making of a direction under s.7(3) of the SA LSL Act and, as stated, her
evidence at first instance was to the contrary. Ms Parsons is bound by the conduct of her case
before the Commissioner, and we do not consider there is any basis to permit her to run a
different case on appeal.15 Appeal ground 4 is rejected.
[44] The only evidence which suggested that Pope Nitschke intended that the LSL direction
force Ms Parsons to leave its employment was Ms Parsons’ evidence concerning her
conversation with Mr Nitschke on 12 August 2014. The remarks which Ms Parsons said Mr
Nitschke had made to her (which we have earlier set out) might readily give rise to the
inference that Mr Nitschke, and by extension Pope Nitschke, intended that the direction would
force Ms Parsons to leave. However the Commissioner rejected Ms Parsons’ version of this
conversation and preferred Mr Nitschke’s more innocuous version of it. Although in her
14 Transcript 19 October 2015, PN 1039
15 See Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68 at 71
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#worker
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#worker
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#worker
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#employer
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
[2016] FWCFB 375
16
appeal Ms Parsons challenged the Commissioner’s general conclusions about her credit as a
witness, she did not specifically challenge the finding about what occurred in this
conversation. Nor was there any challenge to the Commissioner’s finding that Pope
Nitschke’s motive in issuing the LSL direction was to deal, in a lawful way, with the
possibility that at a future time it might not be able to debit long service leave payments from
commission payments. Accordingly there is no basis to disturb that finding on intention made
by the Commissioner, and we will proceed on the basis that Pope Nitschke did not intend to
force Ms Parsons from her employment.
[45] That leaves for determination the question of whether the Commissioner erred in
concluding that the LSL direction did not have the probable result of forcing Ms Parsons from
her employment. Ms Parsons’ primary case in this respect was to the effect that the LSL
direction to take 15.6 weeks off work with no income (apart from any outstanding
commission payments, which would run out no later than 25 November 2014), followed by a
period back at work where there would be an inevitable delay before any further commission
could be earned and paid, would necessarily mean that Ms Parsons could not meet her
household expenses and would therefore be forced to leave her employment to find alternative
work. That probable effect was reinforced, Ms Parsons submitted, by the fact that s.14(1) of
the SA LSL Act provided “A worker must not, while on long service leave, engage in any
other employment in place of the employment in relation to which the right to leave accrued”,
so that Ms Parsons could not lawfully ameliorate her position by finding other employment
during the period of leave.
[46] As a general proposition, we accept that if the LSL direction would result in Ms
Parsons having no income for an extended period as suggested, then its probable effect would
be to drive her from her employment, and she could be regarded as having been dismissed.
That the direction was lawful under the SA LSL Act does not alter the position that the
employment would not be maintainable from Ms Parsons’ perspective if it deprived her of the
ability to meet her household expenses for a long period. To the extent that the Commissioner
expressed a contrary view, we must respectfully disagree with him.
[47] However the Commissioner proceeded on the premise that Ms Parsons would in fact
be paid a “basic rate of pay” whilst on long service leave, to be debited against later
commission payments, so that she would not in fact be left without any income during the
period of leave. Ms Parsons (in ground 2) contended that the Commissioner erred in this
respect in that the evidence demonstrated that, at the relevant time, Pope Nitschke did not
intend to pay anything to Ms Parsons while she was on leave, and because the outstanding
commission payments could not be “spread” to cover the period of the leave she would
necessarily be left without income. She contended that the evidence given by Mr Nitschke
during cross-examination at the hearing confirmed this.
[48] We do not agree. We have perused those parts of the transcript which Ms Parsons
relied upon to support her contention of error. We consider that although there is some lack of
precision in the questions and answers, it is reasonably clear that the effect of Mr Nitschke’s
evidence was that Pope Nitschke always intended to pay Ms Parsons for her long service
leave (whether she took the leave or agreed to cash it out), and debit it from later commission
payments. The following questions and answers demonstrate this (underlining added):
http://www.austlii.edu.au/au/legis/sa/consol_act/lsla1987179/s3.html#service
[2016] FWCFB 375
17
“Well, what alternatives do you say Ms Parsons had other than to zero, negate her long
service leave account? Were you offering any compromise?---There were two
options. The long service leave could be paid out in cash or taken in time off.
