Fair Work Act 2009_

s.394 - Application for unfair dismissal remedy

ParkTrent Properties Group Pty Ltd T/A ParkTrent Properties

Application for relief from unfair dismissal - jurisdictional objections to application: award coverage and high income threshold

[1] This Decision arises out of an application for unfair dismissal remedy made pursuant to s.394 of the Fair Work Act 2009 (the Act). The application was made by Marylou George (the Applicant). The Company is Park Trent Properties Group Pty Ltd t/a Park Trent Properties Group (the Employer).

[2] This Decision concerns jurisdictional objections taken by the Employer to the unfair dismissal application.

[3] A previous Decision has been issued by myself on 2 August 2013 concerning an objection taken by the unrepresented Applicant to the Employer seeking to have legal representation in respect of her unfair dismissal application. For the reasoning set out in that Decision, I decided to allow legal representation: [2013] FWC 4739.

[4] In that 2 August Decision, I set out the Future Conduct of the Case. That is, by agreement of the parties, I would consider the Employer's jurisdictional objections at the start of the two day hearing scheduled in Wollongong - on 13 and 14 August 2013. If I was not to uphold the jurisdictional objections, then the substantive case would then proceed.

[5] As it turned out, the jurisdictional objections took up most of the allocated two days and I declined to decide the jurisdictional objections there and then. Accordingly, I reserved my decision and the substantive hearing was put on hold.

[6] At the Hearing in Wollongong on the jurisdictional objections the Applicant represented herself. The Applicant's witnesses were:

Ms McGirr attended and gave evidence at the request of the Applicant but under a Form F51 Order Requiring a Person to Attend Fair Work Commission. The F51 Order was authorised by myself (Macdonald C) on 6 August 2013.

[7] At the Hearing, the Employer was represented by Mr I Latham, barrister who was assisted by Mr M Willis, solicitor. Mr Latham called the following witnesses:

[8] The Employer filed written submissions on the issue of its jurisdictional objections: (a) Amended Objection to Jurisdiction by Respondent (Ex. 36); and (b) Respondent's Reply to Applicant's Outline of Submissions (Ex. 37). Mr Latham also gave oral submissions in support of the jurisdictional objections. The main points of those submissions are set out below:

(a) Section 382 of the Act allows an employee to file an unfair dismissal application provided that one or more of the following apply:

(i) the Applicant was covered by a modern award; or

(ii) the Applicant's employment was covered by an enterprise agreement; or

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

(b) It was submitted that the Applicant's work was not covered by the three modern awards raised for consideration by myself.

(c) It was submitted that there was no enterprise agreement in operation at the place of business where the Applicant formerly worked.

(d) As to the issue of high income threshold, it was put that the Applicant's monetary and non-monetary circumstances put her over the high income threshold of $123,300. On her own evidence, the Applicant's annual payments comprised three components; (a) Base Pay of $30,000 (income tax was paid on this amount); (b) Consultancy of $65,000 (income tax was not paid on this amount); and (c) Bonus of $20,000 (income tax was not paid on this amount). The sum of those components was $115,000. The Bonus component was not contingent but set in advance.

(e) The benefit of not paying tax on the Consultancy and Bonus components is to be taken into account for the purpose of calculating the high income threshold: Atkinson v Midway Community Care Inc. [2010] FWA 2907 per Williams C (13 April 2010) at [46]. The tax benefit to be added to $115,000 is $27,576 giving an amount of $142,576 which substantially exceeds the high income threshold.

(f) To the sum of $142,576, is to be added non-monetary benefits (being attendance at Employer sponsored/paid for sporting events and business travel).

(g) The Applicant said that she was both an employee and consultant. If consultant meant independent contractor, then the Applicant cannot run an unfair dismissal application.

[9] The Applicant in final submissions spoke to her filed document: Applicant's Final Submissions on JURISDICTIONAL OBJECTION (Ex. 38) In doing so, the Applicant made the following main points:

(a) The Applicant's work was covered by a modern award: Banking, Finance and Insurance Award 2010.

(b) The Fair Work Commission (FWC) should not be misled by the job title given by herself to her job: Chief Financial Officer.

(c) The Applicant had been employed as an Accountant.

(d) As to the high income threshold, her annual earnings were $94,765. Her wages, per payroll, were $30,115. She was also paid a Consultancy component ($65,000) direct to her company: New George Holdings Pty Ltd being registered for the Goods & Services Tax (GST). The Applicant submitted that GST had been applied to the $64,750 and was therefore not subject to personal taxation. She was also given a Bonus of $20,000.

(e) Certain earnings were not to be included for the high income threshold issue because these earnings were allowances and miscellaneous expenses (capped as the $20,000 Bonus) and the Applicant had asked the Employer to classify the Bonus as falling within the "otherwise deductible rule". That is, the Bonus the Applicant said was not subject to taxation.

