Fair Work Act 2009

s.604 - Appeal of decision

Permission to appeal and appeal sought in relation to decision [2019] FWC 3384 of Commissioner Johns at Sydney on 16 July 2019 in U2019/168 - whether covered by modern award - principal purpose test - permission to appeal not in public interest - permission refused.

[1] Mr Andrew McFarlane was employed in the role of Project Manager / Senior Project Engineer by SRG Civil Pty Ltd from 19 January 2015 until 17 December 2018. After his employment was terminated, he applied for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) from the Fair Work Commission (the Commission). SRG Civil objects to the application on jurisdictional grounds. It submits that Mr McFarlane was not protected from unfair dismissal because his income was above the high income threshold and he was not covered by a modern award or enterprise agreement. Mr McFarlane agrees that his income was above the high income threshold but submits that he was covered by the Professional Employees Award 2010 (the Award) as a Level 3 Professional.

[2] A modern award covers an employee if the award is expressed to cover the employee.[1] In this regard, it is common ground that to be covered by the Award, Mr McFarlane must have been "performing professional engineering duties" - defined in the Award as "duties carried out by a person in any particular employment, the adequate discharge of any portion of which duties requires qualifications of the employee as (or at least equal to those of) a graduate member of Engineers Australia". That is, did he require engineering qualifications to be able to satisfactorily do some or all of the things he was required to do, and did?

[3] In addition, Mr McFarlane must have been covered by one of the classifications in Schedule B to the Award.[2]

[4] On 16 July 2019, Commissioner Johns decided that Mr McFarlane was not covered by the Award and was not protected from unfair dismissal (the Decision).[3] He dismissed Mr McFarlane's unfair dismissal application.

[5] Mr McFarlane seeks permission to appeal and seeks to appeal the Decision on the grounds that the Commissioner:

1. Erred in concluding that no aspect of Mr McFarlane's work required him to undertake engineering work or have a professional engineering qualification (at paragraphs [34] and [35] of the Decision) (Ground 1);

2. Wrongly applied the principal purpose test in determining whether the Award applied (Ground 2);

3. Erred in concluding that to the extent Mr McFarlane provided engineering work in an advisory capacity, it was not work he was required to do, not part of his duties and not relevant (Ground 3);

4. Asked the wrong question of whether or not Mr McFarlane had made unique engineering contributions to the business (Ground 4); and

5. Erred in only considering whether Mr McFarlane had authority to sign off on engineering design work and failing to have regard, or sufficient regard, to his responsibility to be involved in the design of anchor works and his accountability in respect of design and technical issues in his role as Senior Project Engineer (Ground 5).

[6] For the reasons that follow, we have decided not to grant permission to appeal.

[7] An appeal under s.604 of the Act is by way of rehearing. The Commission's powers on appeal are only exercisable if there is error on the part of the primary decision maker.[4] There is no right to appeal and an appeal may only be made with the permission of the Commission.

[8] Further, this appeal is from a decision made under Part 3-2 (Unfair Dismissal) of the Act and hence s.400 of the Act applies. Section 400 provides:

"(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.

(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact."

[9] The legislative scheme manifests an intention that the threshold for a grant of permission to appeal be higher in respect of unfair dismissal appeals than the threshold applicable to appeals generally.[5]

[10] In Coal & Allied Mining Services Pty Ltd v Lawler and others,[6] Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as "a stringent one".[7]

[11] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.[8] In GlaxoSmithKline Australia Pty Ltd v Makin[9] a Full Bench of the Commission identified some of the considerations that may attract the public interest:

"... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters."[10]

[12] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[11] However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal and the public interest is not satisfied simply by the identification of error, or a preference for a different result.[12]

Grounds 1 and 3 - whether performing professional engineering duties

[13] It is convenient to deal with these grounds together because in each case, the findings at issue were relevant to the question of whether Mr McFarlane was performing professional engineering duties. In summary, it is said that the Commissioner drew the wrong conclusions about whether Mr McFarlane's role required him to undertake engineering work or to hold professional engineering qualifications.