With the effect that she would not be paid. That's your evidence?---The effect that she
would've been paid the long service leave payment and it would have come from her
commission account, as per the collective agreement.”16
[49] Additionally, the following matters made it clear that Pope Nitschke always intended
to pay Ms Parsons for her long service leave (with a subsequent debit):
(1) In its submissions in writing in the proceedings before Commissioner Hampton
of 31 July 2014, Pope Nitschke had stated its intention to pay leave benefits
when leave was taken.
(2) In its correspondence of 13 October 2014, Pope Nitschke referred to its
intention to apply a debit in respect of the value of the leave. There could only
be a debit if there had been a payment of leave in the first place.
(3) Pope Nitschke had made an initial payment to Ms Parsons for leave on 16
October 2014.
(4) Pope Nitschke’s lawyers made it clear in their correspondence of 17 October
2014 that Ms Parsons would be paid for her long service leave (with a
subsequent debit), and Mr Knox’s reply of the same date made it clear that he
had long understood that to be the case, since he referred to Mr Nitschke’s
evidence before Commissioner Hampton to the effect that there would be a
payment for the leave and a subsequent debit.
[50] What Ms Parsons’ actual subjective belief about this was at the time is unclear, but
there was no objective basis for the belief that she would not be paid anything while she took
the leave.
[51] Ms Parsons in any event had open to her, as a result of Pope Nitschke’s lawyers’ letter
of 13 October 2014, the option of agreeing to cash out her long service leave, with the cashed
amount to be debited against future commissions. That meant that it was not the necessary
consequence of the LSL direction that she would be left without the capacity to earn
commission income for an extended period, regardless of whether the “cash out” actually
resulted in a payment or, if it did, whether a subsequent debit was permissible under the
Agreement or not. Therefore we must reject ground 2 of the appeal. Ground 6, in which it was
contended that the Commissioner ignored Pope Nitschke’s failure to act consistently with the
position it advanced in its 31 July 2014 submissions, must also be rejected because we
consider for the reasons set out that Pope Nitschke in fact did act consistently with that
submission. As stated earlier, in making that submission we do not consider that Pope
Nitschke resiled from its position that it was entitled to debit from future commission
payments.
16 Transcript 20 October 2015, PNs 1898-1899
[2016] FWCFB 375
18
[52] Ms Parsons alternatively advanced two contentions. The first was that Pope Nitschke’s
intention to debit long service leave payments from future commission (whether those
payments were made as the leave was taken or as part of an agreed cashing out of leave) was
inconsistent with the terms of the Agreement and constituted conduct repudiatory of the
contract of employment which compelled resignation (ground 1). In considering this ground
we will assume, without deciding, that the contract of employment incorporated or reflected
the terms of the Agreement in relation to remuneration and leave benefits. The second was
that the amount which Pope Nitschke did in fact pay for the long service leave was much less
than what was required by the Agreement, and this was not taken into account by the
Commissioner (ground 7).
[53] These contentions require an analysis of the relevant provisions of the (now
terminated) Agreement considered in their statutory context. The Agreement was approved on
13 February 2008 as an employee collective agreement under the provisions of the WR Act as
it then stood. Section 17 of the WR Act then provided, subject to certain exceptions which are
not presently relevant, that awards and workplace agreements prevailed over State and
Territory laws to the extent of any inconsistency. That meant that, with respect to long service
leave, any provisions of the Agreement prevailed over inconsistent provisions of the SA LSL
Act. Additionally, long service leave did not form part of the Fair Pay and Conditions
Standard established by Part 7 of the WR Act, nor was it one of the “protected award
conditions” specified in s.354 which, in order to pass the “fairness test” for approval, had to
be fairly compensated for if they were excluded or modified by the Agreement. Therefore the
statutory framework in existence at that time did not prevent the entire exclusion of long
service leave benefits otherwise provided for by State or Territory laws or their modification
in a way which would reduce their monetary value.
