| [2017] FWC 4334 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Sam Technology Engineers Pty Ltd
v
Andrew Bernadou
(C2017/4495)
DEPUTY PRESIDENT CLANCY |
MELBOURNE, 18 AUGUST 2017 |
Appeal against decision ([2017] FWC 3228) of Commissioner Ryan at Melbourne on 7 August 2017 in matter number U2017/3288 – application under s.606 of the Fair Work Act 2009 for a stay order.
[1] On 15 August 2017, Sam Technology Engineers Pty Ltd (STE) lodged an appeal against a decision of Commissioner Ryan 1 in which the Commissioner dismissed STE’s jurisdictional objection that Mr Andrew Bernadou earned more than the high income threshold of $138,900.2
[2] In its Form F7 – Notice of Appeal, STE states it seeks “a stay of the full part of the decision” of Commissioner Ryan and that the “next action of the commissioner [sic] is not required as Mr Bernadou’s salary will be seen to be greater than $138,900.” The practical effect of a stay in this matter, if granted, would be to pause the whole of the directions issued by the Fair Work Commission (the Commission) on 10 August 2017 in relation to matter number U2017/3288, which I refer to below at paragraph [22], until the appeal is determined.
[3] Section 606(1) of the Fair Work Act 2009 (the Act) provides:
“If, under section 604 or 605, the FWC hears an appeal from, or conducts a review of, a decision, the FWC may (except as provided by subsection (3)) order that the operation of the whole or part of the decision be stayed, on any terms and conditions that the FWC considers appropriate, until a decision in relation to the appeal or review is made or the FWC makes a further order.”
[4] It is well established that before a stay order is granted, the Commission is required to be satisfied that an arguable case exists with some reasonable prospects of success in respect of both the question of permission to appeal and the substantive merits of the appeal, and that the balance of convenience favours the granting of a stay order.
[5] This test for granting a stay order was outlined by Vice President Ross (as he then was) in Edghill v Kellow-Falkiner Motors Pty Ltd. 3 That approach was subsequently confirmed by the Full Bench in Kellow-Falkiner Motors Pty Ltd v Edghill.4
[6] Section 400(1) of the Act also applies to the appeal. Section 400(1) provides:
“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.”
[7] Consideration of whether STE’s appeal is arguable with reasonable prospects of success must therefore take into account its prospects of obtaining permission to appeal under s.400(1) of the Act. As was stated by the Full Bench in WorkPac Pty Ltd v Bambach: 5
“Section 400 manifests an intention that the threshold for a grant of permission to appeal is higher in respect of unfair dismissal appeals than that pertaining to appeals generally (compare s.604(2) and s.400).” 6
[8] There is, therefore, a higher threshold for permission to appeal against a decision made under Part 3-2 of the Act.
[9] In GlaxoSmithKline Australia Pty Ltd v Makin, 7 some of the considerations that may attract the public interest were identified:
“…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…” 8
[10] Further, s.400(2) of the Act provides:
“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.”
[11] The required assessment of an appeal’s prospects of success for the purposes of determining a stay application is of a preliminary nature only. The Commission will not have had the benefit of hearing the appellant’s full argument and the opportunity to comprehensively peruse the case materials may not be available. 9
[12] Mr Bernadou commenced employment with STE on 6 March 2014 and his dismissal took effect on 10 March 2017. Mr Bernadou’s application for unfair dismissal remedy dated 24 March 2017 (the Application) was received in the Commission on 27 March 2017.
[13] In response, STE raised three jurisdictional objections in its Form F3 – Employer Response:
[14] Only the high income objection fell for consideration by Commissioner Ryan.
[15] The Commissioner noted that the Act provides that a person is only protected from unfair dismissal if “the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations is less than the high income threshold.” 10 The Commissioner detailed other relevant statutory provisions, including s.329 and s.332 of the Act and Regulation 3.05 of the Fair Work Regulations 2009.
[16] Mr Bernadou’s contract of employment provided:
“Remuneration
Your base salary will be $125,000 per annum, (inclusive of all overtime leave loadings and superannuation). Salaries are paid weekly by electronic fund transfer, direct to your nominated account.
Car allowance of $15000 per annum plus $5000 after 12 months service.
Computer plus company phone.”