[14] The relevant findings of the Commissioner are set out from paragraphs [31] to [36] of the Decision, as follows:

"[31] I am not satisfied that the Applicant made unique engineering contributions such that it could be said that engineering qualifications were necessary to discharge his role. There was a lack of clarity around what he actually did from an engineering perspective. In his evidence before me I sought to clarify what the Applicant meant when, in relation to engineering work, he used the phrase "work with" e.g. temporary works designers. His answers lacked the necessary degree of detail for me to conclude that "work with" meant that he was performing any work where the adequate discharge of any proportion of it required engineering qualifications, let alone at the Level 3 Professional classification in the Award.

[32] The Applicant was, first and foremost, a Project Manager and his principal tasks involved managing the client contract and other contracts to ensure that the Project was completed in manner that was safe, timely and cost effective.

[33] I have made a finding of fact about that "notwithstanding responsibility for technical matters being vested with Mr Sinclair the Applicant's regularly spoke with Mr Sinclair about technical matters and discussed how they should be submitted to the client, WaterNSW. The Applicant's ability to meaningfully discuss these matters necessitated him relying upon his engineering skills publications and experience." However, this finding of fact does not equate to a finding that the principal purpose of the Applicant's position was that of engineer. I also accept the evidence of the Applicant that he created some documents that gave his professional engineering advice and that he gave information to Mr Hawkins about the loads needed for design purposes. However, neither do these findings of fact give rise to a conclusion that this was the principal purpose of his role. The Applicant was required to liaise with engineers. Because of his qualifications skill and experience the Applicant involved himself in works and offered his opinion, however, he did not have the authority to get involved in the technical aspects of design work and at no stage did he have the authority to sign off on technical aspects of any engineering design as it related to the anchor works. The Applicant accepted this proposition in cross-examination. There were times when the Applicant signed off on temporary works as an engineer when the responsible person was on annual leave. But that was not the principal purpose of his role.

[34] Having considered all the evidence I am not satisfied that any aspect of the Applicant's work required him to undertake engineering work. His qualification was not needed to discharge his position as Project Manager.

[35] That is not to say the Applicant did not do any engineering like work. Clearly he did. Further, the Respondent received the benefit of that work. However, to the extent that the Applicant was performing engineering work he was doing it in an advisory capacity. There was no requirement that he do it. It was other personnel within the operations of the Respondent at the Project that had responsibility for engineering matters. Additionally it was SMEC who determined matters concerning design and engineering. Mr McFarlane did not sign off on or verify project design works. He was not exercising and was not required to exercise his qualifications as an engineer (except on rare occasions - e.g. when the responsible engineer was on annual leave). This was not the principal purpose of his role with SRG Civil.

[36] In the present case, an examination of the nature of the work and the circumstances in which the Applicant was employed to do the work by the Respondent demonstrates that the principal purpose for which the Applicant was employed was that of Project Manager. That is to say, he was not "performing professional engineering" as required by the coverage clause 4.1 of the Award and no portion of any of his duties required the adequate discharge of his qualifications. Consequently, the Applicant was not covered by the Award."[13] (references omitted)

[15] It seems to us at least arguable that the Commissioner made an error of fact in concluding that Mr McFarlane was not performing professional engineering duties as defined in the Award. Mr McFarlane is a qualified civil engineer and member of the Institute of Engineers Australia. There was evidence to the effect that his engineering qualifications and experience were both necessary in the performance of at least some of his work and relied upon by SRG Civil. Indeed, the Commissioner found (at paragraph [10(y)] of the Decision) that Mr McFarlane's ability to meaningfully discuss matters for which he had responsibility as Project Manager "necessitated him relying upon his engineering skills publications and experience." The finding is arguably incongruous with the Commissioner's ultimate conclusion that Mr McFarlane was not performing any professional engineering duties, including because they were not required of him.