[54] That position was not modified by the provisions of Schedule 3 of the Transitional Act
which preserved the Agreement in effect. Item 4 of Schedule 3 provides that in respect of
instruments made under the WR Act preserved in effect under item 2, the same “instrument
content rules” - that is, the statutory provisions in effect immediately prior to 1 July 2009
which dealt with what could or could not be included in an instrument - continued to apply.
Item 5A provides that the “State and Territory interaction rules” - that is, the statutory
provisions in effect immediately before 1 July 2009 which had the effect that an instrument
prevailed over, excluded or was subject to the law of a State or Territory - continued to apply.
[55] Under s.3(2)(a) of the SA LSL Act, for employees remunerated by commission
payments, the ordinary weekly rate of pay when taking long service leave is, at any given
date, to “be ascertained by averaging the worker's weekly earnings over the 12 months
immediately preceding the relevant date”. However the Agreement provided for its own
system of payment for employees when taking leave, including long service leave, which was
manifestly inconsistent with that in the SA LSL Act. Its provisions in this respect therefore
prevailed over the SA LSL Act.
[56] Clause 17 of the Agreement provided (noting that Ms Parsons was paid on a
commission-only basis):
“17 Long service leave
17.1 You will receive the following entitlement to long service leave:
[2016] FWCFB 375
19
Whatever is specified in the applicable State legislation with the following
modifications:
(a) We may agree in writing (signed and dated) for you to cash out long service
leave including for pro rata leave once you have seven complete years of
service
(b) If you take or cash out long service leave you will be paid at your basic rate
of pay. Long service leave will not be payable on
Commissions/incentives/bonuses. Cashing out long service leave means you
lose the entitlement to take long service leave and you receive the cash in lieu.
A commission only salesperson’s basic rate of pay will be calculated as the
same as for annual leave.”
[57] Clause 14, which dealt with annual leave, did not expressly deal with the rate of pay
that was payable for annual leave for commission-only employees, except that it contained the
following: “[Note: How payment for annual leave is handled for a salesperson earning
commission is dealt with in the Schedule]”.
[58] Clause S1.1(F) of Schedule 1 outlined the remuneration arrangements for commission-
only salespersons, and relevantly provided that such an employee must always receive as a
minimum the “relevant pay scale for a basic periodic rate of pay” under the “Australian Fair
Pay Commission’s Real Estate Agents (Commission Only) Australian Pay and Classification
Scale”. The Real Estate Agents (Commission Only) Australian Pay and Classification Scale
ceased to operate in respect of real estate salespersons when the Real Estate Industry Award
201017 came into effect on 1 January 2010 (see item 11 of Schedule 9 of the Transitional Act).
[59] Clause S2.8 of Schedule 2 of the Agreement was entitled “Interaction between your
commission payments and other payments”, and subclauses (b) and (d) of the clause
relevantly provided:
“(b) Annual leave and paid personal/carer’s leave payments
(i) ...
OR
(ii) If you are guaranteed a basic piece rate of pay (commission only) for your
work performed then your basic periodic rate of pay for the purposes of
payment for annual leave and paid personal/carer’s leave is calculated by using
the formula in the Regulations for piece rate employees.
(iii) If you are guaranteed a basic piece rate of pay (commission only) for your
work performed then your actual commission rate is a loaded rate in that
11.54% of your actual commission rate represents the employer’s advanced
payment for annual leave and paid personal/carer’s leave. This means when
you take annual leave or you have accrued annual leave when your
employment ends or when you take paid personal/carer’s leave, you have
already been paid in advance for such leave.
17 MA000106
[2016] FWCFB 375
20
However, when you actually take such leave (or have accrued annual leave
when your employment ends) the employer must make up any difference if
what you have been paid in advance for such leave is less than the amount as
calculated in accordance with the piece rate formula prescribed in the
Regulations.
…
(d) Minimums
Despite:
(i) What debits or deductions come out of the employer’s commission or the
employee’s commission; and
(ii) What salesperson’s commission will be a loaded rate for advanced payment of
annual leave or personal/carer’s leave; and
(iii) What salesperson’s commission is a package inclusive of superannuation
the salesperson must always receive at least as a minimum the relevant pay scale and
that superannuation is paid in addition to the pay scale.”