(f) The Bonus also, could not be included as part of the high income threshold as it was a payment that would not be determined in advance and was therefore a contingency payment. The Applicant said the $20,000 was set out in advance but was contingent on her not resigning during the financial year. If she resigned, there was no Bonus paid. She would either get $20,000 or $0 as a Bonus and that was not determined in advance.

[10] The Respondent has raised jurisdictional objections to the further processing of the Applicant's unfair dismissal application to the substantive hearing stage. The Respondent submitted that the Applicant was not entitled to pursue her unfair dismissal application because she was paid above the high income threshold: s.332(b) of the Act.

[11] Even if a dismissed employee is paid above the high income threshold, that dismissed employee can still pursue an unfair dismissal if that employee's employment was covered by a modern award or an enterprise agreement: s.332(b) of the Act.

[12] Both parties agreed that the Applicant's employment was not covered by an enterprise agreement.

[13] The parties were in dispute as to whether a modern award applied to the Applicant's employment.

[14] The FWC sets out below its deliberation on the issues of modern award applicability and the high income threshold.

[15] The applicability or otherwise of three modern awards was raised: (a) Clerks - Private Sector Award 2010; (b) Banking, Finance and Insurance Award 2010: and (c) Real Estate Industry Award 2010,

[16] Tendered in proceedings was a copy of the Applicant's Offer of Employment, dated 14 August 2008. (Ex. 4) This document advised that she was being engaged as an Accountant (Clause 5.2), reporting to Rene Cross, General Manager, and subsequently John Koot, Financial Controller. (Clause 5.3) This document named a state award as governing her conditions of employment: Clerical and Administrative Employees (State) Consolidated Award. This is a New South Wales award.

[17] Under cross-examination, the Applicant advised that a few months later (September 2008), she drafted her own job description (Ex. 5). (PN 660) She gave herself the job title: Chief Financial Officer. Her evidence was that she was given a promotion around September 2008 when she took over some or all of John Koot's work (Financial Controller). The impact of that promotion is that her new work may then not be award governed.

[18] Under cross-examination, the Applicant gave the following evidence which bears upon the issue of award coverage:

(a) Her job was partly professional, as an accountant. (PN 76)

(b) Her job was partly an executive job as a senior management person. (PN 77)

(c) She reported directly to the Chief Executive Officer. (PN 78-81)

(d) A number of employees reported to the Applicant: payroll officer; trust accountant; accounts payable person; assistant accountant; accounts manager (to a limited extent) and customer service account persons. (PN 88-96)

(e) She was responsible for the employment of people to the accounts department. (PN 97-110)

[19] Ms Jenae Johnston, Chief Operations Officer, gave evidence-in-chief, that the Applicant had the right to hire and fire staff within her department, being the accounts department. As well, the Applicant was involved in the once a year all managers meeting and involved in a meeting with all the directors and the Chief Executive Officer in terms of succession planning, if the Chief Executive Officer was no longer there. (PN 1639-1645)

[20] Under cross-examination from the Applicant, Ms Johnston was asked if she was aware of the Applicant's involvement in the succession planning meeting. Ms Johnston responded that she was aware that the Applicant prepared reports for that succession planning meeting. (PN 1685-1687) The Applicant's questioning, I note, did not go to denying that she attended the succession planning meeting.

[21] Mr Ron Cross, Chief Executive Officer, gave evidence-in-chief that the Applicant was the Chief Financial Officer "of the group of companies, had complete control on a daily basis of the funding, the cash flows, and settlements of the company". The Applicant was involved in senior management meetings of the company in regards to the nature of cash flow and the profitability of the businesses. (PN 1820-1821) The Applicant cross-examined Mr Cross but did not raise any questions going to her role, responsibilities and award coverage.

[22] Having considered the evidence and submissions of the parties, I find that the Applicant's work is not likely covered by the Clerks-Private Sector Award 2010.

[23] Section 143(7) of the Act mandates that a modern award must not be expressed to cover employees who would not otherwise be covered by a state award.

[24] It is also the case, in passing, that an employee is not to be disadvantaged by the award modernisation process: Statement issued by Justice Guidice, President re Request from the Minister for Employment and Workplace Relations - 28 March 2008. The Statement was issued on 29 April 2008 - [2008] AIRC 387

[25] The Applicant's Offer of Employment said that the Applicant was covered by a state award being the Clerical and Administrative Employees (State) Consolidated Award. But a consideration of the promotion of the Applicant to Chief Financial Officer and the responsibilities of that position, likely took the Applicant, in my view, out of coverage by the state award in question.