[16] At the time of dismissal, and in addition to his role of Project Manager for the Keepit Dam Project, Mr McFarlane was the appointed "Senior Project Engineer". His contract of employment made his ongoing employment conditional upon maintenance of licenses, certificates and qualifications required to perform his duties. Evidence of same was to be produced upon request, and shortly after he was employed, Mr McFarlane was required to produce evidence of his engineering qualifications and memberships to the head contractor of the project for which he was responsible at that time. In a similar vein, in its bid for the Keepit Dam Project, Mr McFarlane's resume was put forward describing him as a "professional engineer" and listing his engineering qualifications and memberships. Each of these facts arguably tends in favour of a conclusion that some portion of his duties required engineering qualifications.

[17] It is also arguable that in characterising Mr McFarlane's performance of engineering work as voluntary and of an advisory nature, the Commissioner did not give sufficient weight to Mr McFarlane's overall responsibility for the Keepit Dam project, including for the quality of work produced. In providing advice to others involved in the project about certain aspects or issues, it seems arguable that he did so in his capacity as an employee and specifically as both Project Manager and Senior Project Engineer. It is similarly arguable in our view that adequate performance of that role required an understanding of engineering design principles and methodology on the basis that it was only by reason of his qualifications and experience that he was given responsibility for meeting each of the project's deliverables, including budgeting, safety and quality standards.

[18] These are issues that fall in the category of arguable errors of fact. The facts in issue are of significance, because they form the basis for deciding whether Mr McFarlane was performing professional engineering duties - an essential condition of coverage by the Award. They are matters upon which an appeal may be raised if permission to appeal is granted.

Grounds 2, 4 and 5- application of the principal purpose test

[19] By these grounds, Mr McFarlane submits that the Commissioner incorrectly applied the principal purpose test in determining whether he was covered by the Award, including by asking the wrong question of whether he had made unique engineering contributions to the business, and not giving adequate weight to the engineering aspects of Mr McFarlane's role. The Commissioner's findings in this regard are those extracted above.

[20] The principal purpose test is well settled and was summarised in Carpenter v Corona Manufacturing[14]:

"In our view, in determining whether or not a particular award applies to identified employment, more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed. In this case, such an examination demonstrates that the principal purpose for which the appellant was employed was that of a manager. As such, he was not "employed in the process, trade, business or occupation of ... soliciting orders, obtaining sales leads or appointments or otherwise promoting sales for articles, wares, merchandise or materials" and was not, therefore, covered by the award."[15] (references omitted)

[21] It was necessary for the Commissioner to apply the principal purpose test in this case to decide whether Mr McFarlane was covered by one of the classifications in Schedule B to the Award.

[22] The Commissioner set out the relevant legal principles and proceeded to inquire as to the nature of Mr McFarlane's role. At paragraphs [32] and [33] he made findings about what he considered to be the principal tasks of Mr McFarlane's role, including that the principal purpose of the role was not one of "engineer". In doing so, the Commissioner had regard to previous decisions of the Commission including those dealing with whether particular project managers were covered by the Award. He considered the extent to which actual engineering work was part of Mr McFarlane's role. He dealt, at paragraph [35], with the nature and extent of Mr McFarlane's responsibility for engineering design work including in relation to the anchor works and his accountability for design and technical issues. We discern no arguable case of appealable error in the Commissioner's analysis of the nature of Mr McFarlane's role and circumstances.

[23] However, the principal purpose test also directs attention to the nature of work covered by the Award. Only once that is understood can the purpose of an employee's role be properly assessed through the lens of whether it is of the same or a different character or quality to the type of work covered by the Award.

[24] The Commissioner was given little assistance from the parties in this respect. Their submissions as to whether the duties Mr McFarlane performed fell within the Level 3 classification in the Award (or any other classification for that matter) can best be described as brief. No analysis of the nature of work covered by the Award was put before the Commissioner. In our view, this helps to explain why the Decision arguably also does not deal with the matter in any significant way. That is not to say that the Commissioner can necessarily be said to have paid no regard to relevant award classifications in reaching his conclusion. For example, his finding in relation to unique engineering contributions at paragraph [31] points to having in mind one of the indicators of a Level 3 Professional being that they "may make some original contribution or apply new professional approaches and techniques to the design or development of equipment or products".