[60] The “Regulations” referred to in the above provisions were the Workplace Relations
Regulations 2006 (WR Regulations). Regulation 7.7A provided for a formula for the
calculation of a “basic periodic rate of pay”, expressed as an hourly rate, for piece rate
employees for the purpose of annual leave entitlements. Expressed simply, the basic periodic
rate of pay is the total amount of the employee’s piece rate earnings for the previous 12
months (or the employee’s period of service if the employee has served less than 12 months)
divided by the total number of hours worked by the employee over the same period. Under
s.232 of the WR Act, a full-time employee was entitled to 152 hours per year of annual leave,
so that when a piece rate employee took that annual leave entitlement, he or she was to be
paid 152 hours at the base periodic rate of pay calculated in accordance with reg.7.7A.
[61] The WR Regulations are no longer in effect but, in relation to piece workers covered
by a transitional instrument preserved in effect by item 2 of Schedule 3 of the Transitional
Act, reg.3.01 of the Fair Work (Transitional Provisions and Consequential Amendments)
Regulations 2009 (Transitional Regulations) sets out the same formula to calculate the “base
rate of pay” where there is no applicable transitional rate set out in the transitional instrument.
[62] Clause S2.4 of Schedule 2 of the Agreement contained an overriding provision
permitting debits from commission payments:
“S2.4 Debits from your share of commission
Any of the following debits, providing they are relevant, may be debited by the
employer either from your incentive payments if you are guaranteed a basic periodic
rate of pay for your guaranteed hours or from your commission if you are guaranteed
a basic piece rate of pay (commission only) for your work performed:
(a) Wages/salary (however described) and paid for any purpose
…
[2016] FWCFB 375
21
(h) If any wages or allowances or entitlements are ever found during or after your
employment to be payable then such wages or allowances or entitlements will be
totally off settable against your incentives earned for the entire period of your
employment.
…”
[63] The drafting of the Agreement was highly complex, to the extent that we suspect it
would be close to unintelligible to a layperson. Nevertheless we would draw the following
conclusions about what was the entitlement of commission-only employees to long service
leave under the Agreement:
(1) When commission-only employees took long service leave, or agreed to have it
cashed out, clause 17 provided that it was to be paid at the employee’s basic
rate of pay, and that rate was to be calculated by the same method as for annual
leave.
(2) Under clause S2.8(b), the annual leave amount required to be paid was the
amount calculated in accordance with the formula in reg.7.7A of the WR
Regulations, less any amount regarded as pre-paid by the 11.54% loading in
the commission rate. Because no part of that loading had the purpose of pre-
paying for long service leave, then no deduction on that score was necessary
and the amount to be paid might simply be calculated using the formula.
Whether the reference in clause S2.8(b) to the WR Regulations is to be read as
fixed despite their repeal, or read as ambulatory and thus as referring as at
October 2014 to reg.3.01 of the Transitional Regulations, does not matter
because the formulae in both are the same in their effect.
(3) In the case of an employee such as Ms Parsons who has served more than 12
months, long service leave was therefore to be paid at an hourly rate calculated
by dividing the total amount of earnings over the last 12 months by the total
number of hours worked over the last 12 months. Although the clause was not
explicit about this, we presume that a full-time employee would receive, for
each week of long service leave taken, 38 hours at the hourly rate calculated by
this method. The same method of calculation would apply in respect of an
agreement under clause 17.1(a) to cash out long service leave.
(4) Clause S2.4 had the effect, we consider, of allowing any payments made for
long service leave to act as a debit against any future commission payments.
We consider that the language of paragraphs (a) and (h) of clause S2.4 was
intractable and would clearly encompass payments made in satisfaction of long
service leave entitlements. The same conclusion would apply to a payment
made to cash out long service leave.
(5) The debiting requirement was, however, subject to the overriding requirement
in clause S2.8(d) that the employee must receive as a minimum the relevant
pay scale. As written in the Agreement, the relevant pay scale was derived
from the Real Estate Agents (Commission Only) Australian Pay and
Classification Scale. Since that instrument was no longer operative as at
October 2014, we consider that the provision would be read at that time as
referring to what was effectively the replacement instrument, the Real Estate
[2016] FWCFB 375
22
Industry Award 2010. The practical effect of that was that debits in respect of
previous long service leave payments might have to be spread out over a
number of commission payments to ensure that the employee did not receive
less than the minimum pay scale.
