T10487 - 21 March
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Scott Kenneth Butler and The Hydroponics Company
Industrial dispute - alleged unfair termination of employment - alleged breach of Retail Trades Award - procedural fairness denied - reinstatement not practicable - compensation awarded - underpayment of wages - remuneration to be in money and not otherwise - order made REASONS FOR DECISION (1) On 11 October 2002, Scott Kenneth Butler (the applicant) applied to the President, pursuant to Section 29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with The Hydroponics Company arising out of the alleged unfair termination of his employment and alleged breach of an award. (2) This matter was listed for a conciliation conference on 22 November 2002. Mr W Olding sought and was granted leave to appear for the applicant. Mr D Hantke appeared for the employer. (3) Mr Butler was employed by The Hydroponics Company in the position of "State Manager" on 11 August 2000. He was terminated on 7 October 2002. (4) The applicant asserts that he was unfairly dismissed. He also asserts that the Retail Trades Award was breached in the following respects:
(5) The initial conciliation conference failed to resolve the dispute and the matter was referred to a hearing on 22 January 2003. In addition, I allowed supplementary written submissions, the last of which was received on 11 March 2003. (6) Evidence was taken from Mr Butler. Mr Hantke made a sworn statement and was subject to cross-examination. Certain additional information purporting to represent the views of third parties was presented in the form of sworn and unsworn statements, correspondence etc. both during and subsequent to the hearing. Such material is not subject to cross-examination and is therefore of limited evidentiary value. As such the material, with the exception of wage records, such as they are, has been assigned little or no weight in determining the matters in contest, particularly when they relate to contentious issues. (7) This has been a difficult application to deal with; not because of the questions to be determined, but because of the conflict in the evidence and the unexplained gaps in and perverse nature of some of the documentation. (8) Section 75 of the Industrial Relations Act requires that an employer must make and maintain a true record of employment. Regulation 25 spells out in detail the information to be contained in this record. This includes the number of hours worked each day and each week, including starting and finishing times. (9) On the material presented to the Commission, it would appear that this record was not maintained in the prescribed form. The position is complicated by the fact that Mr Butler, as State Manager, was responsible for payroll and maintenance of records. In practical terms he was responsible for the maintenance of the record. This does not in any way, however, relieve Mr Hantke of the statutory responsibility to ensure that the record is maintained. (10) Where it is not possible to determine questions on the basis of documentary records the Commission is entitled to rely on next best evidence. (11) I should emphasise that the role of the Commission is to settle industrial disputes and this may include making orders in respect of Award breaches. In such circumstances it falls to the applicant to prove his or her case and to the former employer to provide a defence. It is not for the Commission to make the case for either party. Nor is it the Commission's role to trawl through copious and unexplained documentation involving myriad calculations. The point has been reached in this matter where the questions will be determined on the material before the Commission, notwithstanding that this material is, in many important respects, quite unsatisfactory. Does the Award Have Application? (12) Clause 2 "Scope" of the Retail Trades Award reads:
(13) Whilst it would appear that the business includes an ancillary wholesale component, there was no suggestion that the primary purpose of the business is other than that of selling goods by retail. (14) I therefore find that to the extent that The Hydroponics Company employs staff for which a classification exists, the Retail Trades Award has application. Was the Applicant Covered by the Award? (15) Mr Butler had the title of "State Manager"1 or alternatively "State Sales Manager"2. (16) The uncontested evidence is that Mr Butler performed all the duties outlined in the Position Description. In summary form this included stock control, sales, record keeping, advertising and promotion, payroll, staff supervision, maintenance and responding to alarms and crisis situations. (17) Mr Hantke submitted that as Mr Butler was State Manager and a party to a negotiated employment contract, he was not subject to the Award. (18) I reject this submission. The critical test is what the employee does rather than what the title is. (19) Section 85 of the Act reads:
(20) It follows that there is no barrier to Mr Hantke and Mr Butler entering into a contract of employment, provided that such contract does not confer a lesser benefit than that which would apply, in this case on a weekly basis, under the Award. (21) During the hearing there was some confusion as to the precise elements of this contract. From subsequent documentation it is clear that Mr Butler was paid at the rate of $534.23 for the entirety of his employment. Different arrangements were, arguably, in place to compensate for Saturday work. (22) No formal contract was ever signed and Mr Butler said that he accepted the position on the terms offered because he needed the job. He had however made inquiries with the Workplace Standards Authority and was conscious of the Award implications. This however is of no consequence. There is offer and acceptance and there is consideration. Therefore an employment contract is in place. The only question is how this contract measures up to entitlements that would apply under the award. (23) Clause 7 of the Award defines Retail Employee from Grade 1 through to Grade 7. The definitions provide broad descriptors of the escalating level of administrative and supervisory responsibility at each successive level. Indicative tasks, which might be required at each level, are also provided. (24) It is clear from the evidence that Mr Butler should be classified as either a Level 5 or Level 6. (25) Taking into account the totality of Mr Butler's duties and in particular his staff supervisory and payroll responsibilities, I find that Mr Butler should be classified as a Retail Employee Level 5. (26) It follows that Mr Butler was entitled to be paid the following amounts for a thirty-eight hour week.
