WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES JANE CHRISTINE CARGILL

CLAIMANT

-v-

RE/MAX HARBOUR CITY REAL ESTATE PTY LTD

FIRST RESPONDENT

 CECILY ROBERTSON

              SECOND RESPONDENT

CORAM iNDUSTRIAL MAGISTRATE PM HOGAN

HEARD Wednesday, 16 January 2008, Thursday, 17 January 2008

DELIVERED Tuesday, 26 February 2008

FILE NO. M 51 OF 2007

CITATION NO. 2008 WAIRC 00354

CatchWords Contravention of Australian Workplace Agreement, Failure to pay in accordance with Agreement, Undertaking referring to a Guarantee, Construction of Undertaking, Federal Minimum Wage, No-disadvantage Test.

Legislation  Workplace Relations Act 1996

Workplace Relations Amendment (Workchoices) Act 2005

Minimum Conditions of Employment Act 1993

Property Sales Award Queensland – State 2005

Result Claim proved

Representation 

Applicant Mr G McCorry of Labourline – Industrial and Workplace Relations Consulting appeared as Agent for the claimant

Respondent Ms E Needham (of Counsel) instructed by Sparke Helmore appeared for the respondent

REASONS FOR DECISION

1       This claim is brought pursuant to sections 718, 722 and 824(2) of the Workplace Relations Act 1996 (Cwth) (“the WR Act”).  The claim is that Re/Max Harbour City Real Estate Pty Ltd (“Re/Max”) has contravened a provision of an Australian Workplace Agreement (“AWA”) agreed between Re/Max and Ms Cargill and that Ms Robertson (a licensed real estate agent and a director of Re/Max) was involved in the non-compliance.  Essentially, it is claimed that Ms Cargill was not paid in accordance with the AWA which included an undertaking that referred to a guarantee by the respondents that she would earn at least 125% of the rate of pay prescribed for her Award classification during each year of employment (or part thereof).

2       The respondents’ case is that Ms Cargill was remunerated in accordance with the AWA and that the guarantee contained within the undertaking did not apply to her.  Rather the respondents argue that the undertaking given was that Ms Cargill was able to demonstrate a personal work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for her Award classification.

3       There is no dispute that in or about January 2006 an agreement was reached between the parties that Ms Cargill would be employed by Re/Max as a real estate salesperson.  Nor is it disputed that Ms Cargill agreed to be employed on a “commission only” basis.

4       Ms Cargill commenced a course, conducted by the Real Estate Institute of Western Australia (“REIWA”), and under the sponsorship of the respondents, on 6 February 2006 in order to obtain the necessary certification which would enable her to work as a real estate salesperson.  The complainant obtained her certification on 17 March 2006.  It is agreed that she commenced employment with the respondents on 18 March 2006 and that the AWA was effective from that date.

5       This claim turns upon the construction of the undertaking given by Ms Robertson on behalf of Re/Max.

6       The legislative background which explains the relationship between the undertaking and the AWA is as follows.

7       Before 27 March 2006 an employee remunerated solely by commission was excluded from the provisions of the Minimum Conditions of Employment Act 1993 (WA).  On 27 March 2006 the Workplace Relations Amendment (Workchoices) Act 2005 (Cwth) brought employees of constitutional corporations (and there is no dispute that Ms Cargill was such an employee) under the umbrella of the WR Act.  Section 183 of the WR Act provided that certain employees (such as those in Ms Cargill’s position) must be paid a basic periodic rate of pay for each of their guaranteed hours that was at least equal to the standard Federal Minimum Wage (“FMW”).

8       Prior to the Workchoices amendments of 27 March 2006, employees such as Ms Cargill could move into the Commonwealth industrial relations system by entering into a Commonwealth employment instrument such as an AWA.  Here, of course, Ms Cargill elected to do that via the AWA agreed in February 2006.

9       At the relevant time the legislation required that, before an AWA could come into effect, it must pass the “no-disadvantage test”.  That test was set out in section 170XA of the WR Act which provided:

“(1) An agreement passes the no-disadvantage test if it does not disadvantage employees in relation to their terms and conditions of employment.

