[2011] FWA 6818 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Veronica Cubillo
v
North Australian Aboriginal Family Violence Legal Service
(U2011/8817)
COMMISSIONER DEEGAN |
HOBART, 5 OCTOBER 2011 |
Termination of employment - application for unfair dismissal remedy - jurisdictional objection - whether Applicant covered by an enterprise agreement or an award.
Introduction
[1] This matter arises from an application for unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act) filed in Fair Work Australia’s Darwin office on 15 June 2011 by Mrs Veronica Cubillo (the Applicant) in respect of the summary termination of her employment by the Northern Australian Aboriginal Family Violence Legal Service (the Employer) on 2 June 2011.
[2] On 24 June 2011 the Employer filed a response to the application objecting to the Tribunal’s jurisdiction to determine the application and seeking dismissal of the application on the basis that the Applicant was not a ‘person protected from unfair dismissal’ for the purposes of s.382 of the Act because she was a high income earner who was not covered by an award or an agreement. On 7 July 2011 the Applicant’s representative notified the Employer that the Applicant was covered by the Social, Community, Home Care and Disability Services Industry Award 2010 (the Modern Award).
[3] Following an unsuccessful telephone conciliation conference the matter was listed for jurisdiction hearing in Darwin on 18 August 2011. At the hearing the Applicant was represented by Mr Mahendra, a barrister, appearing by video-link from Fair Work Australia’s Sydney premises. Mr Roper, also of counsel, appeared for the Employer.
Background
[4] The Applicant commenced employment with the Employer on 7 September 2009 in the capacity of a ‘Cultural Services Manager’. She was appointed to the position of Chief Executive Officer from 24 May 2010. She continued in that position until her dismissal in June 2011.
[5] Over the course of the employment relationship four successive contracts applied to the Applicant’s employment with the Employer:
[6] It was the 2011 Contract which applied to the Applicant’s employment at the date of the dismissal. The Applicant’s employment was terminated on 2 June 2011.
The Employer’s case
[7] The Employer relied on the objections set out in the Form 4 - Objection to Application for Unfair Dismissal Remedy - filed with the Tribunal prior to the hearing, and a witness statement 5 was filed on behalf of the Employer by its acting Chief Executive Officer Mr Wayne Connop. Mr Connop’s statement was used primarily as a vehicle through which to admit into evidence those documents relevant to the Applicant’s employment. Mr Connop was not required for cross-examination.
[8] It was the case for the Employer that the Applicant clearly earned above the ‘high income threshold’ and no enterprise agreement applied in relation to her employment. In those circumstances the Employer submitted that the sole question for determination was whether the Applicant was covered by the Award and was, as a consequence, a person protected from unfair dismissal. Mr Roper submitted that the only question for determination was whether a modern award covered the Applicant and brought her within the protection afforded by s.382 of the Act. 6 It was the Employer’s case that the Applicant was not covered by the Modern Award.
[9] The Employer relied on the following three authorities for the relevant methodology for determining whether or not an award covers a particular employee:
[10] It was submitted that the fundamental question to be answered in determining whether or not an award covers an employee involves the application of the ‘principal purpose test’ laid down by the Full Bench in Carpenter. Further it was put that, notwithstanding the fact that some of an employee’s activities may include activities which are subject to award coverage, if the so-called ‘principal purpose’ for which they are employed is a managerial one then that is the end of the matter. Ancillary involvement in some award covered activities was not determinative.
[11] According to the Employer, although its operations fell within the scope of activities envisaged by the definition of ‘social and community services sector’ in clause 3.1 of the Modern Award, the scope of the Applicant’s employment went beyond those activities. It was put that her duties were clearly managerial in nature and thus not “direct” or “hands-on” in relation to the matters referred to in clause 3.1. 10 The Employer submitted that the CEO position description11 and the contents of the Applicant’s own statement12 were consistent with this proposition.13
[12] It was also the Employer’s case that award coverage extends only to those employees falling into one of the categories listed in clause 10 of the Modern Award (i.e. full-time, part-time and casual employees). While the Employer accepted that the Applicant was a ‘full-time employee’ in the general sense of that term, it was submitted that she was not a full-time employee for the specific purpose of sub-clause 10.1(a)(i) of the Modern Award. 14 The Employer contrasted the position under clause 25.1 of the Modern Award, which sets the ‘ordinary hours of work’ for full-time award covered employees at 38 hours, with clause 4 of the 2011 Contract which provided:
