CITATION NO. 2008 WAIRC 00005

CatchWords Claim for a benefit under contract of employment - hotel vouchers and payment in lieu of notice - application upheld - Industrial Relations Act 1979 (WA) s 29(1)(b)(ii).

Result Application for contractual entitlements upheld

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1. This is an application by Ms Sara De Longis ("the applicant") pursuant to s 29(1)(b)(ii) of the Industrial Relations Act 1979 ("the Act") seeking benefits due to her under her contract of employment with Luxe Day Spa ("the respondent").

1. The applicant sought the payment of entitlements she claimed were due to her pursuant to her contract of employment with the respondent. The first claim related to hotel vouchers received for the sale of a packaged product. At the time the application was lodged these vouchers were valued at $400.00. The second part of the benefit claimed was two weeks payment in lieu of notice, a total of $607.50 (gross), subsequently amended in the course of proceedings to 41 hours, a total of $615.00 (gross).
2. The respondent objected to the Commission proceeding on the basis that the Commission lacked jurisdiction to deal with the claims. The respondent in its notice of answer and counter proposal raised two jurisdictional issues, those being:

(i) the gift vouchers received by the applicant were gifts and not part of the employment contract therefore not an "industrial matter" as defined under the Act; and

(ii) a written agreement to make the payment in lieu of notice was reached under duress and after the employment relationship had concluded therefore such payment was not an "industrial matter" pursuant to the Act.

1. The jurisdictional issues were followed by the submissions on merit and were dealt with together, having regard for the need for the Commission to determine the jurisdictional questions at first instance.

1. The applicant testified she commenced employment with the respondent in March 2006 as a beauty therapist and later that year was promoted to the position of manager. The applicant testified she first learned of the respondent's organisation when she attended the day spa for a treatment. During the applicant's time on the premises she was approached by the respondent and asked if she would like a job. The applicant testified she subsequently came in for an interview, worked a trial period and was hired the following week by the respondent on $14.00 per hour as a casual on a three month probationary period. The applicant testified after the probationary period concluded the hourly rate was increased.
2. The applicant testified that when first employed the terms of the contract were not written but had been reached verbally. The applicant testified the rate was increased to $15.00 per hour in October 2006, she received sick leave and was no longer casual but considered to be permanent part-time, although on her own testimony she worked full-time hours.
3. The applicant testified that the first written contract entered into with the respondent occurred in December 2006. The applicant testified she signed that contract in January, 2007. Extracts from the contract included:

SARA DELONGIS.(sic). of ...3 CHAM BERS WAY, NORANDA. WA 6062...

Dear Employee this is a contract for your work place agreement which allows the owners of Luxe Day Spa a monitered (sic) working condition guide line to achieve the highest mandatory standard our company is compelled to keep..

That you are now a permenant (sic) parttime (sic) employee of Luxe Day Spa.. For the next three months you will be on probation period as Manager of Luxe Day Spa and will be paid fortnightly. You will be requird (sic) to do a minimum of 25 to 40 hrs per week.

From time to time you may be requested to stay back if need be to do overtime when asked during busy periods of the year eg, Christmas and New Year period Sunday's and Public Holidays if rostered on by the management of Luxe Day Spa.

Under the minimum condition act (sic) by the Dept of Consumer and Employment Protection in the Health/Beauty Industry act, (sic) employees are to be paid at the normal rate of pay. Your hourly rate as a Beauty Therapist working as a permenant (sic) parttime (sic) employee at Luxe Day Spa is $15 an hr from 18th day of December 2006, your weekly budget is $2000.00 per week, which being $1700 is of services and $300 being sales.

This is a private and confidentialy (sic) agreement made strictly by Luxe Day Spa business owners and the employee ...........................................................

... Day by MANAGER, if the condition is unsatisfactory it will be notified to the employee by three initial warnings then followed by Three (sic) initial warnings then followed by the three written warnings.

THY SHALL NOT CONSPIRE! Against your fellow therapist (NO BITICHING!) (sic) Or you will be given an instant, dismissal.