(2) Subject to sections 170XB, 170XC and 170XD, an agreement disadvantages employees in relation to their terms and conditions of employment only if its approval or certification would result, on balance, in a reduction in the overall terms and conditions of employment of those employees under:

(a) relevant awards or designated awards; and

(b) any law of the Commonwealth, or of a State or Territory, that the Employment Advocate or the Commission (as the case may be) considers relevant.”

10    Section 183 of the WR Act of course required that Ms Cargill be paid the standard FMW from 27 March 2006.  Hence the “undertaking included” AWA was required to provide that Ms Cargill not be disadvantaged, on balance, in comparison with the standard FMW. 

11    Section 170VPB(2) of the WR Act provided that if the Employment Advocate had concerns about whether the AWA passed the no-disadvantage test, but those concerns were resolved by a written undertaking given by the employer and accepted by the Employment Advocate, then the Employment Advocate must approve the AWA.  Given there was no relevant award regulating the employment of real estate salespersons in Western Australia (“WA”), the no-disadvantage test required the Employment Advocate to make a determination as to whether an existing award was appropriate for the purpose of deciding whether the AWA passed the no-disadvantage test.  Such an award was defined as “a designated award”.

12    Here, the AWA itself incorporated reference to the Property Sales Award Queensland – State 2005 (at 1.1.3).  It is confirmed in the Approval Notice given by the Employment Advocate with respect to the AWA that the award against which the AWA was assessed was that Queensland Award.

CONSTRUCTION OF THE UNDERTAKING

13    As the undertaking is deemed to be included in the AWA (section 170VPJ) it is part of a statutory employment instrument made pursuant to the provisions of the WR Act.

14    Putting aside the undertaking, the AWA makes no provision for the payment of a minimum wage as required since 27 March 2006.  One must assume that the undertaking resolved the Employment Advocate’s concerns as to Ms Cargill, as a commission-only employee, being disadvantaged by virtue of that commission-only status.  There is of course no evidence before the Court as to how or why the Employment Advocate actually determined that the undertaking satisfied the no-disadvantage test. 

15    Nevertheless the task for this Court is essentially a straightforward construction of the undertaking as a statutory instrument.  The Court must bear in mind that the “undertaking included” AWA must provide for Ms Cargill not to be disadvantaged.  The principle of no-disadvantage is not only enshrined in the Act via the no-disadvantage test but also within the principal object of the WR Act as set out in section 3.  Of particular relevance to this matter is clause (c) of section 3 which makes reference to the provision of “an economically sustainable safety net of the minimum wages and conditions for those whose employment is regulated by this Act”.

16    It appears that the document containing the undertaking was drafted by, or on behalf of, Don Tepper, Industrial Relations Manager of the Real Estate Employer’s Federation SA.  Exhibit 11 reveals that he emailed to Re/Max’s office manager a copy of the undertaking, along with a very brief explanation, seeking approval for him to make the undertaking on behalf of the first respondent.  Ms Robertson signed the undertaking as licensee of the first respondent and it appears that the undertaking was then returned to Mr Tepper and then forwarded to the Employment Advocate with a notation “seen – Don Tepper”.

17    It is clear from that email (Exhibit 11) that the undertaking was lifted from the Queensland Award.  Clause 15.2 of that Award provides as follows:

“15.2 Opting Out of Parts 12 and/or 14

15.2.1 Qualifying to Opt Out – Assessment Criteria

Where it can be demonstrated to the satisfaction of the QPIR, that an employee:

(a) has held a Real Estate Agent’s Licence for at least 2 continuous years; or

(b) has at least 6 months’ full-time equivalent recent experience in the industry and a historical earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(c) can demonstrate a personal work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(d) is guaranteed by the employer to earn at least 125% of the rate of pay prescribed for the employee’s Award classification during each year of employment (or part thereof),

the employee and the employer may freely elect to alter any of the provisions of Parts 12 and/or 14, subject to the conditions set out in Parts 15, 16 and 17.