Alleged Unfair Termination of Employment (27) The evidence of Mr Butler in relation to the termination is as follows:3
(28) The termination was summary without payment in lieu of notice. (29) Mr Hantke said Mr Butler was dismissed for "multiple reasons"4. It was difficult to clearly understand what these reasons were; such was the nature of the evidence. It would appear that difficulties associated with MYOB operations might have been a factor5. (30) Reading between the lines it would appear that what commenced as a friendship relationship between Mr Butler and Mr Hantke, progressively deteriorated as the employment relationship continued. Towards the end I have little doubt Mr Hantke considered Mr Butler to be an unsatisfactory employee. (31) Mr Hantke said that he had issued two written warnings to Mr Butler, but was unable to present evidence to satisfactorily substantiate this assertion. (32) Mr Butler agreed that on the day prior to the termination, there had been a heated discussion concerning cheque number allocations in MYOB. (33) Mr Hantke may well have had a valid reason for termination but he did not adequately articulate what it was. I suspect it was a general dissatisfaction with Mr Butler's performance, which may have been brought to a head by the most recent MYOB incident. (34) Leaving aside the question of valid reason, I have no doubt that the basic rules of procedural fairness were not applied. (35) The Hydroponics Company is a small business and it is unreasonable to require the same level of HR management sophistication that would be expected of a major corporation or public entity. (36) Nonetheless, if there were performance issues relating to Mr Butler he should have been given the opportunity to redress these problems. Perhaps he was. (37) More particularly, if his job was on the line he should have been made aware of this in unambiguous terms, and again, given the opportunity to respond. (38) If there were allegations against Mr Butler, they should have been clearly stated and Mr Butler afforded a proper opportunity to respond. It is also a requirement under Section 30[8] of the Act, that an employee is to be offered the opportunity to be assisted by another person in such circumstances. (39) I accept Mr Olding's submission that Mr Butler was unfairly terminated. (40) From my observation of the parties during the hearing it was clear that the relationship between Mr Hantke and Mr Butler had irretrievably broken down. Reinstatement would be quite impracticable. (41) Mr Olding sought compensation of two weeks' pay. This is a relatively modest claim and one I am prepared to grant. Annual Leave Loading (42) The applicant asserts that he was not paid annual leave loading on accrued annual leave. (43) Clause 10 of the Award provides for a 17.5% annual leave loading to be paid in addition to the payment of annual leave. Such loading is not payable on proportionate leave paid on termination of service. (44) Mr Butler was employed for a total period of 111 weeks. Under the award he would be entitled to the leave loading on two lots of four weeks' leave [eight weeks in total], but not on the proportionate component for the final seven weeks of employment. (45) Whilst the annual leave loading is described in the Award as a payment "in addition", there is nothing that requires the loading to be separately identified in an annual leave payment. Regulation 25[1][j] of the Industrial Relations Regulations 1993 states that the following must be recorded in the Record of Employees.