4. Hours of work
4.1 The Employee’s ordinary hours of work are 38 per week, averaged over a 12-month period.
4.2 In addition, the Employee may be required to work additional hours, as are reasonably necessary to complete the Employee’s duties.
4.3 The salary and benefits payable to the Employee under this Agreement is in respect of all hours worked.
[13] The Employer also noted clause 28.1 of the Modern Award provided that hours worked in excess of 38 hours per week attracted overtime penalty rates, while there was no such entitlement under the 2011 Contract. It was put that this was a further indication that the parties to the 2011 Contract understood that the Award did not apply. 15
[14] It was further submitted for the Employer that the drafting of other provisions of the 2011 Contract supported the proposition that the Modern Award did not cover the Applicant. 16 Clause 5.1 of the 2011 Contract included a provision that the Applicant’s salary would be in accordance with the Northern Territory Social and Community Services Award (the NT Award or the transitional award) with some conditions and benefits covered under the Modern Award. It was put that the reference to both a modern award and a transitional award supported the Employer’s position because Item 29 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 precludes the application of transitional awards in situations where a modern award applies. According to the Employer it was not intended that either award apply to all aspects of the employment relationship. Rather, the reference to the awards in the 2011 Contract functioned to help the parties understand the “style” of Award entitlements which applied in some respects.
[15] The Employer noted that the redundancy entitlements provided in clause 26 of the 2011 Contract were to be in accordance with the provisions of the Modern Award. It was put that the fact that the parties considered it necessary to expressly state that redundancy be dealt with in accordance with the Modern Award strongly suggested that the Modern Award did not otherwise apply.
[16] Finally, it was submitted that the characteristics and responsibilities of the Applicant’s role as CEO of the Employer did not fall within the compass of the social and community services employee level 8 classification in Schedule B to the Modern Award. According to the Employer the reference to level 8 social and community services employees being subject to direction from ‘senior officers’ suggested that employees at the level 8 classification are to be subject to direction from “someone else within the corporate structure at a level somewhere inferior to the board”. 17 Further, the description of level 8 duties made it clear that the classification applied to employees at an upper mid-level management or lower senior management level - not to a CEO who was at the helm of the organisation and who is responsible for top level management and direction.18
The Applicant’s Case
[17] The Applicant’s evidence was contained in a statement. 19 The Applicant contended that she was covered by the Modern Award, and therefore protected from unfair dismissal at the time of her termination.
[18] It was submitted on the Applicant’s behalf that to rely on the definition of ‘social and community services sector’ in clause 3.1 of the Modern Award to determine whether or not an employee falls within the award’s compass was to adopt an incorrect approach, as the coverage clause of the Modern Award (clause 4) evidenced a clear intention to cover all employees employed in the community services sector in the classifications listed in schedules B to E. It was put that it was necessary to look at whether the Applicant was an employee as defined in one of the award classifications. 20 In this respect it was noted that level 8 of the Social and community services employee classification specifically requires the relevant employee to exercise managerial responsibility for the organisation’s activities.21
[19] The Applicant did not accept that she was disentitled to the benefit of Modern Award coverage simply because the 2011 Contract required her, where necessary, to work more than 38 hours a week. Although the 2011 Contract made no provision for payment of overtime, it was noted that clause 4.4 provided for time off in lieu to be granted for time worked outside ordinary working hours. It was put that this was consistent with clause 28.2 of the Modern Award which contemplated employees being compensated for additional hours by way of time-off instead of payment of overtime.