THY SHALL NOT STEAL! From the company or circumstantial evidence may lead t (sic) court action and an instant dismissal will be given (AVOID EMBARRESMENT) (sic)

Each therapist will be acheiving (sic) their personal weekly target which you have to moniter (sic). The programe (sic) will be carefully monitered (sic) for (3) months during your probatin (sic) period. The therapist working around 25-40 hrs per week, reaching her target will receive: A BONUS PAYMENT OF $50.00.

Should you wish to take holidays, a month's notice is to be given to the company. If sick for more than a day a sick day's notice from your doctor is to be given to the company. Should you wish to leave prior to the notice period company may, depending on the circumstances, agree to the early release, although payment will be made only for the time actually worked ...

IF AN EMPLOYEE ACCIDENTLY DAMAGES OR BREAKS ANY OF LUXE DAY SPA'S EQUIPMENT, HE OR SHE WILL NEED TO REPLACE THE EQUIPMENT OR THE EQUIVELENT (sic) AMOUNT WILL BE REDEEMED FROM THE LAST PAY DUE PRIOR TO LEAVING OR THEY COULD PAY BACK IN INSTALLMENTS (sic) WHILST WORKING AT LUXE DAY SPA.

We hope that all of you will benefit from our work place agreement and think of all the little ways that you could improve upon your performance ensuring you that you reach your budget.

I..... Sara De Longis............ Agree on the terms and condiotion (sic) upon the work place agreement contract here before me.

Employee's name ... Sara De Longis.... Signed......................

Address... 3 Chambers Way Noranda... Date....11/1/2007.........

Witness no1 name... Sam De Longis..... Signed.......................

Address... 3 Chambers Way Noranda... Date....11/1/2007.........

NOTE: Luxe Day Spa reserves the right to amend incentive schemes at any time."

1. The applicant testified that when she was promoted to manager, the employees of the respondent were informed when a particular packaged product, namely Sea Creations cosmetics, was sold then employees would receive a hotel voucher. The applicant testified she received two hotel vouchers after selling two sets. The applicant testified that when each of the vouchers were given to her they were signed by Ms Gill and her husband. The applicant testified that she was the only employee to have received them. The applicant testified that after her termination the respondent had cancelled the two vouchers. One of these vouchers reflected the following:

"Well done Sara........ Signed .............. Jaqulyn ☺

Please enjoy a Duxton Escape Package including overnight accommodation in Deluxe Room with a full buffet breakfast for two served in our Grill Restaurant.

1. The applicant testified on 28 February 2007 she was informed by the respondent that Mr Gill would be coming to speak with the applicant and to wait. The applicant testified that during that period both she and the respondent made phone calls to Wageline to enquire about entitlement to payment in lieu of notice. Following those discussions the following letter was drafted by the respondent and signed by the respondent:

"This is a letter to state that Sara De Longis has two week's notice and pay in lieu from this day of 28th Feb (sic) 2007"

1. The applicant testified at the time she was terminated she was working a full-time week, namely 38 hours at the rate of $15.00 per hour. The applicant testified she did receive a partial payment relating to payment in lieu of notice, namely 35 hours. On the submission of the applicant there remained outstanding some 41 hours after she was terminated, a total of $615.00.
2. The applicant indicated in cross examination that during her employment she was asked by the respondent to sign the contract of employment. At the time she had sought clarification from the respondent on a number of matters one related to the length of notice employees were required to give if the applicant was to leave. The applicant testified the respondent informed her that two weeks notice was required in the event she handed in her notice.
3. The applicant testified the monies received throughout her pay from the respondent were transferred electronically into her bank account on a fortnightly basis. Bank account statements were tabled (exhibit L 5) to confirm this arrangement. The final pay sheet identified two cheques were paid, one for $708.00 and the other for $440.00. The cheque for $708.00 included a period of payment in lieu of notice, namely 35 hours and part payment of holidays being for 18.5 hours. The second cheque for $440.00 was for the remaining holiday pay being 32 hours.
4. The applicant submitted that the contract provided for incentive bonus schemes to operate and allowed the respondent to amend any such schemes. Provision of the hotel vouchers was taken on the part of the applicant to be changing or adding to those bonus schemes. The amendment to provide the vouchers in return for selling Sea Creations products was reached verbally as indicated in evidence in the proceedings.
5. With regards to the probation period, the applicant submitted in conclusion that a probation period applied to the managerial role. It was possible for the applicant to be demoted down to a beauty therapist if the terms of the managerial contract were not met, given the employment probationary period that had been undertaken when the applicant first commenced had been completed satisfactorily.

