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Introduction

Read the full decision here.

One of the requirements of bringing an unfair dismissal to the Fair Work Commission is that you must be covered by a modern award. This especially so if you earn more than the income threshold of $148,700 per annum.

This decision deals with how to determine if an employee is covered by a modern award by way of using the “principal purpose” test.

Background

The company in this matter is a venture funded Australian rocket company developing capabilities for launching small satellites into space. This family-run company was founded in 2013.

The applicant was employed from 13 October 2017 until his dismissal on 15 August 2019 He was from 1 March 2018 under a s. 457 Visa. At the time of dismissal, the applicant was paid $155,00 per annum. This being more than the high-income threshold, to progress his unfair dismissal claim he was required to provide the Fair work Commission that his work was covered by a modern award.

At the time of his dismissal, the applicant held the position of Head of Operations. His duties included: the writing of procedures and plans for the Company in relation to how the Company will operate and how a problem of non-conformance of a product is to be solved. The role did not require a degree, much less an engineering degree, and stated that ten years’ experience in a similar working environment or ideally within a similar industry would be accepted. He had five employees and an external provider of IT services reporting to him. Two of those employees were managers and one was a system analyst/planning scheduler. There was also a QA inspector and an administration officer reporting to the applicant.

The applicant was a senior manager, reporting directly to the CEO.

Which award?

To this end he argued that his work was subject to Professional Services Award or the Manufacturing and Associated Industries Award. He also raised, but did not pursue, coverage under the Miscellaneous Award.

Qualifications not recognised

The applicant failed on both counts, with the Deputy President in this matter reasoning that although the applicant held qualifications and professional memberships in his home country, the UK, they had yet to be recognised here in Australia. This was particularly pertinent when applying the manufacturing award.

Legislative context

Section 382 of the Fair Work Act 2009 provides as follows:

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) 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.”

Relevantly, s. 143 of the Act provides as follows:

“143 Coverage terms of modern awards other than modern enterprise awards and State reference public sector modern awards

Coverage terms must be included

(1) A modern award must include terms (coverage terms) setting out the employers, employees, organisations and outworker entities that are covered by the award, in accordance with this section.

Employers and employees

(2) A modern award must be expressed to cover:

(a) specified employers; and

(b) specified employees of employers covered by the modern award.

Organisations

(3) A modern award may be expressed to cover one or more specified organisations, in relation to all or specified employees or employers that are covered by the award.

Outworker entities

(4) A modern award may be expressed to cover, but only in relation to outworker terms included in the award, specified outworker entities.

How coverage is expressed

(5) For the purposes of subsections (2) to (4):

(a) employers may be specified by name or by inclusion in a specified class or specified classes; and

(b) employees must be specified by inclusion in a specified class or specified classes; and

(c) organisations must be specified by name; and

(d) outworker entities may be specified by name or by inclusion in a specified class or specified classes.

(6) Without limiting the way in which a class may be described for the purposes of subsection (5), the class may be described by reference to a particular industry or part of an industry, or particular kinds of work.

Employees not traditionally covered by awards etc.

(7) A modern award must not be expressed to cover classes of employees:

(a) who, because of the nature or seniority of their role, have traditionally not been covered by awards (whether made under laws of the Commonwealth or the States); or

(b) who perform work that is not of a similar nature to work that has traditionally been regulated by such awards.

Note: For example, in some industries, managerial employees have traditionally not been covered by awards”. {My emphasis].

Note also see the Fair Work Ombudsman information guide here, which sets out in simple terms which employees may not be covered by awards.

In summary, pursuant to s. 48 of the Act, a modern award covers an employee or employer if it is expressed to do so. A reference to a modern award covering an employee is a reference to the award covering the employee in relation to particular employment.

The Approach to determining award coverage

The Deputy President in this matter cited a decision of the Full Bench of the Commission Gourabi v Westgate Medical Centre:

“For relevant purposes, each modern award has a ‘coverage’ clause that determines ‘the employers, employees, organisations and outworker entities’ that are covered by it. The determination of whether a particular employment falls within the coverage clause of a modern award usually involves two considerations: first, a legal question concerning the proper construction of the coverage clause (and any other relevant provisions of the award) and, second, a factual question as to whether the employer and employee fall within the scope of the coverage clause, properly construed.”