[20] It was the Applicant’s submission that she was clearly a full-time employee for the purposes of the Modern Award, albeit one charged with upper level managerial responsibilities. It was also argued that, contrary to the position put by the Employer, the drafting of the 2011 Contract which made provision for TOIL and redundancy was at odds with standard practice regarding employment arrangements for senior employees beyond the scope of award coverage. It was noted for the Applicant that the parties’ understanding was, in any event, irrelevant as it was not possible to contract-out of the application of modern awards.
[21] It was argued for the Applicant that the fact that the Social and community services employee level 8 classification envisages broad direction from ‘senior officers’ does not mean that that the Applicant’s situation is not contemplated by that classification. Attention was drawn to the terminology used in the (lower) Social and community services employee level 6 classification, which contemplates employees at that level operating under the management of ‘senior employees’. It was submitted that the use of the term ‘senior officers’ in level 8 was intended to encompass senior executive employees who did not report to “other employees” but to a board of directors and/or a chairperson. 22 Further, it was submitted that the fact that level 7 employees are subject to “limited direction” and are charged with managerial responsibilities meant that level 8 employees had to be “one step higher than that” at what the Applicant considered to be the “upper echelons of management” within an organisation. It was the Applicant’s case that the fact that she exercised managerial responsibility did not disentitle her to the protection of the Modern Award.
[22] It was the case for the Applicant that it is necessary to look at the relevant award classifications in order to determine whether or not an employee is covered by that award. It was submitted that, given the breadth of the level 8 classification, it was clear that the Applicant fell within the compass of that classification.
[23] Finally, it was submitted that cases concerning other awards, in which managerial responsibilities have been deemed to remove an employee from the scope of an award, are not relevant to this matter in which several of the Modern Award’s classifications expressly require the exercise of managerial responsibilities (particularly at the level 8 classification).
Employer’s Submissions in Reply
[24] The Employer accepted that if the Modern Award ‘covers’ the Applicant then the protection flows. 23
[25] While accepting that one cannot contract-out of a modern award, the Employer submitted that the parties’ understandings and intentions are nevertheless relevant considerations for determining the ‘primary purpose’ of the employment.
[26] In essence, the Employer’s case was that the Applicant was not covered by the Modern Award as:
Relevant Statutory Provisions
[27] Section 382 of the Act provides as follows:
382 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.
Note: High income threshold indexed to $118,100 from 1 July 2011
47 When a modern award applies to an employer, employee, organisation or outworker entity
When a modern award applies to an employee, employer, organisation or outworker entity
(1) A modern award applies to an employee, employer, organisation or outworker entity if:
(a) the modern award covers the employee, employer, organisation or outworker entity; and
(b) the modern award is in operation; and
(c) no other provision of this Act provides, or has the effect, that the modern award does not apply to the employee, employer, organisation or outworker entity.
Note 1: Section 57 provides that a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.
Note 2: In a modern award, coverage of an outworker entity must be expressed to relate only to outworker terms: see subsection 143(4).
Modern awards do not apply to high income employees
(2) However, a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) at a time when the employee is a high income employee.
Modern awards apply to employees in relation to particular employment
(3) A reference in this Act to a modern award applying to an employee is a reference to the award applying to the employee in relation to particular employment.
48 When a modern award covers an employer, employee, organisation or outworker entity
When a modern award covers an employee, employer, 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.
Note: In a modern award, coverage of an outworker entity must be expressed to relate only to outworker terms: see subsection 143(4).
Consideration
[28] The question for determination in this matter is whether the Modern Award covers the Applicant. If it does then, although the Applicant’s annual rate of earnings exceeded the high income threshold, she is a person protected from unfair dismissal for the purposes of s.382 of the Act.
[29] The relevant provision of the Modern Award provides as follows:
4.1 This industry award covers employers throughout Australia in the:
(a) crisis assistance and supported housing sector;
(b) social and community services sector;
(c) home care sector;
(d) family day care scheme sector;
and their employees in the classifications listed in Schedule B to Schedule E to the exclusion of any other modern award.
[30] The evidence was that the employer was an organisation in the social and community services sector.
[31] The Applicant’s case is that she was an employee in a classification in Schedule B to the Modern Award, specifically a Social and community services employee level 8.