[26] The Applicant's responsibilities included, on her evidence, the right to hire staff. Ms Johnston's evidence was that it was the right to hire and fire. Either way, that matter per se does not take the Applicant out of coverage by the state award or the modern award in question.

[27] The right to hire and/or fire is not the exclusive domain of senior management in the sense that it is only carried out by senior management. The right to hire and/or fire can, and is, delegated by senior management to lower echelons. For example, and relevantly, that power can, and is, delegated to supervisors of departments. Those same supervisors can, and some are, carrying out work that is covered by the state award or modern award in question.

[28] But a consideration of the other evidence leads to the conclusion that the Applicant was likely no longer state award covered and by operation of section 143(7) cannot be modern award covered. Thus on her own evidence, she described her role as partly an executive job, as a senior management person and she reported directly to the Chief Executive Officer. The executive or senior management nature of her role was evidenced by her being involved in the succession planning for the position of Chief Executive Officer in the event that the present incumbent was no longer there. Finally, Mr Cross, Chief Executive Officer, gave unchallenged evidence that the Applicant was involved in senior management meetings of the Company in regards to the nature of cash flow and the profitability of the businesses.

[29] Mr Latham, barrister for the Employer, referred to case law to support his submission that the responsibilities listed above fall outside the coverage of the state award and the modern award in question.

[30] One such case was a Full Bench Decision that considered whether the Clerks'- Private Sector Award 2010 applied to a certain employee who had filed an unfair dismissal application: Jenny Craig Weight Loss Centres Pty Ltd v Margolina [2011] FWAFB 9137 (23 December 2011). The Full Bench upheld an appeal against a decision of Ryan C that the work carried out by that employee/unfair dismissal applicant, was covered by Level 5 and/or Level 6 of the Clerks' - Private Sector Award 2010.

[31] In upholding the appeal, the Full Bench set out the employee's duties, referred to the Definitions and Interpretation clause and the Coverage clause and said:

"[12] We are unable to conclude that the respondent (the dismissed employee) was engaged 'wholly or principally in clerical work' as that term is defined in the Clerks Award (the modern award). The duties of a regional manager have some elements of clerical work but they are mainly supervisory or managerial. The Commission (Ryan C) was in error to find otherwise."

[32] The Full Bench finding contained in the foregoing extract is that "supervisory or managerial" duties do not fall within the definition/coverage of clerical work. Putting aside the term "managerial", there is no explanation by the Full Bench as to why "supervisory" duties do not fall within the definition/coverage of clerical work. The explanation is important in that the classification structure contained in the Clerks' - Private Sector Award 2010 covers employees engaged in a "supervisory" capacity.

[33] Thus Level 4 describes the characteristics of employees at this level as having, amongst other things;

"Whilst not a pre-requisite, a principal feature of this level is supervision of employees ...

They are able to train employees in levels 1 - 3 by personal instruction and demonstration."

[34] The next level up, Level 5 also advises that employees at this level may have a supervisory role. Thus:

"They are responsible and accountable for their own work and may have delegated responsibility for the work under their control or supervision ...

They would also be able to train and to supervise employees ..."

[35] Given the express references to supervision duties/role in two of the levels of the Clerks' - Private Sector Award 2010, I am unable to follow the unexplained assertion of the Full Bench that that modern award does not apply to persons engaged in "supervisory" duties.

[36] The relevance of my observation above about the Full Bench unexplained assertion as to supervisory duties not being covered by that modern award but the classification structure demonstrating otherwise, is that the Applicant in my case under consideration, had a supervisory role. I am not assisted by the unexplained assertion of the Full Bench and prefer the express provisions of the modern award that it applies to persons engaged in supervisory duties.

[37] Perhaps the assertion of the Full Bench can be explained this way. The Full Bench decision, relevantly, sets out the dismissed employee's job description and her other duties/responsibilities (paras. 8 - 10). The decision then extracts the coverage of the modern award (Clause 4.1) and importantly the definition of "clerical work" (clause 3).

[38] The definition of "clerical work" is stipulated as including the following type of work:

"recording, typing, calculating, invoicing, billing, charging, checking, receiving and answering calls, cash handling, operating a telephone switchboard and attending a reception desk." (underlining added)

[39] I was formerly a union official of the Federated Clerks Union of Australia, New South Wales Branch, for 29 years (1973-2002). I can tell that this definition applied to a time when office work is not what it is today. I appreciate that it is only an inclusive list (that is, not exhaustive) but the definition must surely predate the radical overhaul of office work by the use of firstly electronic and then computer equipment and the introduction of software and even the explosion of software packages available to office workers.

[40] Given that the Full Bench decision only refers to the coverage clause and the antiquated definition clause of a clerical worker and makes no reference to the grading structure and that the title of the modern award uses the term "Clerks", then perhaps that explains the Full Bench finding that the dismissed employee's supervisory duties did not fall within that antiquated definition of what constitutes a "clerical worker".