1. Counsel for the respondent raised the jurisdictional issues that the vouchers received by the applicant were gifts and not part of the employment contract therefore not an "industrial matter" as defined under the Act and that payment in lieu of notice was reached under duress and after the employment relationship had concluded therefore not an industrial matter as defined under s 7 of the Act.
2. Counsel for the respondent in its submissions relied on the decision of their Honours in Hotcopper Australia Ltd v David Saab 81 WAIG 2704- at para 28. Drawing on the principles reflected in the decision the respondent submitted the definition of "industrial matter" under the Act was required to be read down and the Commission's powers contained under the Act to make monetary awards are limited to amounts accrued under terms of a contract, be they express or implied. Counsel for the respondent submitted the applicant's claims may belong within the realms of a civil dispute required to be pursued through a civil jurisdiction and that the provision of gift vouchers for the selling of Sea Creations products was not necessary for the reasonable or effective operation of the contract.
3. Counsel for the respondent submitted that entitlement for payment in lieu of notice owed to the applicant given that the documentation relied on by the applicant as having been signed by the respondent was drawn up after the termination actually occurred and provided following duress applied by the applicant.
4. Ms Gill for the respondent testified that the hotel vouchers relied on by the applicant as a contractual benefit were a gift and that she denied speaking to staff to inform them of the receipt of the gift vouchers in return for the sale of a particular product. The respondent conceded in testimony having spoken to all of the staff requesting them to increase the sales on Sea Creations products:

"... and you never know you might get a little bit of a gift from us."

1. The respondent testified that the hotel vouchers were personal and were to be considered to be gifts from Ms Gill's personal account. The respondent testified that the sale of Sea Creations products was part of her everyday duties and the gift of hotel vouchers provided to the applicant for selling Sea Creations were not considered to be part of the wages.
2. The respondent testified that the employment contract reached with the applicant in December 2006 and signed in January 2007 replaced previous employment contracts.
3. In cross-examination the respondent testified that the applicant's probation period had ended prior to the termination being effected. In cross-examination the respondent confirmed that no written warning had been provided to the employee but that all staff had been provided with verbal warnings relating to the treatment of clients.
4. Counsel for the respondent submitted that neither payment in lieu of notice nor the bonus or, as the respondent preferred to call them, the gift vouchers, could be considered to be an "industrial matter" consistent with the Act. Turning to the issue of the vouchers the respondent submitted that these were not an essential part of the contract and relied specifically on the decision of Gregor C in Cedric Turner v The Kings Park Board (1996) 77 WAIG 989. It was the submission of the respondent that it was not necessary for the vouchers to be given an order for the employment contract to function properly.
5. Counsel for the respondent submitted the onus is on the applicant to establish that the benefits sought is an implied or expressed term of the contract of employment and that no evidence had been placed before the Commission that the giving of the vouchers were necessary for the reasonable or effective operation of the contract in the circumstances of the case. The Commission is therefore not able to find that these vouchers were a contractual benefit.
6. Counsel for the respondent submitted that no payment in lieu of notice provision existed in the contract of employment, the applicant was on probation at the time and therefore not entitled to such payment. Counsel for the respondent submitted that at the time the document was signed by the respondent the employment relationship was no longer on foot. In the event the applicant wished to proceed then such application ought be made to the Magistrate's court for the issue to be heard within a civil jurisdiction, as the Commission was unable to deal with it as it was beyond jurisdiction. Counsel for the respondent submitted that employment must have been terminated by the time there were payment in lieu of notice discussions and that further the respondent was under duress and felt pressured and threatened because the applicant refused to leave the premises and was making matters uncomfortable and inappropriate with regards to clients who were in the front foyer.
7. The respondent testified that on the day of termination she attempted to have the applicant sign an agreement indicating that the contract had been breached. The document was tabled without signature from the applicant and on the applicant's own testimony she denied that this was the document at all, although she admitted having seen a similar document. The applicant testified during her own testimony that she had refused to sign a similar document.