The DP then noting:

“In interpreting an award provision, the words of the clause are to be given their ordinary meaning. Award history and subject matter may be considered to resolve any ambiguity. In considering whether a modern award covers a person, the test has been stated as: ‘to discern the objective meaning of the words bearing in mind the content in which they appear and the purpose they are intended to serve’. The approach to determining whether an employee is covered by an award is to assess the principal purpose or primary function for which the employee was employed”. [Citations removed].

Professional Services Award?

To assist, the DP went to Halasagi v George Weston Food Limited (Halasagi), Vice President Lawler said in relation to the meaning of “professional engineering duties” as it appears in the Professional Employees Award:

[23] I proceed on the basis that:

  • Particular duties will not be “professional engineering duties” as defined unless it is almost invariably the case that a qualification of the sort referred to in the definition is needed for the adequate discharge of some portion of those duties. [My emphasis]
  • The qualification must relate directly to the duties in question. That is, it is not enough that an employee holds a qualification as (or at least equal to those of) a graduate member of Engineers Australia, the qualification must be a qualification of the sort that is almost invariably needed to perform duties of the sort that are said to be the ‘professional engineering duties’ of the employee. In other words, an employee would generally not be able to rely upon, say, a degree in mechanical engineering to claim coverage by the Professional Employees Award 2010 in a position that involves duties in the field of chemical engineering.
  • If the advertisement for an employee’s position identifies a relevant qualification as required, this would be prima facie evidence that the position involved ‘professional engineering duties’ for an employee who held that qualification.
  • The reference in the definition to ‘the adequate discharge of any portion of’ the relevant duties is intended to ensure that engineers who advance in their career and assume an increasing load of administrative duties remain covered if they still perform some engineering duties, the adequate discharge of which requires the relevant qualification and the definition should be construed accordingly.

The DP summarising:

Of course, an applicant who seeks to establish that they are protected from unfair dismissal by virtue of being covered by a modern award needs to establish not only they are within the coverage clause of that modern award (the issue with which I am presently concerned), but also that they are employed in a classification in the award. That later question is determined by reference to the “principal purpose” test:

‘[This] approach…was endorsed and adopted by a Full Bench of the Commission in Bateman v Communications Design & Management Pty Ltd. It is first necessary to consider whether [the applicant] was performing professional engineering duties as defined in clause 3.2 of the Professionals Award. In my view the proper construction of that definition is that the employee must hold the relevant qualifications or their equivalent. My view in this regard is based on the text of the definition which provides that the term “requires” relates to the qualification rather than the duties performed. Further, the discharge of the relevant duties is qualified by the term “adequate”. These aspects of the definition reflect the specialised nature of engineering work, the professional obligations placed on engineers which are sometimes reflected in legislation and the fact these aspects of the role are recognised by formal tertiary level qualifications”.

What about the Manufacturing Award?

The DP found that whilst the Company was covered by the manufacturing award, as it engaged in manufacture including of components for its rocket and that other elements of the definition such as mechanical and electrical engineering are engaged.

The applicant contended that certain aspects of the award applied to his duties.

However, when applying the “principle purpose” test, that is the test requires assessment of the principal purpose or primary function for which the employee was employed. In particular, the DP focused on the applicant’s qualifications, which did not stack-up as required under the award.

Leaving the door open

The DP allowed for the applicant to provide further evidence based on his initial claim (that is, he is not permitted to introduce new evidence); which would obviate any conversion of his UK qualifications to be recognised in Australia. Therefore (in my opinion) slamming the door shut again.

Take away

I suppose that if the applicant had had his qualifications “converted” or “recognised” in Australia, there may have been an arguable case, despite his high income, that he could pursue the unfair dismissal matter. At this point, it is semantics, and it is up to the applicant to prove otherwise.