[41] Discussed below is a 1996 decision of Glynn J of the Industrial Relations Commission of New South Wales. In that decision, her Honour said of the term "Clerks":

"The term, and indeed the office of 'clerk', is one of venerable antiquity, and there is much to be said for the retention of the 'Clerks' State Award. However, Ms News (witness and Senior Regional Manager, Centacom Staff) stated that the term 'clerk' is not now used as much as it was 10 or 15 years ago. The work of the clerk is also evolving. The use of the term "administrative" could alert those people needing to refer to the award that the work of an employee could be covered by the award though another title might be used to describe the position.": (pg. 62)

[42] Apart from needing to have regard to the classification structure as to award coverage, one needs to have regard to the large body of case law on the meaning of such terms as "clerk", "clerical worker", "employed or engaged in any clerical work whatsoever" etc.

[43] A New South Wales decision which refers to a number of cases on award coverage and clerical work is: Federated Clerks' Union of Australia, New South Wales Branch v Kingmill Pty Limited t/a Thrifty Car Rental (1999) 94 IR 67. This is a decision of Glynn J of the Industrial Relations Commission of New South Wales.

[44] I was the union advocate for the Federated Clerks Union of Australia, New South Wales Branch (the FCU) in the above case (Thrifty Car Rental).

[45] The FCU successfully argued that persons engaged as Rental Sales Officers at William Street, Sydney, and the three airport counters at Sydney airport and the persons engaged as Reservation Consultants at Thrifty's Car Rental national call centre, came under coverage of the Clerical and Administrative Employees (State) Award, because they were "employed or engaged in any clerical capacity whatsoever". That award was formerly known as the Clerks (State) Award. The decision of Glynn J includes a consideration of cases from her own New South Wales jurisdiction, South Australia and Western Australia on clerical employees and award coverage.

[46] Thrifty Car Rental unsuccessfully appealed the decision of Glynn J to a four member Full Bench: [2001] 106 IR 217.

[47] The award named in the Applicant's Offer of Employment is the Clerical and Administrative Employees (State) Award. The previous title of that award was the Clerks (State) Award. The change in the title of this award and other major issues such as a new classification structure was the subject of an extensive arbitration before Glynn J of the Industrial Relations Commission of New South Wales: Clerical & Administrative Employees (Class Struct.) State Award [1996] NSW IR Comm. 190 (25 October 1996).

[48] This case was originally set down for a five day hearing in one week but eventually extended to three and a half years to decision date. Inspections were held of some eighteen companies in order for Glynn J to observe office work. Witnesses were drawn from these inspections: irrespective of award coverage or not and irrespective of whether the employees were union members or not. There were some sixty witnesses. The FCU also subpoenaed the wage records of companies for ascertaining not only what the market was paying to office workers but as well, what job titles were being applied by companies to their office workers.

[49] I was the principal advocate for the FCU, assisted by the State Secretary and my fellow Industrial Officer, Ms Fiona Hancock who was also a witness in the proceedings.

[50] In deciding to insert a new classification structure and change the title of the award from Clerks (State) Award to Clerical and Administrative Employees (State) Award, her Honour had regard, amongst other things, to case law dealing with coverage of the award. The case law considered by Glynn J as to award coverage included the case law referred to by Mr Latham.

[51] Mr Latham referred to a decision of Sheldon J of the Industrial Commission of New South Wales which dealt with a demarcation dispute between two unions as to coverage of Purchasing Officers engaged by a particular company: In re Federated Clerk's Union of Australia, New South Wales Branch and Australian Workers Union [1971] AR (NSW) 419.

[52] In deciding in favour of the Federated Clerks Union, Sheldon J analysed that Union's constitution which said it covered employees "employed or engaged in any clerical capacity". His Honour cited case law that the phrase "engaged in any clerical capacity" was "a wide one" and then for the purpose of deciding the demarcation dispute before him said, in part, "It is clear that professional employees are not engaged (in a clerical capacity) nor are those who are truly and basically executive officers. But an employee does not cease to be employed in a clerical capacity merely because his work includes many administrative and non-recording functions." (p.421)

[53] In considering the work and responsibilities of the Applicant, she is doing more than clerical-administrative work, which would give her award coverage. She is carrying out work and responsibilities more likely at a senior management executive level.

[54] Ther other term used by the Full Bench to overturn the decision of Ryan C, was that the dismissed employee had "managerial" duties, apart from "supervisory" duties. That is, the "managerial" and "supervisory" duties were said not to fall within coverage of the Clerks' - Private Sector Award 2010. There is no explanation as to why the "managerial" duties being performed by the dismissed employees do not fall within coverage of the modern award. Indeed, the "managerial" duties are not drawn out of the employee's job description.

