100108384

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES IAN MACFARLANE

APPLICANT

 -v-

 HALPERIN FLEMING & MEERTENS

RESPONDENT

CORAM COMMISSIONER J H SMITH

DELIVERED FRIDAY, 21 DECEMBER 2001

FILE NO APPLICATION 1499 OF 2001

CITATION NO. 2001 WAIRC 04492

_______________________________________________________________________________

Result Application for enforcement of Minimum Conditions of Employment Act  1993 – Application dismissed for want of jurisdiction.

Representation

Applicant In person

Respondent Mr D G Fleming

_______________________________________________________________________________

Reasons for Decision

1          This is an application made under s.29(1)(b)(ii) of the Industrial Relations Act 1979 ("the Act").  Ian MacFarlane ("the Applicant") claims that he is owed a sum of $2,480.59 being a benefit to which he is entitled under a contract of employment, not being a benefit under an award or order.  The sum claimed is an amount deducted from the Applicant's final pay following his resignation as a legal practitioner employed by Ron Halperin, David George Fleming, Brent Douglas Meertens and Bronwen Joy O'Sullivan trading as Halperin Fleming Meertens ("the Respondent"). 

2          The Respondent deducted from the Applicant's final pay, an amount of $2,123.33 for professional indemnity insurance and $357.26 for the cost of the Applicant's practice certificate paid for the period from 8 August 2001 until 30 June 2002.  The deductions were made from the Applicant's last two weeks' pay and accrued annual leave as follows:

  "Salary Reconciliation

Final salary due to Ian

2 weeks ordinary pay: $1,538.50

LESS:-

 Tax: $   398.00 

 HECS $     75.00

Nett Pay:  $1,065.50

17 days holidays:-

17 days @ $153.85 per day $2,615.40

LESS:- 

 Tax: $   832.00

 HECS $     75.00

Nett Pay:  $1,708.40

TOTAL DUE TO IAN:  $2,773.90

Amount of salary package overpaid to Ian

 Professional Indemnity Insurance

 paid @ $2,377.35 pa paid to 30/6/02

 326/365 of $2,377.35  $2,123.33

 Practice Certificate fee

 @ $400.00 pa paid to 30/6/02

 326/365 of $400.00  $   357.26

TOTAL OVERPAID TO IAN  $2,480.59

BALANCE DUE TO IAN:  $   293.31"

3          Following a direction by the Respondent, the Professional Indemnity Insurers advised the Respondent on 3 October 2001 that it had refunded $1,914.70 to the Applicant by sending him a cheque for that amount.

4          Following a conference in the Commission the parties agreed that this matter could be heard and determined by way of written submissions.

5          The Applicant claims the deduction for the professional indemnity insurance and practice certificate fee was made without his consent and contrary to s.17D of the Minimum Conditions of Employment Act 1993 ("the MCE Act").

6          Section 3 of the MCE Act defines a "minimum condition of employment" to mean — 

 " (a) a rate of pay, or other requirement as to pay, prescribed by this Act;

 (b) a condition for leave prescribed by this Act; or

 (c) a condition prescribed by Part 5;"

7          Section 5(1)(c) of the MCE Act provides:

"(1) The minimum conditions of employment extend to and bind all employees and employers and are taken to be implied —

… (c) if a contract of employment is not governed by a workplace agreement or an award, in that contract."

8          Section 17C of the MCE Act provides:

"(1) To the extent that an employee receives his or her pay in money the employee is entitled to be paid in full and payment is to be made —

(a)               in cash;

(b)               by cheque, postal order or money order payable to the employee;

(c)               by payment into an account, specified by the employee, with a bank or financial institution; or

(d)               in any other manner authorized or required under the workplace agreement, award or contract of employment.

 (2) In the case of any employee who is not employed by the Crown, payment can be made under subsection (1) (b) or (c) if, and only if, the employee so authorizes."

9          Section 17D of the MCE Act provides:

"(1) Despite section 17C, an employer may deduct from an employee's pay —

(a)               an amount the employer is authorized, in writing, by the employee to deduct and pay on behalf of the employee;

(b)               an amount the employer is authorized to deduct and pay on behalf of the employee under the workplace agreement, award or contract of employment; and

(c)               an amount the employer is authorized or required to deduct by order of a court or under a law of the State or the Commonwealth.

