The Commission found that it has jurisdiction to hear an employee’s denied contractual benefits claim against an employer, which is a national system employer.

 Sections 26(2)(e) and 27(2)(o) of the Fair Work Act 2009 (Cth) did not prevent a national system employee from bringing a contractual benefits claim against a national system employee under ss 23(1) and 29(1)(b)(ii) of the Industrial Relations Act 1979 (WA).

Background

The applicant is a casual bus driver employed by the respondent, a private bus company in Southwest Western Australia. His hourly rate is $34.61 under a written contract.

The respondent holds contracts with the Public Transport Authority (PTA), including an "Evergreen Contract" for the Bunbury Stratham Capel Route (BSC Route). Under this contract, the PTA pays service fees to ensure bus drivers receive a specified "grossed up" hourly rate.

The PTA's bulletin sets the pass-through rate at $43.31 per hour for the MR Burnside Route.

To guarantee drivers receive this higher rate, the Evergreen contract (Clause 9.12) prevents contractors from profiting excessively from the additional service fees paid by the PTA.

The applicant started driving school buses on the BSC Route around July 2018. After discovering the pay rate discrepancy between his contract and the pass-through rate contained in the PTA’s Evergreen Contract Model Payments Elements, he filed a denied contractual benefits claim.

Contentions

The parties agreed that the applicant is a national system employee and the respondent is a constitutional corporation, which is a national system employer as defined in section 14 of the FW Act.  Further, they agreed that the applicant was not a party to the Evergreen contract.

The respondent contended that the applicant's claim did not pertain to a breach of existing entitlements within his employment contract. Instead, the applicant sought to alter his contract to include the higher rates from the PTA and the respondent’s contract, to which he was not a party. The respondent argued that this would necessitate the Commission making determinations regarding the fairness or legality of the applicant's contract, resembling an "unfair contracts" claim excluded by s 26(2)(e) of the FW Act.

Alternatively, the respondent claimed that the applicant aimed to enforce higher pay entitlements originating from the Evergreen contract, which was neither an employment contract nor an instrument to which the applicant was a party. The respondent contended that pursuing the enforcement of the Evergreen contract did not fall within the Commission's jurisdiction because it did not constitute a claim for the enforcement of an employment contract as defined by s 27(2)(o) of the FW Act.

The respondent argued that because the “source” of the applicant’s rights is not the applicant’s employment contract, but something outside it, the Commission did not have the jurisdiction to deal with the matter. According to the respondent, this would require the applicant to demonstrate that his claim fell under an exception to the privity rule, enabling him to enforce the Evergreen contract against the respondent to his benefit. The respondent maintained that both cases would involve claims excluded by ss 26(2)(e) and 27(2)(o) of the FW Act.

The applicant contended that under settled law, a denied contractual benefits claim under the Industrial Relations Act 1979 (WA) (IR Act) is in practicality, a claim for the enforcement of an employment contract, for which an order for damages to remedy the denial of the contractual benefit may be made.

Moreover, the applicant argued that his claim falls under a State or Territory law concerning "claims for the enforcement of contracts of employment," thereby not being excluded from the Commission's jurisdiction by the exception in s 26(2)(e) of the FW Act because of the application of ss 27(1)(d)(iii) and 27(2)(o).

The applicant asserted that the respondent's jurisdictional objection is not a novel issue and has been consistently rejected in previous cases. Contrary to the respondent's characterisation, the applicant clarified that his claim does not involve seeking to challenge the fairness of the employment contract, nor is it an attempt to enforce the Evergreen contract between the respondent and the PTA. Instead, the issue was whether he was entitled to a contractual benefit within his employment contract, specifically the minimum rates outlined in the Evergreen contract when operating buses on the BSC Route. The applicant argued that the Commission possessed jurisdiction to adjudicate and resolve this issue in a denied contractual benefit claim.

Findings

The Commission found that it does have jurisdiction to hear the claim.

This matter is not excluded by operation s 26(2)(e) of the FW Act because there is no unfair contracts law or jurisdiction in WA of the type that s 26(2)(e) is intended to exclude.

The Commission's jurisdiction to deal with industrial matters, including compelling the fulfilment of employment contract benefits, is found in common law principles, not the IR Act. The Commission's role is to identify the terms of the contract, whether explicitly stated, incorporated, or implied.

Section 27(2)(o) of the FW Act does not exclude the applicant’s claim. The applicant has made it clear that he is not seeking to enforce the Evergreen contract. Furthermore, s 27(2)(o) of the FW Act is directed at whether the law under which the claim is being made is excluded, not the content of the claim itself.  The identification of the contract upon which the applicant relies is one of the elements the applicant will have to establish at a substantive hearing of his claim.

The decision can be read here.