[55] It is trite to say that a job title or assertion by a person that he/she is supervisory or managerial, cannot determine award coverage.

[56] The 1996 decision of Glynn J concerning a new classification structure, award title etc., referred to the massive and fundamental changes to office work since the introduction of the first grading structure in 1978 into the Clerks' (State) Award as it was then known. Her Honour observed that there had been major changes in organisations generally over the past 20 years and in particular, the managerial hierarchy had flattened with middle management positions being the casualties of that elimination of levels of management. Responsibilities and functions previously undertaken at those levels had devolved both up and down in the structure. Clerks now find themselves with some of those higher functions and responsibilities." (Pg. 7 to 11)

[57] Thus, some managerial functions and responsibilities have devolved down to be performed by "clerks".

[58] Four years earlier to her Honour's observations, Commissioner Shiels of the Industrial Relations Commission of New South Wales decided that a dismissed employee was covered by the Clerks (State) Award: Jim Patatou v Nestle's Australia (unreported; IRC 1073 of 1992; 3 December 1992)

[59] Mr Patatou held the position of Field Sales Manager, Food Service Division reporting to the State Sales Manager.

[60] Commissioner Shiels held that Mr Patatou fell within the top grade of the then existing grading structure as he was "required to accept responsibility for the work of a department or of a section" and Mr Patatou did not fall within the award exclusion definition of "managerial capacity".

"It cannot be denied that the applicant was engaged by the Company to "manage" the Field Sales employees in the Field Service Division and that his duties and responsibilities allowed him some discretion as to how he managed the Field Sales force. He was however subjected to supervision, reporting to the State Sales Manager, Food Service Division. The uncontroverted evidence of the applicant is that he was not responsible for developing sales targets, that was done in Head Office. He only ever terminated one employee and that was at the instruction of his supervisor. He was responsible for recruiting staff but that was subject to scrutiny by his supervisor. Mr Patatou was never engaged in direct sales of the Company's product and spent the majority of his working time in the office at Smithfield". (Pg. 23-24)

[62] The appeal by Nestle Australia Ltd was not upheld by a Full Bench (unreported; Fisher P, Cullen J and Connor C; 92/2492; 16 July 1993).

[63] The observations of Glynn J and the foregoing case law were not brought to the attention of Commissioner Ryan nor the Full Bench appeal decision.

[64] Finally, as to Commissioner Ryan's decision, he said that the Applicant could fall within classification levels 5 and/or 6. (Para.13) On my reading of the classification structure, there are only five (5) levels. The confusion comes from the designation introducing each level. Thus, the lowest level is headed, "B.1 Level 1" but the highest level is headed "B.6 Level 5". The confusion, as I see it, is at Level 3 which is given two headings as it were "B.3 Level 3" and "B.4" (but no level listed). The next heading is "B.5 Level 4".

[65] The written submissions of the Employer (Ex. 36) set out extracts from the Banking, Finance and Insurance Award 2010 (modern award) (the Banking etc. Award) on award coverage and classification structure.

[66] The primary position of the Employer is that its business does not fall within the definition of the banking, finance and insurance industry.

[67] Even if its business fell within the Banking etc. Award, the Employer said the work of the Applicant was beyond coverage of the classification structure contained in that modern award. Thus, the highest level (B.6) of that structure covers "Those employees (engaged in) a middle managerial role ...". Mr Latham submitted that the Applicant's executive position of Chief Financial Officer was beyond a middle managerial role.

[68] The Applicant's written submissions on jurisdictional objection (Ex. 38) said that the Banking etc. Award could "conceivably apply to me". The Applicant submitted that her role fell in between B.4 and B.5 and therefore below the top level of B.6/Level 6. At most, she was B.5/Level 5, because one of the indicative tasks for that level was "accountant". Her submissions asked me not to be misled by the title, Chief Financial Officer, which she gave to herself. The Applicant set out other reasons for claiming that she acted in a middle management role.

[69] The Employer submitted that it was not engaged in the banking, finance and insurance industry.

[70] Under cross-examination , the Applicant agreed that the Employer was not a bank "but it lends money". She also said the Employer provided insurances through a subsidiary company called Easyplan Pty Ltd. Mr Latham on behalf of his client questioned the Applicant as to this answer by the Applicant who also went on to give evidence that Rhymney Pty Ltd was also her Employer. She said that these other employers were part of the ParkTrent Properties Group Pty Ltd (PN119 to 158). Her employer then was ParkTrent Properties Group and its related companies.

[71] I find that the Applicant only had the one employer being ParkTrent Properties Group Pty Ltd. This is the company named on her Individual Non-business taxation notice (Ex 9. Annex B1, D1, F1).