1. I listened carefully to the evidence given by each of the witnesses. I have concerns about some of the evidence given by the respondent. In my view the respondent was unconvincing when giving evidence about the conversation she claimed she had with the applicant about what had occurred on the day of the applicant's termination. On the issue of Ms Gill's evidence regarding the hotel vouchers as being in addition to and not part of the employment contract I prefer the evidence of the applicant as understanding that the vouchers were part of the applicant's contract of employment. The issue of whether the applicant was on probation at the time of her termination was confused at times by both witnesses. The applicant gave evidence she was in the manager's position on a trial basis but had completed her probationary employment at the conclusion of three months. Ms Gill claimed the applicant to be on probation at the time of her termination. The Commission has not relied on evidence given by either witness in this regard and instead relies on the written contract between the parties signed some six weeks prior to the applicant's termination. The Commission finds the evidence given by the applicant to be evidence that was given honestly and to the best of her ability with the exception of one occasion where she seemed to avoid counsel for the respondent's question. It is the Commission's view that where there is any inconsistency in the evidence given by the applicant and the respondent in these proceedings I prefer the evidence given by the applicant.
2. It is not at issue in this matter that at all relevant times the applicant was an employee of the respondent and was employed under a contract of service. I find that these claims are also industrial matters for the purposes of s 7 of the Act as they relate to payments the applicant claims are due to her which arise out of the applicant's employment with the respondent. The issue to be determined therefore is what were the terms of the applicant's contract of employment with the respondent and whether it was a term of the contract of employment that the applicant is entitled to the payments she is seeking.

1. The first question to be answered by the Commission in relation to this application is whether the hotel vouchers fall within the definition of "industrial matter" as defined in s 7 of the Act. This is a question of jurisdiction as raised by the respondent and to answer that question the Commission turns to the Industrial Appeal Court decision in Hotcopper Australia Ltd v Saab (op cit) at p 24 where Anderson J reflects on the jurisdiction of the Commission to award monetary compensation for matters referred under s 29(1)(b)(ii). Anderson J reflects of the jurisdiction of the Commission to award monetary compensation:

"This does not necessarily mean that the Commission may not entertain a reference under s 29(1)(b)(ii) unless it is in its form and in its terms a claim by an employee to recover in specie the precise benefit expressed or implied in the employment contract. In the context of the exercise of jurisdiction to resolve an industrial dispute of the kind described in s 29(1)(b)(ii), nothing much would seem to turn on the distinction between the two remedies (damages and specific performance) in the general run of cases. It seems to me that if there is a dispute which is an industrial matter, and the subject matter of it is a claim (in the sense of a complaint) of the kind defined in s 29(1)(b)(ii), it is a dispute that may be dealt with by the Commission on a reference by the employee. How it is dealt with will be for the Commission to decide within the powers and discretions conferred on it by those sections of the Act which regulate the manner in which the Commission may exercise its jurisdiction in any particular case. Without intending to express a concluded view, I am inclined to think that this would include making a monetary order for compensation - that is, a damages award - in an appropriate case, as long as its purpose is to do no more than is necessary to "redress the matter by resolving the conflict in relation to the industrial matter" - Welsh v Hills (1982) 62 WAIG 2708 - and as long as its effect is so limited."