[17] Commissioner Ryan identified the issues for consideration as the treatment of superannuation, the car allowance and other allowances. He found that Mr Bernadou’s salary of $125,000 was not inclusive of superannuation paid by STE, in compliance with the Superannuation Guarantee legislation, and therefore all of the $125,000 formed part of Mr Bernadou’s earnings. It was noted that Mr Bernadou made a voluntary contribution to his superannuation out of his $125,000 salary.
[18] The parties were in dispute as to what percentage of the $20,000 car allowance should be attributed to earnings. At the hearing on 9 June 2017, Mr Bernadou tendered his vehicle log book for the period 10 March 2016 to 10 March 2017 and also petrol receipts for a similar period. Given STE did not have an opportunity to review this material prior to the hearing, the Commissioner allowed STE a further five weeks to review the exhibits and make submissions as to the split between business and private use of the car allowance, which Mr Bernadou would be permitted to respond to. Parties agreed that the further submissions would be in the form of a Statutory Declaration.
[19] Commissioner Ryan found that the dispute between the parties as to the car allowance did not need to be resolved. The Commissioner accepted STE’s submission that 40% of the usage of the car was for business purposes and the remaining 60% of the usage of the car was for private purposes over Mr Bernadou’s submission that 6.95% of the allowance was for private use, therefore 93.05% for business use. The Commissioner therefore concluded $12,000 of the car allowance had been for personal use. He added this $12,000 to Mr Bernadou’s earnings of $125,000, bringing the total earnings to $137,000.
[20] The Commissioner then addressed the telephone and laptop reimbursements. In relation to these, STE had provided a statement from an Accountant that suggested in relation to these reimbursements, a private usage component of 50% should be attributed. The Commissioner was prepared to accept this and having calculated the amount equating to half of both the telephone reimbursement ($1,560) and laptop reimbursement ($1,500), added a further $1,530 to Mr Bernadou’s earnings, bringing the total to $138,530, which was still below the high income threshold of $138,900.
[21] Commissioner Ryan then proceeded to dismiss STE’s jurisdictional objection that Mr Bernadou earned more than the high income threshold and returned the Application to the general unfair dismissal list for determination of the remaining jurisdictional objections and the merits.
[22] On 10 August 2017, the Application was listed for a Jurisdiction (Small Business Fair Dismissal Code; Genuine Redundancy) and Arbitration Conference/Hearing from 9 October to 11 October 2017, with requirements for parties to file and serve their material. The first part of the requirements obligates STE to file and serve its Outline of Argument: objections, Statement(s) of Evidence and Document List by no later than noon on 28 August 2017.
[23] STE contends the Commissioner erred by not including payments made to Mr Bernadou for petrol and tolls as additional components of his car allowance. It submitted these were not reimbursable expenses as they were additional parts of the car allowance. STE said petrol invoices were forwarded to STE weekly for payment and toll invoices were submitted monthly for payment. In addition to the car allowance of $20,000, STE submitted that $3,355 in petrol and tolls was paid to Mr Bernadou. It said a 60:40 (private/business) calculation should be applied to that amount, bringing Mr Bernadou’s earnings to approximately $139,000, which is therefore above the high income threshold. In the alternative, STE submitted that the full amount of $3,355 should form part of Mr Bernadou’s earnings, bringing his total earnings to in excess of $140,000.
[24] During the course of the stay hearing, STE submitted Commissioner Ryan did not consider the car allowance in its entirety, and that rather than $20,000, the allowance included payments for petrol and equated to $24,000. Applying the percentage for personal use, it submitted Mr Bernadou’s earnings were greater than the high income threshold, as adding the 60% figure of $14,400 to the base salary of $125,000 brings the total to $139,400.
[25] Mr Bernadou appeared at the hearing for the stay application. While he took issue with the 60:40 (private/business) ratio the Commissioner had applied and has lodged his own appeal against the Commissioner’s decision, he maintained the position he had argued before the Commissioner and submitted his annual earnings were less than the high income threshold of $138,900.
[26] STE raised the issue of additional payments for petrol before the Commissioner and the Commissioner had acknowledged this. For example at the hearing there was the following exchange:
“MR SCHMIDT: Commissioner, the first thing is his car allowance was in the vicinity of $24,000. I think we have to clarify the first thing - - -
THE COMMISSIONER: I thought it was $15,000 plus five?