[72] Even if her evidence is correct that her Employer was engaged in finance and/or insurance, for the purpose of claiming modern award coverage by the Banking Etc Award, I accept the Employer's argument that she was senior management and beyond coverage of that modern award given the classification structure contained therein.

[73] The top grade in the classification structure is Level 6 and applies to persons performing a middle managerial role and primarily controlling the conduct of a part of the employer's business. An indicative job list going to control of the conduct of a part of the employer's business includes - "branch manager, human resources or fraudulent relations manager, financial planners, information technology specialists, relationship manager, senior analyst, subject matter manager, divisional manager."

[74] The top grade level demonstrates that the indicative job list is about employees who have control of part of the business. The job description of the Applicant confirmed that she oversees these managers in control of part of the business. Thus, it says under "Accountabilities" that she has a number of "Key Result Areas" and one of which is "Cost Control". The first entry against "Cost Control" says :

" constantly assessing business units and managers for effective cost management."

That entry means that the Applicant's work involves assessing the whole business - that is, assessing all of the parts which parts are the indicative tasks listed for the top grade of level 6.

[75] Accordingly, I find that even if the Employer was engaged in business, whereby some if its employees' work was covered by the Banking etc Award, that said Award did not cover the senior management role of the Applicant. Her role was beyond middle management.

[76] The Employer submitted that even if the Banking etc Award applied, the Applicant's executive position of Chief Financial Officer was beyond a middle managerial role. The Applicant's denial of that assertion was to downplay the job title of Chief Financial Officer which she had given to herself. The problem with that argument is that I then wonder whether that downplay argument is made in the full knowledge of the Applicant that the downplay argument is necessary in order to gain award coverage for the purpose of maintaining her unfair dismissal application.

[77] I raise that issue because of the matters set out below as to acceptance of the Applicant's downplay argument.

[78] Firstly, the Applicant was questioned by myself on the job description devised by herself and to which she gave herself the now allegedly misleading title of Chief Financial Officer.

[79] Her job description (Ex 5) comprises a front page with the heading of Chief Financial Officer and a summary of tasks/functions under three headings and then three pages setting out her "Accountabilities". Under that broad heading is a number of "Key Result Areas". One of those is Cost Control and has already been referred to in this Decision.

[80] Of relevance is a "Key Result Area" called "Budgeting/Business Plans". I questioned the Applicant as to how the job description (she drafted) for the position of Chief Financial Officer, was different to the job (covered by the state award) that she accepted. The Applicant responded that she did not do the work of Business Plans (PN 660-678).

[81] The problem I have with this response is that the Applicant is denying that she carried out Business Plans which is listed in part of the three page document attached to her summary page. True it is, that this three page document has the look of a template that she has not prepared and she can then say that parts of that template do not apply to her new job promotion of "Chief Financial officer". But that argument is not available for the summary front page document she prepared. In that summary, under the heading "Key Result Areas" is the first dot point of:

[82] Given that the Applicant was the author of that entry and then states that it did not form part of her "Chief Financial Officer" role, then I was inclined to the view that the Applicant was downplaying the significance of her role in order to slot into middle management award coverage.

[83] Secondly, evidence arose in the proceedings that raised the issue of the Applicant's credit.

[84] The Applicant has a son who went to Canada to study. She went guarantor for him and filled in a guarantor's form that she earned probably $140,000 per year. (The Applicant was denying that she earned above the high income threshold of $123,300). She said she increased her income so that her son could qualify. The following question was then put to the Applicant:

" I see; so is your income a figure that you can change as you wish? ... Well, yes". (PN 297)

[85] Further questioning elicited that the Applicant was claiming Centrelink payments for her son. Centrelink payments are a child care subsidy for low income employees. The Applicant declared that her income was $30,000 for the purpose of claiming Centrelink payments That is, she did not consider that she should declare the Consultancy figure of $60,000 and the Bonus of $20,000 because income tax was not paid on the Consultancy and the Bonus was tax free ("otherwise deductible rule").

[86] The Applicant also received a child care fee reduction because her income was only $30,000.

[87] I do not pronounce on the legality of the foregoing arrangement but it is a matter for referral to government bodies for investigation.

[88] The Employer submitted that the Real Estate Industry Award 2010, at its highest, only deals with supervisory employees and by inference, the Applicant was not covered by this modern award.

[89] The Applicant did not put a submission on the coverage of this modern award.

[90] Schedule B - Classifications of this modern award sets out a graging structure pertaining to Property Sales classifications. As the Applicant was not engaged in property sales, then this modern award has no application.

[91] Having found that no modern award applied to the Applicant's work and given that both parties agreed that no enterprise agreement applied, then the Applicant can only maintain her unfair dismissal application if her income was below the high income threshold.