1. The Commission acknowledges the submission of the respondent that such considerations ought be read down however the Commission has considered, in relation to the hotel vouchers, whether the benefit sought was monetary compensation, an ex gratia payment or indeed a term of the applicant's contract of employment whether expressed or implied. The first question to be answered by the Commission is whether the hotel vouchers, in the Commission's view, fall within the definition of "industrial matter" as defined in s 7 of the Act. The Commission considers the denied contractual benefit claimed, being the hotel vouchers received by the applicant, are within the definition of "industrial matter" under the Act and are therefore able to be considered by the Commission. In making my decision the Commission finds it is not necessary, when interpreting the worth of the vouchers, to exercise a commercial decision.
2. In Comeng (N.S.W.) v Vehicle Builders' Employees Federation [1983] AILR 362, Macken J_._ noted:

"The primary obligation of Comeng towards its vehicle builders depends on the existence of a contract between the company and each vehicle builder. The terms of the relationship between them does not depend primarily on an award but rather on the contract of employment. In some contracts of employment there are additives which have the character of ex gratia payments and which, therefore, may be unilaterally withdrawn by the employer. It has not been suggested by Comeng that the overaward payments it makes to its employees have any such character. Such a contract cannot be unilaterally varied by one party to it".

1. The Commission finds there is no evidence to suggest that the hotel vouchers were understood to be able to be either removed or reduced at the employer's discretion. For this to be the case, the employer would have needed to make it clear at the outset. The Commission accepts Ms Gill described the ex gratia payment as a gift specifically for a stated purpose. Accordingly the applicant is entitled to treat her contract as having been amended to incorporate this provision. The Commission finds that the contract of the applicant contained a provision:

"NOTE: Luxe Day Spa reserves the right to amend incentive schemes at any time."

1. In summarising the evidence before the Commission the applicant can specifically recall the verbal agreement reached with the respondent regarding the sale of Sea Creations products to receive a bonus over and above the targets referred to in the applicant's contract of employment on the sale of $1000.00 worth of Sea Creations products. For this to be the case, the employer would have needed to make it clear at the outset. The Commission finds that at a meeting held towards the end of 2006 employees of the respondent, including the applicant, were informed by the respondent they were entitled to be provided with a hotel voucher for every $1000.00 package of Sea Creations products sold. The Commission finds the hotel vouchers did not reflect a gratuity or ex gratia payment as referred to in Pacific Publications Pty Ltd v Cantlon [1983] AR (NSW) 423 and Ray v Radano [1967] AR (NSW) 471. The Commission finds the worth of the benefits to be clearly identifiable. Exhibit L6 specifies one of the vouchers as a "Duxton Escape Package" with one night's overnight accommodation in the deluxe room including a full buffet breakfast for two served in the grill restaurant and the other voucher to be one night's accommodation in a superior river room at the Sheraton Hotel, Perth (valid Friday, Saturday or Sunday). The monetary compensation able to be awarded in such a case would be equivalent to the rates charged by the hotels for the services specified within each voucher claimed as a denied contractual benefit. The Commission finds that the applicant earned and received two hotel vouchers in the early weeks of 2007 as a result of selling two sets of Sea Creations products. Under the arrangements that prevailed the applicant was entitled to a hotel voucher for every $1000.00 package of Sea Creations products sold. The Commission is satisfied that:
   • - the respondent and applicant entered into this contractual arrangement during the applicant's employment;
   • - the applicant, since entering into the arrangement, sold two $1000.00 packages of Sea Creations products;
   • - the applicant was provided with two hotel vouchers by the respondent; and
   • - following the applicant's termination these vouchers were withdrawn by the respondent

The Commission finds therefore the applicant has been denied a contractual entitlement. Accordingly, the applicant is entitled to treat her contract as having been expressly amended to incorporate hotel vouchers to be received on the sale of Sea Creations packaged products. The Commission finds on two separate occasions, the vouchers were provided to the applicant and their value or worth was voided by the respondent following the applicant's termination. The Commission finds those vouchers to be worth some $400.00. On balance the Commission finds the benefit as having been denied.