 (2) The employee is entitled to have any amount so deducted paid by the employer in accordance with the employee's instructions or in accordance with the requirements of the workplace agreement, award, contract of employment, court order or law of the State or the Commonwealth (as the case may be).

 (3) Nothing in this section requires an employer to make deductions requested by an employee.

 (4) An employee may, by giving written notice to the employer, withdraw an authorization under subsection (1)(a)."

Jurisdiction to hear and determine the Application

10       The Respondent contends that the issue whether the Respondent is in breach of s.17C or s.17D of the MCE Act is not "an industrial matter within the meaning of s.22A of the Act" because of the operation of s.7(c) of the MCE Act and s.83(1a) of the Act.

11       Section 7(c) of the MCE Act provides:

"A minimum condition may be enforced —

… (c) where the condition is implied in a contract of employment, under section 83 of the Industrial Relations Act 1979 as if it were a provision of an award, industrial agreement or order other than an order made under section 32 or 66 of that Act."

12       Section 83(1), (1a), (2) and (4) of the Act provide:

“(1) Subject to this Act, where a person contravenes or fails to comply with any provision of an award, industrial agreement or order, other than an order made under section 32, 44(6) or 66 —

(a) the Registrar or a Deputy Registrar;

(b) an Industrial Inspector;

(c) any organization or association named as a party to the award or employer bound by the award, industrial agreement or order; or

(d) any person on his own behalf to whom the award, industrial agreement or order applies,

 may apply in the prescribed manner to an industrial magistrate's court for the enforcement of the award, industrial agreement or order.

(1a) An application for the enforcement of an award, industrial agreement or order (other than an order made under section 32, 44(6) or 66) shall not be made otherwise than to an industrial magistrate's court.

(2) On the hearing of an application under subsection (1) the industrial magistrate's court may, by order — 

(a) if the contravention or failure to comply is proved, issue a caution or impose such penalty as the industrial magistrate's court considers just but not exceeding $1 000 in the case of an employer, organization or association and $250 in any other case;

(b) dismiss the application,

 and, subject to subsection (3), in any case with or without costs, but in no case shall any costs be given against the Registrar, a Deputy Registrar, or an Industrial Inspector.

(4) Where in any proceedings brought under subsection (1) against an employer it appears to the industrial magistrate's court that an employee of that employer has not been paid by that employer the amount which he was entitled to be paid under an award or order the industrial magistrate's court shall, subject to subsection (5), order that employer to pay to that employee the amount by which he has been underpaid."

13       Pursuant to s.83(1a) of the Act an application for enforcement of an award or industrial agreement shall not be made otherwise than to an Industrial Magistrate.  In Crewe and Sons Pty Ltd v Amalgamated Metal Workers and Shipwrights Union of Western Australia (1989) 69 WAIG 2623 at 2626 the President observed that it was established in Mt Newman Mining Co Pty Ltd v TWU (1984) 64 WAIG 1075 (for the reasons expressed in Minister for Works and Water Resources v AMWSU (1983) 63 WAIG 1389) the Commission does not have any jurisdiction to hear and determine matters which are essentially for enforcement and recovery of wages under an award.  In Mt Newman Mining Co Pty Ltd v TWU the President at 1076 observed:

"… An award is said to govern relations between the parties to a contract of employment as to all matters with which it deals (Amalgamated Collieries of W.A. Ltd v True (supra)).  So that whatever entitlement the drivers had, as well as the obligation of the employer to pay wages, was in that sense governed by the award (see also section 114 of the Act).  Proceedings to enforce payment imply contravention or failure to comply with provisions of the award and may bear the character of enforcement proceedings which by section 82 and section 83 of the Act are to be instituted before an Industrial Magistrate and not otherwise.  An employer is obliged to pay wages in accordance with the award and an order requiring the employer to meet that obligation operates to enforce the award.  Consistent with the decision of the Full Bench of the Commission in Hon. Minister for Works and Water Resources v Amalgamated Metal Workers and Shipwrights Union of Western Australia (1983) 63 WAIG 1389 and for the reasons there set out the Commission does not have jurisdiction to hear and determine proceedings which are essentially for enforcement or recovery of wages owing under an award.  In the respondent's submission the claim for payment of working time lost, though it arose out the contract of employment, was not a claim to enforce the award."