The alteration of the provisions of Parts 12 and/or 14 shall be known as Opting Out.

15.2.2 No Disadvantage Test – Initial Assessment of Competence

An employee may Opt Out of Parts 12 and/or 14 only after being assessed as competent to do so, under the criteria outlined in clause 15.2.1, by the QPIR, which is the sole entity approved by the Industrial Commission to assess whether the employee meets the requirements of clause 15.2.1.

15.2.3 No Disadvantage Test – Recurring Assessment of Competence

In order to ensure that the employee achieves a minimum safety-net income during the course of employment, the No Disadvantage Test assessment of the employee’s competence to Opt Out shall be a recurring event, as prescribed in clause 16.3.2(b)(ii)(B).”

18    The undertaking itself copied clauses (a), (b), (c) and (d) from 15.2.1.

19    Neither the email (Exhibit 11), the undertaking itself nor the Approval Notice give an indication as to which of the four alternatives contained within the undertaking in fact form the basis of the undertaking.  Counsel on behalf of the respondents essentially submits that it was the third alternative, given that that was Ms Robertson’s intention at the time of signing the undertaking.  The Agent for the claimant submits that only the fourth alternative can have any application, essentially because the third option makes no sense in the WA context.

20    In my opinion Ms Robertson’s intention at the time of signing the undertaking is irrelevant.  I must say that even if it was relevant I would have some difficulty in relying on her evidence given her vague recollection as to how it was that she came to sign the undertaking and her incomprehensible explanation as to why it was that Ms Cargill, and others, were asked to enter into AWAs.  (Whether that “explanation” was due to evasiveness or a genuine lack of understanding of the workchoices system, I cannot be sure).  In relation to her evidence as to how she came to sign the undertaking, she said she was asked to sign it by Janet Roney, (the office manager to whom Mr Tepper’s email was addressed).  Ms Robertson could not recall whether she had actually seen Mr Tepper’s email.  She agreed that the email did not ask that one of the undertakings be chosen.  She said she read “or” between the four alternatives and considered that Ms Cargill met the third option so she signed it.

21    As the Agent for the claimant sets out in his outline of submissions:

“Clause 12.1 of the Award provides –

 Part 12 applies to all employees other than those who are approved to Opt Out in accordance with Part 15.  In the case of employees who are approved to Opt Out in accordance with Part 15, the provisions of this Part shall apply unless they are varied or over-ridden by an Agreement registered in accordance with Parts 16 and 17.

Clause 12.2 of Part 12 of the award provides for minimum weekly rates of pay for the classifications of the employees specified therein.

Part 15 of the award allows an employer and an employee to opt out of Parts 12 and 14 of the award.  An employer and an employee may opt out of Parts 12 and 14 of the award, only after the employee has been assessed as competent to do so, under the criteria outlined in clause 15.2.1, by the Queensland Property Industry Registry.  The assessment is to be carried out by independent industry based peers in the real estate industry – clause 15.1.1 of award.

Parts 16 and 17 of the award prescribe the effect of an opting out and the registration process.”

22    He then submits that:

“Parts 15 – 17 of the award are not relevant to the Claimant and the Respondent as the provisions can only be applicable in Queensland where the Queensland Property Industry Registry exists.”

23    When one reads the Queensland Award carefully one discovers that all employees covered by the Award must have a written employment agreement and that agreement must be registered with the Queensland Property Industry Registry (“QPIR”) (1.3.2).  The QPIR is administered by the Property Sales Association of Queensland and the Queensland Real Estate Industrial Organisation of Employers (1.6.12).  Until an agreement is registered with the QPIR the employer must pay not less than the Award classification rate of pay and commission is not to be offset against paid leave entitlements (13.3(g)).  Part 15 of the Award provides for a “personal, stand-alone no-disadvantage test”. 