[25] The case put by Mr McFarlane at first instance was affected by the same arguable error of which he now complains. His submissions of 19 April 2019 at paragraph 18 (set out in full in the Decision) conflated the two conditions for award coverage, submitting "the Applicant was employed for the principal purpose of performing "professional engineering duties" within the classification of Level 3. Arguably, that approach led the Commissioner to express his conclusions in a way that did not clearly delineate between the two different conditions of award coverage - firstly, whether Mr McFarlane was performing professional engineering duties, and secondly, whether he was employed in a classification in Schedule B to the Award. As a result, the Decision discloses arguable appealable error in failing to take into account or give adequate weight to a relevant consideration - that being the nature of work covered by the Award.

[26] The question remains whether permission to appeal should be granted.

Is it in the public interest to grant permission to appeal?

[27] As outlined above, an appeal may attract the public interest where it raises issues of importance and general application or where appellate guidance is appropriate because of a diversity of decisions at first instance. Other cases where the public interest may be enlivened include a decision that manifests an injustice, delivers a counter-intuitive result or relies on legal principles that appear disharmonious with other recent and similar decisions.[16] In each case it is a matter of broad value judgement.

[28] In our view, this case turns on its particular facts and circumstances. There is no relevant diversity of decisions at first instance such that appellate guidance would either be necessary or appropriate. To the contrary, the legal principles in relation to the principal purpose test are well settled. While we have identified arguable appealable error and one matter on which the Commissioner reached arguably inconsistent conclusions, we have not made a finding of that nature in relation to the Commissioner's ultimate characterisation of the principal purpose of Mr McFarlane's role not being one of "engineer".

[29] In each of the identified cases where the same question of whether a particular Manager was covered by the Award has arisen, the outcome was as it is here. Acknowledging of course that each case depends on its own facts, this circumstance tends against there being utility in granting permission to appeal because even if the arguable appealable errors are made out and corrected, it seems to us more likely than not that the result will again be that Mr McFarlane is not covered by the Award. The material and evidence that was before the Commissioner tends to support the conclusion that the principal purpose for which Mr McFarlane was employed was as a Project Manager, rather than under the Award classification of a Level 3 - Professional.

[30] For the same reason, we are not satisfied that any relevant injustice has been done to Mr McFarlane or that the Decision delivers a counter-intuitive result. As we have said, it is consistent with other decisions of the Commission. While Mr McFarlane is entitled to assert award coverage in order to access the unfair dismissal jurisdiction, there is no suggestion that either party operated on the basis that the Award covered or applied to Mr McFarlane during the period of employment.

[31] Overall, we are not persuaded that permission to appeal against the Decision is in the public interest. Accordingly, permission must not be granted.

[32] Permission to appeal is refused.

[1]Section 48 of the Act.

[3] [2019] FWC 3384.

[4] Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47; (2000) 203 CLR 194 at [17].

[5] G & S Fortunato Group Pty Ltd v Stranieri (2013) 233 IR 304 at [13]; Barwon Health - Geelong Hospital v Colson (2013) 233 IR 364 at [6]; Becke v Edenvale Manor Aged Care [2014] FWCFB 6809 at [11].

[6] [2011] FCAFC 54; (2011) 192 FCR 78.

[8] O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 234 CLR 506at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54; (2011) 192 FCR 78 at [44] -[46].

[9] [2010] FWAFB 5343, 197 IR 266.

[11] Wan v Australian Industrial Relations Commission [2001] FCA 1803; (2001) 116 FCR 481 at [30].

[12] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, (2010) 197 IR 266 at [26]- [27]; Lawrence v Coal & Allied Mining Services Pty Ltd T/A Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].

[13] [2019] FWC 3384 at [31]- [36].

[14] (2002) 122 IR 387 (AIRC, 17 December 2002).

[16] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, 197 IR 266 at [27].

Printed by authority of the Commonwealth Government Printer