(46) It follows, that for a finding as to whether the loading has been paid, to be made, it is necessary to determine the total payments made in respect of annual leave. This is where the difficulties with this application begin. (47) As part of the exchange during the supplementary submission process, the applicant submitted a bundle of documents purporting to be the pay advice of Mr Butler for the entire duration of his employment. The pay advices appear to be a MYOB printout and were presumably prepared by Mr Butler in his payroll function. This documentation was provided in response to Mr Hantke's assertion that certain periods of annual leave had been taken and not entered in the record. This, Mr Hantke submitted, amounted to a double payment on termination. (48) Scattered at random throughout this bundle are 18 pay advices relating to the period ending 18/7/02. The data contained in each advice is identical, save the date of preparation. The date of preparation is different in each case, with five occurring in 2002 and the balance in 2001. It is beyond comprehension that a pay advice prepared on 12/01/01 can contain data relating to the pay period ending 18/07/02. (49) When these advices are removed from the bundle there remains unexplained gaps for which no information at all is provided. These gaps relate to the following periods:
(50) It may be that these gaps are not critical to the annual leave calculation. They do, however, when coupled with other irregularities, call into question the degree of reliance the Commission should attach to these documents. (51) For the period 11/8/00 to 22/12/00 annual leave is shown to accrue variously at the rate of 3.11 hours per week and 3.5 hours per week. This is incorrect. The correct rate of accrual is 2.92 hours per week and this was put in place from 29/12/00 onwards. However this error amounted to an overstatement of accrued annul leave as at 22/12/00 of 11.02 hours, an error which was subsequently perpetuated. (52) The total leave accrued in 111 weeks is 324.12 hours. (53) There can be no doubt Mr Butler took 114 hours leave in June/July 2001; 15.2 hours in December 2001; and 15.2 hours in May/June 2002, a total of 144.4 hours. (54) On this basis Mr Butler should have received a payment equivalent to 179.7 hours on termination. He was in fact paid an amount equivalent to 188.09 hours, which on its face is an overpayment of 8.39 hours, before the leave loading is taken into account. (55) There are two further periods in dispute. (56) Mr Hantke asserts that Mr Butler took four days' leave between Christmas and New Year 2000. The pay advice record does not support this and I am therefore not prepared to accept this assertion. (57) Mr Hantke further asserts that Mr Butler took 77 hours leave in June 2002 and that Mr Hantke personally relieved him. (58) Again there is a difficulty with the documentation. There are no valid pay advices for the period between 7 June and 19 July 2002. There are in fact seven pay advices; all relating to the period ended 26 July 2002. The data in each is identical, save for the date of preparation. These advices were prepared on 26/07/02,19/07/02, 12/07/02, 5/07/02, 28/06/02, 21/06/02 and 14/06/02. (59) This is the same problem encountered above for the pay advices relating to the period ending 18/07/02. Indeed the pay advice for the period ended 18/07/02 is so different from the advice relating to 26/07/02 [one week later] as to be a nonsense. This inevitably leads me to the conclusion that I can have little confidence in the pay advice documentation as a means of settling disputed issues. (60) On balance I am prepared to accept Mr Hantke's assertion that an additional 77 hours leave was taken in June 2002. I must emphasise, however, that I am less than happy with the material available to assist in reaching this conclusion. (61) It is more likely than not that, on termination, Mr Butler was paid an annual leave payment in excess of that which had properly accrued. It is likely that excess payment was the equivalent of 85.39 hours. At the rate of $14.05 per hour, this would amount to $1199.70. (62) A payment for a 17.5% leave loading on eight weeks' pay (at the Level 5 rate) would amount to $764.50. (63) As this is less than the excess leave payment above I find that the applicant has failed to prove that the annual leave payment was not in accordance with the requirements of the Award and the Act. This part of the application is rejected. Overtime, Monday to Friday (64) Mr Butler claimed that he worked a 40-hour week, Monday to Friday. He claims that as the Award prescribes a 38-hour week, he was entitled to be paid overtime for two hours each week. (65) Mr Hantke said in evidence:6
(66) Note: It has since been established that the salary was $27780 pa, not $30000. (67) In a supplementary submission dated 28 January 2003, Mr Hantke asserts:
(68) Leaving aside the absence of any proper record to support this contention, it would also be necessary to demonstrate that Mr Butler was free to leave the premises during any lunch break. There is no evidence to support this. (69) I therefore find that Mr Butler worked 40 hours per week, Monday to Friday. (70) Clause 20 of the Retail Trades Award prescribes:
(71) Clause 23 prescribes that work in excess of "ordinary hours", Monday to Friday, shall be:
(72) I find that Mr Butler worked two hours per week in excess of "ordinary hours". That equates to an entitlement of 3 hours per week at the Award rate. (73) In Matthewson v Egg Marketing Board7 Shelley C summarised in some detail the approach of the courts in relation to offsetting of over award payments against Award entitlements. (74) In the instant case there can be no doubt that Mr Butler was paid an amount of money each week, for a 40-hour week. This can be contrasted with a situation whereby an employee is paid an amount of money for a 38-hour week, which is in excess of Award entitlements but without an identified purpose, and the excess component is sought to be offset against proven unpaid overtime. (75) According to the principles outlined in Matthewson, the correct approach is to compare, on a weekly basis, the amount of money actually paid to Mr Butler with that which he would be entitled to under the Award. An allowance needs to be made for annual leave taken during the relevant period in that overtime is not payable during a period of annual leave. (76) I find that on this basis Mr Butler was underpaid by an amount of $3186.80 during the relevant period. Details of this calculation are found in Appendix 1. Saturday Work (77) The applicant seeks payment for four hours worked at overtime rates for every Saturday during his first 12 months of employment. (78) It is a matter of some regret that the evidence in relation to this claim from both the applicant and the employer was problematic and unsatisfactory. (79) Mr Butler said that he worked Saturdays throughout the entire period of his employment. In August 2001 he entered into a financial arrangement with Mr Hantke to recompense the Saturdays worked. No claim is pursued for the period subsequent to 11 August 2001. (80) Mr Butler states that during his first 12 months of employment he worked every Saturday [52 in total] and was not paid for any of them. This evidence must immediately be called into question in that Mr Butler took three weeks leave in June/July 2001. It would seem highly improbable that he returned to work each Saturday during a period of leave. (81) Mr Hantke stated that during the first year Mr Butler worked every second Saturday, alternating with a casual employee, a Mr Raymond Dredge. Mr Butler denied this, stating that the alternating arrangement did not commence until August 2001. (82) Mr Hantke stated that during the first five months of employment Mr Butler was given the use of a motor vehicle in compensation for working on Saturdays. This arrangement ceased at Mr Butler's request and was replaced with the financial arrangement referred to above. (83) There is no dispute that the car was initially provided and accepted as recompense for working on Saturdays. Mr Butler's evidence is that when the car arrangement concluded, he was not paid anything for Saturdays until August 2001. (84) The records in relation to the "financial arrangement" referred to above are quite misleading and indeed inappropriate. I am simply unable to conclude from the records when the arrangement commenced. (85) It does, however, seem more likely than not, that if the motor vehicle arrangement ended at the initiative of Mr Butler [and this was not challenged], the alternative financial arrangement would have commenced shortly thereafter. Why would Mr Butler, at his own initiative, forego a benefit if no alternative was in place? (86) There appears to be little doubt that the motor vehicle arrangement was, initially at least, an agreed means of recompensing Saturday work. The question is, can a motor vehicle be used to offset a monetary entitlement under the Award? (87) Section 49[1] of the Act states:
(88) There can be no doubt that Mr Butler was subject to the Award and entitled to be paid at the rate fixed by the Award. (89) Section 51[3] of the Act states:
(90) From the above I conclude that remuneration payable under the Award must be paid in money and not otherwise. It follows that the use of a motor vehicle cannot be offset against a monetary entitlement [in this case overtime on a Saturday] arising from an Award provision. This is the position even when the parties have freely entered into an agreement for an alternative means of recompense. I suspect that this was the position in the instant case. However the Commission has no discretion to take this into account. (91) Having regard for the totality of the evidence [and indeed, lack of it] I conclude that the applicant has failed to prove his claim that he worked 52 Saturdays without remuneration. (92) I am however satisfied that Mr Butler did work some Saturdays and was not properly recompensed in accordance with Award requirements. An order relating to an underpayment of wages must be expressed in precise terms. As it is not possible to identify with precision the number of Saturdays worked by Mr Butler, the Commission must adopt a conservative approach. (93) I can safely conclude that Mr Butler worked at least every second Saturday during the five months for which the motor vehicle was provided. I am therefore prepared to make an order for four hours worked on each of 10 Saturdays. (94) The relevant Award rate at the time was $13.50 per hour. (95) Clause 23[a] of the Award prescribes that overtime on Saturday is to be paid at the rate of double time. (96) It follows that the underpayment amounts to $1080. Superannuation (97) The applicant claims that there is a shortfall in superannuation contributions based on the requirements of the Superannuation Guarantee [Administration] Act 1992. (98) The Commission's jurisdiction is limited to the Superannuation clause contained within the Award. (99) Clause 37 of the Award requires a superannuation contribution equivalent to 3% of ordinary time earnings. In short, the Award has not been updated to reflect the provisions of the Commonwealth superannuation legislation. (100) In this instance superannuation contributions made on Mr Butler's behalf clearly exceed the Award requirements and hence this part of the application is dismissed. (101) I note in passing that on a cursory calculation, it appears likely that the requirements of the Commonwealth legislation have, in any event, been met. Summary (102) In summary I find that Mr Butler has been underpaid to the following extent:
(103) In addition I have awarded an amount equivalent to two weeks' pay ($1068.40] as compensation for the unfair termination. (104) I will therefore make an order for a total amount of $5335.20. ORDER Pursuant to Section 31 of the Industrial Relations Act 1984 I hereby order that The Hydroponics Company, C/- Daryl Hantke, 6 Glasgow Court, Gulfview Heights, South Australia 5096, pay Scott Kenneth Butler, Unit 1, 10 Donald Court, Glenorchy, Tasmania 7010 an amount of five thousand three hundred and thirty five dollars and twenty cents [$5335.20], such payment to be made not later than 5.00pm on Monday 14 April 2003.
Tim Abey Appearances: Date and Place of Hearing: Appendix 1 Overtime Monday to Friday
1 Exhibit A1 |