MR SCHMIDT: No, Commissioner. Then he got petrol as well on top of that.
THE COMMISSIONER: Okay.
MR SCHMIDT: So that came up to - - -
THE COMMISSIONER: Fine, but if you do the petrol, you do the same percentage split as you would with the kilometrage, unless there is any other evidence that you have got, Mr Bernadou, of putting in petrol at your own expense or - I don't know how this is going to play out but we'll see how that goes - but certainly whatever percentage we come up with for the kilometres has to be applied to the incidentals that go with the car. That seems to be somewhat obvious.” 11
[27] Mr Bernadou tendered receipts for purchases of petrol for which he said he was reimbursed. 12 STE also relied on correspondence from its Accountant which detailed payments it claimed Mr Bernadou had been receiving, including an amount of $3380 for petrol and amounts for phone and laptop reimbursement referred to in paragraph [20] above. In his decision, the Commissioner referenced the correspondence of the STE Accountant.13
[28] Despite what had been put before him regarding payments made by STE to Mr Bernadou for petrol and despite what he stated during the course of the hearing, the Commissioner did not consider it in terms of assessing Mr Bernadou’s earnings. It was not taken into account.
[29] In order to decide STE’s jurisdictional objection the Commissioner was required to determine whether or not Mr Bernadou’s annual rate of earnings was less than the high income threshold. In considering this application for a stay I must determine whether there is an arguable case with some reasonable prospects of success in respect of both the question of permission to appeal and the substantive merits of the appeal that the Commissioner erred in finding that Mr Bernadou’s annual rate of earnings was less than the high income threshold.
[30] The Commissioner was satisfied that Mr Bernadou’s annual rate of earnings was less than the high income threshold. He made this finding having failed to take into account payments that had been made by STE in relation to petrol and tolls. Consequently, I am satisfied there is an arguable case with some reasonable prospects of success in respect of both the question of permission to appeal and the substantive merits of the appeal that the Commissioner did not have regard to all the material facts in finding Mr Bernadou’s annual rate of earnings was less than the high income threshold.
[31] STE submitted resources would be expended unnecessarily if the Appellant was required to prepare material for the unfair dismissal application prior to the determination of the appeal.
[32] In response, Mr Bernadou advised he is not seeking reinstatement but submitted it has already been 22 weeks since he has received a salary.
[33] In the circumstances of this matter and having regard to the submissions of the parties, I am satisfied the balance of convenience favours the granting of a stay. I am satisfied there is a strong arguable case. Further, a stay in this matter will operate to place a temporary pause on the requirements relating to the preparation of materials for the determination of the jurisdictional objections and merits of the Application, only for as long as STE seeks permission to appeal and the Commission deals firstly with that application and then the appeal proper, should permission be granted. The application for permission to appeal is listed for hearing on 6 September 2017, less than 3 weeks from today.
[34] A stay may spare both parties, should permission to appeal be granted and the appeal be upheld, the dedication of time and expense to no effect. Mr Bernadou will not, in my view, be prejudiced by any delay resulting from the operation of a stay to an extent that swings the balance of convenience in his favour.
[35] Pending the hearing and determination of the appeal or further order, the whole of the decision 14 of Commissioner Ryan together with the whole of the directions issued by the Commission on 10 August 2017 in relation to matter number U2017/3288 are stayed. A stay order will be issued separately.
DEPUTY PRESIDENT
Appearances:
Mr J Schmidt for the Appellant.
Mr A Bernadou on his own behalf.
Hearing details:
2017.
Melbourne and Sydney (video link):
August 17.
2 This was the applicable amount at the time the termination of Mr Bernadou’s employment took effect .
3 Print S2639.
4 Print S4216, applied in Bank of Sydney Ltd v Repici [2015] FWC 5511.
5 WorkPac Pty Ltd v Bambach [2012] FWAFB 3206.
6 Ibid at [14].
8 Ibid at [27].
9 Supreme Caravans Pty Ltd v Hung Pham [2013] FWC 4766 at [9].
10 Fair Work Act 2009 at s.382(b)(iii).
11 Transcript PN 88-93.
12 Exhibit A2.
13 [2017] FWC 3228 at [25].
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