[32] Both the Employer and the Applicant accept that the Employer is covered by the Award. In order to determine whether the Applicant is covered by the Award it is necessary to analyse the terms of the relevant award and undertake an analysis of the role and the duties of the employee concerned. Relevantly Schedule B of the Modern Award provides as follows:
B.8 Social and community services employee level 8
B.8.1 Characteristics of this level
(a) A person employed as a Social and community services employee level 8 is subject to broad direction from senior officers and will exercise managerial responsibility for the organisation’s relevant activity. In addition, employees may operate as a senior specialist providing multi-functional advice to either various departments or directly to the organisation.
(b) A person employed as a Social and community services employee level 8 will be subject to broad direction from management/the employer and will exercise managerial responsibility for an organisation. In addition, employees may operate as a senior specialist providing multi-functional advice to other professional employees, the employer, Committee or Board of Management.
(c) General features of this level require the employee’s involvement in the initiation and formulation of extensive projects or programs which impact on the organisation’s goals and objectives. Employees are involved in the identification of current and future options and the development of strategies to achieve desired outcomes.
(d) Additional features include providing financial, specialised, technical, professional and/or administrative advice on policy matters within the organisation and/or about external organisations such as government policy.
(e) In addition, employees will be required to develop and implement techniques, work practices and procedures in all facets of the work area.
(f) Employees at this level require a high level of proficiency in the application of theoretical approaches in the search of optimal solutions to new problems and opportunities which may be outside of the original field of specialisation.
(g) Positions at this level will demand responsibility for decision-making within the constraints of organisational policy and require the employees to provide advice and support to all facets of the organisation. Employees will have significant impact upon policies and programs and will be required to provide initiative, and have the ability to formulate, implement, monitor and evaluate projects and programs.
(h) Positions at this level may be identified by the significant independence of action within the constraints of organisational policy.
B.8.2 Responsibilities
A position at this level may include some of or similar responsibilities to:
(a) undertake work of significant scope and complexity. A major portion of the work requires initiative;
(b) undertake duties of innovative, novel and/or critical nature with little or no professional direction;
(c) undertake functions across a range of administrative, specialist or operational areas which include specific programs or activities, management of services delivery and the provision of high level advice;
(d) provide authoritative specialist advice on policy matters and contribute to the development and review of policies, both internal and external;
(e) manage extensive programs or projects in accordance with organisational goals. This may require the development, implementation and evaluation of those goals;
(f) administer complex policy and program matters;
(g) may offer consultancy service;
(h) evaluate and develop/revise methodology techniques with the organisation. The application of high level analytical skills in the attainment and satisfying of organisational objectives;
(i) where the prime responsibility is in a specialised field, employees at this level would undertake at least some of the following:
(i) contribute to the development of operational policy;
(ii) assess and review the standards of work of other specialised personnel/external consultants;
(iii) initiate and formulate organisational programs;
(iv) implement organisational objectives within corporate goals;
(v) develop and recommend ongoing plans and programs.
B.8.3 Requirements of the position
Some or all of the following are needed to perform work at this level:
(a) Skills, knowledge, experience, qualification and/or training
(i) detailed knowledge of policy, programs, guidelines, procedures and practices of the organisation and external bodies;
(ii) detailed knowledge of statutory requirements.
(b) Prerequisites
(i) qualifications are generally beyond those normally acquired through a degree course and experience in the field of specialist expertise;
(ii) substantial post graduate experience;
(iii) lesser formal qualifications and the acquisition of considerable skills and extensive and diverse experience relative to an equivalent standard; or
(iv) attained through previous appointments, service and/or study with a combination of experience, expertise and competence sufficient to perform the duties of the position.
[33] I am unable to accept the Employer’s proposition that if the principal purpose of the Applicant’s employment was of a managerial nature she cannot be covered by the Modern Award. Clearly a number of classifications in Schedule B of the Modern Award anticipate an employee performing a management role and at a very high level. I accept that this is not the case with most awards. With some awards it is clear that management roles are excluded. In this award, however, management roles are clearly included.