“This Part, otherwise known as Stage 2 Employment, applies only to those employees who have been assessed by independent, industry-based peers, as demonstrating sufficient competence to make employment arrangements which differ from the provisions of Parts 12 and/or 14.” (15.1.1).

24    Parts 12 and 14 provide for minimum entitlements and payment of wages, allowances and/or commission.  Those Parts do not provide for remuneration by way of commission only.  The Award provides that the QPIR is the entity recognised to perform the assessments prescribed by Part 15 (15.1.5).  Part 16 of the Award is intended to facilitate the existence of a central registry of individual employment arrangements in the industry, i.e. the QPIR (16.1.2).  Under the Award an employer must provide an agreement and an application to QPIR to each person employed under the Award (16.2.1).  Those employees seeking to be employed as commission only must seek approval from the QPIR to opt out.  The Award provides a fall back provision for those employees who have opted for commission only who earn less than 125 percent of the rate of pay prescribed for their award classification in the first 12 months (see 16.3.2 (b)(iii)).

25    There is no evidence before the Court of any such Registry (or equivalent body in Western Australia) having conducted, in relation to Ms Cargill’s election to opt out, such an assessment as must be conducted by the QPIR in Queensland.  Rather, it appears that a representative of the Real Estate Employer’s Federation SA drafted a document containing a list of alternatives lifted from the Award without giving any cognisance to the requirement for an independent assessment to be made or how, for example, the third option might apply in the WA context.  It appears that Mr Tepper simply requested that the document be signed and that he did so without giving any guidance as to how the assessment was to be conducted.  Indeed the request in the email was that he be given Re/Max’s approval to make the undertaking on its behalf.

26    Clause 4.1.1 of the AWA expressly requires the Award to be read down to make sense for WA.  Given the principal object of the WR Act and the apparent lack of any independent assessment process in Western Australia, I agree with the Agent for the claimant that Parts 15 to 17 of the Award are not relevant to the claimant and the respondents as such provisions can only be applicable in Queensland.  Without the implementation of the requisite independent assessment process, it simply is not possible to read down the Award such that Parts 15 to 17 make sense for WA.  Hence the third alternative provided in the undertaking has no applicability to Ms Cargill as a property salesperson in WA.  The only alternative provided in the undertaking that can have any applicability to Ms Cargill’s situation is the fourth alternative.  Although the AWA attempts to provide remuneration by way of commission only it must be read subject to the undertaking which was a condition precedent to the approval of the AWA by the Employment Advocate. 

27    As the Agent for Ms Cargill submits, for the “undertaking included” AWA to satisfy the no-disadvantage test in relation to both section 183 of the WR Act and the Award it must provide for Ms Cargill’s remuneration and other entitlements on balance to be not less than the FMW and not less than the wage prescribed by the Award.  The “undertaking included” AWA only satisfies the no-disadvantage test for Ms Cargill if the undertaking is construed as being constituted by the fourth alternative provided within the undertaking.  As the fourth alternative provided in the undertaking is the only clause that has any applicability to Ms Cargill, then she is entitled to be remunerated in accordance with that provision. 

Conclusion

28    There is no dispute that clauses (1) and (2) of the undertaking had no application to Ms Cargill.  In construing whether the third option had applicability it is necessary to look at the purpose of the undertaking and the statutory context in which it was given.

29    The purpose of the undertaking was to satisfy the no-disadvantage test as set out in 170XA of the WR Act.  The statutory regime in place at the time was that a worker could agree to opt out of certain entitlements if the employer could show that the worker would not be disadvantaged by so doing. 

30    Here it is difficult to make a positive finding as to the employer’s actual intention at the time of signing the undertaking.  The claimant was not a party to the undertaking and the only witness called by the respondents gave vague and unreliable evidence as to its making.  However, even if the employer intended to rely on the third option in the undertaking, a reading of the designated award, in accordance with clause 4.1.1 of the AWA, reveals that such an option could have no applicability in the WA context.  Thus the undertaking must be read as one providing a guarantee as set out in the fourth option.

PM Hogan

Industrial Magistrate