[92] At the time of the Applicant's dismissal, the high income threshold stood at $123,300.

[93] In assessing whether the Applicant's income was below or above the high income threshold, I am required to have regard to her annual rate of earnings (as defined by the Act) and such other amounts (if any) as worked out by reference to the Fair Work Regulations 2009.

[94] In relation to earnings, s.332 of the Act provides that:

(b) amounts applied or dealt with in any way on the employee's behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) However, an employee's earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee's benefit in relation to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee's benefit under a law of the Commonwealth, a State or a Territory.'

[95] With regard to benefits other than the payment of money, regulation 3.05(6) of the Fair Work Regulations 2009 (the Regulations) provides:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person's employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332 (3) of the Act; and

(c) FWA is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) FWA can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by FWA is an amount for subparagraph 382 (b) (iii) of the Act.'

[96] Section 332(1) sets out the earnings that are to be taken into account for assessment of the high income threshold. But then sets out that certain matters cannot be included in that assessment: s.332(2). Of relevance is s.332(2)(a) - payments the amount of which cannot be determined in advance. This criterion was argued in proceedings as to whether it covered the $20,000 Bonus that formed part of the Applicant's overall package.

[97] Regulation 3.05(6) provides that where non-monetary benefits are given to an employee, pursuant to an agreement between the employer and the employee, then the real or notional value of the non-monetary benefits is to be taken into account in assessing an employee's earnings. This was an issue in the proceedings.

[98] The earnings of the Applicant were broken up into three components:

[99] The sum of those three components is $115,000.

[100] The Employer submitted (Ex. 36) that the $115,000 was not the actual earnings of the Applicant because she had not paid income tax on the Consultancy and Bonus components. The Employer submitted that the benefit to the Applicant of not paying income tax should be taken into account and referred to a decision of Commissioner Williams in support: Atkinson v Midway Community Care Inc [2010] FWA 2907 (13 April 2010).

[101] As to the Consultancy component, the Applicant gave evidence that this was paid to her company (New George Holdings Pty Ltd which is registered for a Goods and Services Tax).

[102] The amount of company tax paid on the $65,000 Consultancy was $2,924. The Employer submitted that as the Applicant was getting a tax benefit out of this arrangement (in not paying the higher rate of personal income tax), then the difference between $2,924 and the higher rate of tax payable on $65,000 should be added to the earnings of $115,000. I concur and in doing so, adopt the reasoning of Commissioner Williams.

[103] In coming to that decision, I accept that the Applicant is an employee and not a consultant as in independent contractor. If she was truly an independent contractor, then she could not bring this unfair dismissal application.

[104] The other component in issue is the Bonus of $20,000 for which no tax is paid.

[105] Section 332(2) states that an employee's earnings do not include "(a) payments the amount of which cannot be determined in advance;" The "Note" to that sub-section examples payments falling within the above definition - one of which is bonuses.

[106] The Employer submitted that the Bonus of $20,000 was determined in advance and was not therefore excluded from being assessed as part of the earnings. Accordingly, the Bonus was to be assessed as a benefit to the Applicant and the value of that benefit was calculated by reference to the tax benefit saved by the Applicant by her not paying any personal income tax on the $20,000.

[107] The Employer submitted that the method for determining the value of the benefit of the Consultancy and Bonus components was to add the three components (Base Pay + Consultancy + Bonus), which gave an all up quantum of $115,000, and assess the tax payable on $115,000. That tax assessment came to $30,500. As the Applicant only paid $2,924, then the tax saving to her was the difference between $30,500 and $2,924. That tax saving was $27,576.

[108] The tax saving benefit of $27,576 to the Applicant was to be then added to the annual earning of $115,000 to reflect the Applicant's true earnings. This gave an amount of $142,576 which is substantially higher than the high income threshold of $123,000.

[109] The earnings figure of $142,576 became even higher when the benefit of superannuation and GST were taken into consideration.

[110] This was so, as the superannuation was not paid into a superannuation fund by the Employer. Rather, the Employer paid the superannuation component to the Applicant. (PN 2354) The Applicant confirmed that this superannuation was paid direct to her bank account and she managed her own superannuation through her company (New George Holdings Pty Ltd) which is a trustee for her new George Superannuation Fund. (PN 2418)

[111] The inclusion of the GST into calculation of her all up earnings was required, because the GST was not paid to the Australian Taxation Office but was a payment made to the Applicant.(PN 2354) The Applicant submitted that GST should be excluded from a consideration of her earnings because it was a government regulated payment. (PN 2418)

[112] To the earnings of $142,576 and the superannuation/GST benefit, should be added the non-monetary benefits, submitted the Employer. These non-monetary benefits are set out in the affidavit of Ms Rena Johnston and including sporting events and private travel. (Ex. 24)

[113] The Applicant contests the inclusion of non-monetary benefits.