[34] In order to determine whether the classification - Social and community services employee level 8 - covers the role performed by the Applicant it is necessary to compare the requirements of that classification set out at Item 8 of Schedule B of the Modern Award with her role and position description. It is clear that those characteristics of a level 8 employee which are set out at B8.1 (f) and (g) are compatible with a position at the CEO level.
[35] The Employer argues that the reference to “senior officers” in Schedule B8.1(a) is an indication that the level is not intended to encompass an employee at the CEO level, where there is no more senior officer. The Applicant claims that this is not determinative and contrasts the use of the word “officer” in schedule B8.1(a) with the reference to “senior employees” in the level 6 classification, asserting that the “officers” could be a reference to officers of the Board of the organisation.
[36] The Employer also argued that the Applicant could not be covered by the Modern Award as the terms of her employment contract indicate a clear intention that the Modern Award should not cover her. The Employer conceded, however, that the intention of the parties in this regard would not be conclusive as it is not possible to contract-out of award coverage (as opposed to award application).
[37] While the wording of the 2011 Contract may be indicative of an intention by the parties that the Modern Award will not cover the Applicant’s position it is also consistent with an intention that the award will not apply to that employment. In my view the 2011 Contract is of little assistance in determining the Applicant’s award status. The provisions of the 2011 Contract are unclear. Its terms provide that the Applicant will receive a salary in accordance with the NT Award, however, her salary of $130,000 per annum is double that of the highest salary provided under that award.
[38] The Modern Award is the product of the award modernisation process undertaken by the Australian Industrial Relations Commission in 2008 and 2009. An examination of the process through which the Modern Award was developed indicates that the basis for the classification levels in the Modern Award was the classification structure found in the Queensland State Award covering the community services sector. In its submissions to the award modernisation process the Australian Municipal, Administrative, Clerical and Services Union (ASU) stated that the classifications and wage rates it had adopted for the social and community services employees largely reflected those to be found in the Social and Community Services (Queensland) Award 2001. According to the submission of the ASU, “[a]s a result of a decision by QIRC Commissioner Fisher handed down on 6 May 2009 24 new rates of pay reflecting work value changes, equal remuneration principles and the rationalisation of SACS award and CASH award classification structure now provides the most appropriate and relevant structure in the SACS industry nationally”.25 The ASU noted that it was its intention to “cover all employees in the sector (other than to any exclusions noted above)”.26 The only exclusions sought were for employees excluded by the Act or covered by enterprise awards or NAPSAs, and employees in residential aged care. Where an employee was covered by more than one award the most appropriate classification was to apply.
[39] During the consultation process relating to the proposed Modern Award, the Australian Federation of Employers in Industry (AFEI) noted that the draft award proposed by the ASU sought to include a management structure in the award classification structure. 27 AFEI sought the inclusion of an exemption clause of the type found in the relevant New South Wales state award28 which, it was said, functioned to exempt managerial persons or persons exercising managerial functions.29 AFEI also sought the inclusion of an “exemption rate” in the Modern Award which would exclude employees with salaries a certain percentage above the award rate for various award entitlements, such as overtime. The NSW Award at clause 20 relevantly provides:
Exemptions
An employee who is in receipt of at least 5% in excess of the rates of pay set out for a Grade 6, Year 2 employee in ‘Tables 1 to 4 - Rates of Pay’ of this Award, as payable at that time, shall be exempt from the provisions of Part III, Hours of Work of this Award and from the provisions of Clause 32 - On-Call Allowance of Part V, Allowances, Expenses and Amenities of this Award.
Exclusions
The following employees shall be excluded from this Award:
(i) ...
(ii) the principal officer of an organisation where that principal officer has the legal and/or managerial responsibility of that organisation.
[40] The ASU opposed the inclusion of any exemption or exemption rate in the Modern Award. The final Modern Award did not include any exemptions of the type found in the NSW Award and included, unchanged (at least for level 8) the classifications structure drawn from the Queensland state award. No changes were made to the coverage clause, as sought by the ASU, in order to limit in any way award coverage of all employees in the sector.