1. The second jurisdictional issue as raised by the respondent, that being the applicant is not entitled to the written agreement to receive payment in lieu of notice as such agreement was reached under duress and after the employment relationship had concluded therefore the matter could not be considered an "industrial matter" pursuant to the Act. The Commission finds there was an agreement entered into between the respondent and the applicant on the day of the applicant's termination and further that agreement was to make good a payment of two weeks payment in lieu of notice. The Commission finds that agreement was in writing as entered into evidence during proceedings. In considering the jurisdictional issue the Commission finds that at the direction of the respondent the applicant was instructed to remain outside the premises to await the arrival of the Ms Gill's husband. During this period the Commission finds both the applicant and the respondent made phone calls to Wageline regarding entitlements to payment in lieu of notice. The Commission finds that at the time the agreement to pay two weeks payment in lieu of notice was entered into, the applicant was continuing to operate under instructions from the respondent. The Commission finds that the applicant at that stage was still employed and the claim is therefore within the jurisdiction of the s 7 of the Act. The Commission finds at no stage during this process was any threat, verbal or otherwise, issued by the applicant to the respondent. On balance the Commission finds the agreement to have been genuinely reached and the respondent was not operating under duress. Further, the Commission finds the term of the agreement reached amended the written contract of employment reached in late 2006 in so far as payment in lieu of notice. The applicant's claim for notice extends to whether a contractual entitlement has been denied and the Commission finds that an express agreement was entered into between the applicant and the respondent amending the terms of the employment contract. Relevant also was the part payment of payment in lieu of notice already made to the applicant by the respondent (exhibit L4):

ADVANCED PAYMENT IN CHEQUE OF $708.00 WHICH INCLUDES ONE WEEK'S NOTICE OF TERMINATION OF EMPLOYMENT FROM 28TH OF FEBRUARY 2007 TO 7TH OF MARCH

BEING FOR 35.5 HRS AND PART PAYMENT OF HOLODAYS (SIC) IN LOU BEING FOR 18..5 HRS

1. The Commission finds that the respondent in part made good the contractual entitlement of payment in lieu of notice, a total of 35.5 hours, denying the applicant an outstanding entitlement of 41 hours at $15.00 per hour, a total of $615.70 (gross).

1. The statutory basis for seeking relief through the Commission pursuant to applications of this nature has been reflected in many decisions. In Hotcopper Australia Ltd v David Saab (op cit) at p 2707 stated:

"I observe that a claim made under s 29(1)(b)(ii) of the Act is not a claim for breach of contract of employment, in the common law sense, because the ability to make the claim, the nature of the claim and the remedies available are limited by and also stem from the wording of the subsections. Section 29(1)(b)(ii) prescribes and defines a particular statutory breach of contract within those limitations.

The limitations (and/or conditions precedent to the exercise of jurisdiction and/or power) include the following:-

(a) the claim must relate to an "industrial matter" as defined in s 7 of the Act;

(b) the claim must be made by a "employee" as defined in s 7 of the Act.

(c) the benefit claim must be a contractual benefit claim, i.e. the claimant must be entitled to the claim under his/her contract of service.

(d) the subject contract must be a contract of service.

(e) the benefit must not arise under an award or order of the Commission.

(f) the benefit must have been denied by the employer."

1. The Commission finds the applicant was an employee, was employed under a contract of service and the benefits sought by the applicant do not arise under an award or order of the Commission. The Commission has determined that the applicant's contract of employment contained entitlements now sought by the applicant as having been denied.
2. Further submissions were sought from the parties regarding the prospect of entitlements arising under s 661 of the Workplace Relations Act 1996. Correspondence was forwarded to the applicant and respondent on 21 November 2007 and they were provided with seven days to respond: I thank the parties for their submissions.
3. The Commission concludes the applicant has been denied a contractual entitlement for payment in lieu of notice, an amount of $615.70 (gross) and the equivalent worth of the two vouchers provided to the applicant in return for the sale of Sea Creations products during her employment, a total of $400.00.
4. The Commission will issue a minute of order reflecting my reasons for decision. The parties will have until close of business Tuesday 8 January 2008 to advise my associate Ms Allison as to whether a Speaking to the Minutes will be required. If a Speaking to the Minutes is required that will be listed for Wednesday 9 January 2008. The Commission is anxious to ensure the order issues promptly given I am leaving the country for a number of weeks and foreshadow that it would be my intention to issue the final order no later than midday 9 January 2008.