[64] It may be accepted that under this approach the uncomfortable outcome was that the
monetary value of long service leave entitlements was effectively negatived or rendered
illusory. However that was an outcome which the statutory workplace relations regime at the
time the Agreement was entered into permitted and which, we consider, the Agreement
clearly intended to achieve.
[65] Ground 1 of the appeal must therefore be rejected. Pope Nitschke’s intention to debit
any long service leave payments made to Ms Parsons from future commission payments was
consistent with the Agreement and did not evidence conduct repudiatory of the contract of
employment.
[66] In relation to ground 7, Ms Parsons has not demonstrated that the amounts actually
paid to her for long service leave were less than the payments required by the Agreement. Ms
Parsons’ argument in this respect proceeded on the basis that the payment had to be calculated
as a simple average of her weekly earnings over the previous 12 months. While that would
have been the applicable amount payable if the provisions of the SA LSL Act applied, the
Agreement used a different methodology as we have explained. While it has not been
explained how the amounts paid by Pope Nitschke were calculated, there was no evidence
that they were less than what the Agreement, interpreted in the way we have set out, required.
Ground 7 is rejected.
[67] We do not consider therefore that there was any error in the Commissioner’s
conclusion that the LSL direction did not force Ms Parsons to resign from her employment.
[68] Having reached that conclusion, the remaining grounds of appeal may be disposed of
shortly:
(1) In relation to ground 3, the Decision was not concerned with whether the LSL
direction was unfair, harsh or unreasonable, but only whether it forced Ms
Parsons to leave her employment. Ground 3 is rejected.
(2) Ground 5 was premised on the LSL direction leading to Ms Parsons
undergoing a “non-earning period”. For the reasons we have stated, we do not
consider that the LSL direction would have that effect.
(3) In relation to grounds 8, 9 and 11, we are inclined to the view that the
Commissioner was not entitled to make the broad adverse finding against Ms
Parsons’ credit based on her response to the order to produce documents and
her alleged lack of candour concerning the swift manner in which she obtained
alternative employment. Having reviewed the transcript, we consider that Ms
Parsons gave a reasonable and credible explanation concerning the limited
documents produced by her in response to the order,18 and the matter was not
thereafter taken up with her in a manner which would fairly allow an adverse
18 Transcript 19 October 2015, PNs 661-667
[2016] FWCFB 375
23
credit finding to be made. In relation to her new employment, we do not find
anything inherently surprising in an experienced real estate salesperson being
quickly able to obtain such employment when it is paid on a commission-only
basis. However, we have earlier explained why the LSL direction could not,
objectively considered, have had the probable effect of bringing the
employment to an end. Ms Parsons’ credit as a witness was not relevant to this
conclusion. Any error in the Decision on this score would not result in the
Commissioner’s conclusion that Ms Parsons was not dismissed being vitiated.
The same applies to the other matters raised by ground 11. Grounds 8, 9 and 11
are each rejected.
(4) In relation to ground 10, it has not been demonstrated how evidence of
differential treatment, if admitted, could possibly have altered the conclusion
that Ms Parsons was not dismissed.
Conclusion and orders
[69] For the above reasons, we do not consider that Ms Parsons has demonstrated any error
in the Commissioner’s finding that she was not dismissed by Pope Nitschke. Accordingly we
make the following orders:
(1) Permission to appeal is granted.
(2) The appeal is dismissed.
VICE PRESIDENT
Appearances:
A. Knox agent for Sharon Parsons.
A. Manos of counsel with T. Kidman solicitor for Pope Nitschke Pty Ltd ATF Pope Nitschke
Unit Trust t/a Pope Nitschke First National.
Hearing details:
2016.
Sydney:
21 January.
Printed by authority of the Commonwealth Government Printer
Price code C, PR576250
OF THE FAIR WORK MISSION THE