[41] The decision 30 of the QIRC to which the ASU referred further indicates that the new classifications to be included in the Queensland Award did include management at the highest level in community sector organisations. Fisher C stated as follows:
“The greatest increases have also been awarded at Level 8 in light of the complexity of the role. The Commission was concerned during these proceedings about whether the managerial positions in medium sized organisations such as those held by Ms Bartolo and Ms Walsh are suitably classified at Level 8. These positions are responsible for a sizeable number of employees; multi-million dollar budgets; multiple worksites; significant amounts of plant and equipment and have substantial accountabilities to their committees of management and to funding bodies. Despite the level of increases granted there is a compelling case that positions with such significant responsibilities should either not be classified under the Award, or alternatively, if this is not industrially acceptable, for the Award classification structure to be amended to accommodate employees performing such duties and having such responsibilities. The approach adopted in the Queensland Local Government Award for executive classifications and salaries is recommended for consideration for all "chief executive" positions of community services organisations but particularly those of medium sized organisations.” 31
[42] There is no indication that any action has been taken to remove from the classifications in the award managerial positions of the type referred to in the Queensland decision.
[43] The history surrounding the making of the Modern Award indicates that it was intended to cover managerial positions in the social and community services sector of the type occupied by the Applicant. I can see no compelling reason to find that the Applicant’s award coverage has been removed. I find that the Applicant is a person covered by an award and therefore within the unfair dismissal jurisdiction of the Act. The matter will be referred for conciliation.
COMMISSIONER
Appearances:
Mr D. Mahendra, of counsel, for the Applicant.
Mr W. Roper, of counsel, for the Employer.
Mr D. Sweet, Cridlands MB Lawyers, for the Employer.
Hearing details:
2011.
Darwin:
August, 18.
1 Annexure A to Exhibit R1.
2 Annexure C to Exhibit R1.
3 Annexure D to Exhibit R1.
4 Annexure E to Exhibit R1.
5 Exhibit R1.
6 Transcript PN32.
7 Leigh Carpenter v Corona Manufacturing Pty Ltd [2002] AIRC 1562, PR925731 (SDP Williams, SDP Lacy & Tolley C).
8 R Brand v APIR Systems Limited [2003] AIRC 1161, PR938031 (Giudice J, SDP Marsh & Thatcher C).
9 Tucker v Digital Diagnostic Imaging Pty Ltd [2011] FWA 1767 (Cambridge C).
10 Transcript PN54-PN55.
11 See Attachment C to Exhibit R1 - position description and responsibilities etc at rear of June 2010 contract.
12 See paragraphs 7 and 8 of Exhibit C1.
13 Transcript PN117-PN118.
14 Transcript PN173.
15 Transcript PN122 and PN126.
16 See Transcript PN123-PN126.
17 Transcript PN132.
18 Ibid.
19 Exhibit C1.
20 Transcript PN137.
21 See Transcript PN80 and PN159.
22 Transcript PN163.
23 Transcript PN173.
24 QCU v QCCI & Other QIRC comm. 33: 191 QGIG 19.
25 Australian Services Union Submissions to the AIRC re: Stage 4 industries / occupations - (AM2008/79) Health and welfare services (remainder) – Social and community services (amended submissions of 24 July 2011) at paragraph 51. See link: <http://www.airc.gov.au/awardmod/fullbench/industries/awardmodindustry.cfm?award=social>
26 Ibid at paragraph 49.
27 Transcript of Proceedings in AM2008/76 & AM2008/79 (Melbourne, 6 August 2009, Cribb C) at PN456.
28 Social and Community Services Employees (State) Award (AN120505). See link: <http://www.fwa.gov.au/consolidated_awards/AN/AN120505/asframe.html>
29 Transcript of Proceedings in AM2008/76 & AM2008/79 (Melbourne, 6 August 2009, Cribb C) at PN456.
30 (2009) Queensland Industrial Gazette Vol 191, No 2 pages 19 -59.
31 (2009) 191/2 QGIG 19
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