[114] The Employer submitted that the Bonus should be included in the calculation of the Applicant's earnings. The Applicant opposed that submission because the Bonus could not be determined in advance: section 332(2)(a). Thus, she would not get the $20,000 if she stayed employed for a whole year but get nil dollars if her employment came to an end before the whole year was up.

[115] Mr Latham relied upon the Full Bench decision in Jenny Craig Weight Loss Centres Pty Ltd for an explanation of the operation of section 332(2)(a). The Full Bench said:

" It seems clear enough that the legislature intended to exclude bonus payments which are contingent, either because they depend on performance in some way or because management reserves the right to modify or discontinue them."

[116] In considering the foregoing, it is clear that the Bonus was not performance related. There was no evidence that her Bonus was the subject of an employer right to modify or discontinue the Bonus. True it is, that the Bonus, in a sense, is discontinued when the Applicant's employment comes to an end. But in my view "discontinue the Bonus" refers to an employer who discontinues a bonus scheme whilst the contract of employment is still on foot.

[117] Accordingly, I find that the Bonus of $20,000 is to be taken into account when calculating the Applicant's earnings.

[118] The Applicant's remuneration package had three elements (Base Wage + Consultancy + Bonus) and I find that all three elements are to be taken into consideration for the purpose of the high income threshold issue.

[119] I adopt the reasoning of Williams C in Atkinson's case that the benefit of not paying income tax should be taken into account when assessing the high income threshold.

[120] The Applicant exercised her right not to be legally represented even after I decided to allow the Respondent to have legal representation because of the complexity of the case (legal/financial issues). The complexity of those financial issues was confirmed during the proceedings not only to those financial matters made clear by evidence but as well to other matters left unsatisfactorily not clarified.

[121] Accordingly, I accept the submission of Mr Latham as to the approach to be taken to a consideration of Base Pay + Consultancy + Bonus for the purposes of assessing the high income threshold and applying the reasoning of Williams C.

[122] I have not taken into consideration the real or notional benefits to the Applicant of the non-monetary benefits given to The Applicant.

[123] The Employer took jurisdictional objections to the Applicant's unfair dismissal application pursuant to section 382(i) and (iii).

[124] The parties agreed that there was no enterprise agreement in play: section 382 (ii) in order for the Applicant be able to maintain her unfair dismissal application.

[125] I have upheld the Employer's case that no modern award applied to the Applicant: section 382 (i) in order for the Applicant to be able to maintain her unfair dismissal application.

[126] I have upheld the Employer's case that the Applicant was paid above the high income threshold, and therefore the Applicant can not maintain her unfair dismissal application on this ground; pursuant to section 382 (111).

[127] Having considered all of the evidence and submissions of the parties, I uphold the Employer's jurisdictional objections and accordingly, the Applicant is unable to maintain her unfair dismissal application. Accordingly, the Applicant's unfair dismissal application is dismissed.

[128] As indicated above, in the reference to the Applicant's evidence on Centrelink payments for the benefit of her son, I will provide a copy of this Decision and the transcript to the Australian Taxation Office and the Department of Human Services.

[129] There is another piece of evidence given by the Applicant that I will also draw to the attention of the Australian Taxation Office. The extract of that evidence is set out below:

Are you saying that is within the confines of the Law? ---Yes, because it is a system that the company has been following for a long time and Mr John Cains says it's okay as long as you pay company tax on it.

Ms George, on the basis of that argument anybody could simply say, I am a consultant for the vast bulk of my income and therefore I don't have to pay income tax on it"? --- Well, that is what the company encourages. Mr Shane Stone from Victoria office has actually just changed around March from a full salaried staff to a full consultancy staff with no change of the job responsibilities. I've got there a list of all the employees in the company who is being paid in that manner and our external accountant Mr John Cains said, "It is completely all right as long as you all pay company tax into the company and as long as you guys are directors of that company, but if you are not a director of the company, you cannot do it." So if ever I have a benefit of the tax and a benefit of social security because I followed the system which is approved, I do not believe I did anything wrong. What would have been wrong is if I accepted the company to pay me in cash which is what they wanted to do and I said, "I will not accept cash as my salary."

THE COMMISSIONER: What was the name of the person from Victoria? --- Mr John Cains. He's our external accountant."

[130] In the foregoing extract, the Applicant is saying that company tax is paid to the company. I understand the company to be ParkTrent Properties Group Pty Ltd t/a PartTrent Properties, rather than being paid to the Australian Taxation Office.

[131] I do not pronounce upon the legality of the foregoing.

Mr Ian Latham, barrister, and Mr M Willis, solicitor, for ParkTrent Properties Group Pty Ltd t/a ParkTrent Properties Group

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