14       In J–Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, Western Australian Branch (1993) 49 IR 205 at 213 the President observed, in relation to enforcement proceedings under s.83 of the Act, that the reference to "enforcement proceedings" is the subject of something of a misnomer, in fact no "enforcement" occurs under s.83 except insofar as there can be payments of amounts "underpaid in breach of an award under s.83".  Otherwise there can be no power to compel a party to comply with his/her obligations under the award although there is a power for an Industrial Magistrate to impose a penalty for non-compliance of the provisions of an award. 

15       By the enactment of s.7(c) of the MCE Act and s.83(1a) of the Act the Commission has no jurisdiction to hear and determine a claim under s.29(1)(b)(ii) of the Act where orders are sought for payment of a sum of money that arise out of an entitlement under or pursuant to a minimum condition (see Oates v Sanders Executive Pty Ltd t/a L J Hooker Morley (1998) 79 WAIG 1198).  In this matter, what is sought in the application is an order for payment of amounts said to be "underpaid in breach of s.17D of the MCE Act".  In my view what is sought is an order for the enforcement of s.17D of the MCE Act, as s.17D is a "requirement as to pay" within the meaning of "minimum condition of employment" in s.3 of the MCE Act.  Accordingly, the claim is beyond the jurisdiction of the Commission.

Merit of the Applicant's case

16       Although it is not necessary at law to consider any other grounds why the application should be dismissed, I make the following observations in respect of the Applicant's claim. 

17       In an application made under s.29(1)(b)(ii) of the Act, the onus is on the Applicant to establish that the subject of the claim is a benefit to which the Applicant was entitled under his contract of employment.  In that regard, it is for the Commission to determine the terms of the contract of employment and to ascertain in a juridical manner, whether the claim constitutes a benefit which has been denied under the contract of employment, having regard to the obligations on the Commission to act accordingly to equity, good conscience and the substantial merits of the case, pursuant to s.26 of the Act (Belo Fisheries v Froggett (1983) 63 WAIG 2394; Waroona Contracting v Usher (1984) 64 WAIG 1500; Perth Finishing College v Watts (1989) 69 WAIG 2307).

18         The Applicant was employed by the Respondent as an articled clerk on 9 August 1999.  On 31 July 2000 the Applicant entered into an employment contract with the Respondent to work as a solicitor.  The Applicant's employment ceased on 8 August 2001.  The material terms of the contract were:

"5. Remuneration

(a) The Employee shall be paid the gross salary ("the Salary") specified in Item 8 of the Schedule in the manner specified in Item 8 of the Schedule.

(b) In addition to the Salary the Employee shall be paid the commission ("the Commission") specified in Item 9 of the Schedule (if any) in the manner specified in Item 9 of the Schedule.

(c) In addition to the Salary and the Commission the Employee shall be paid the bonus ("the Bonus") specified in Item 10 of the Schedule (if any) in the manner specified in Item 10 of the Schedule.

(d) In addition to the Salary the Commission and the Bonus the Employer shall provide the Employee with the benefits in kind mentioned in Item 11 of the Schedule.

…

16. Special Conditions

 Notwithstanding anything to the contrary contained in this Contract the special conditions ("the Special Conditions") specified in Item 19 of the Schedule (if any) shall be deemed to be incorporated in and form part of this Contract and in the event of their being any conflict between the Special Conditions and the remaining terms and conditions of this contract the Special Conditions shall prevail."

19         The material terms of Item 19 Clause 2 of the Schedule to the contract of employment were:

"2. Practising Certificate and Professional Indemnity Insurance

The Employer will pay the Employee's Practising Certificate fee and Professional Indemnity Insurance premium whilst this Contract is in force.  The Employee must reimburse the Employer for any period during which the Practising Certificate and/or the Professional Indemnity Insurance are in force whilst the Employee is not employed by the Employer."

20       In their written submissions the Respondent makes the following points:

(a) The Practice Certificate fee is paid on an annual basis for the period commencing on the 1st July in each year and terminating on the 30th June in the following year.

(b) The Professional Indemnity Insurance is paid on an annual basis and was due to be paid on or before the 15th May 2001 for the period 1st July in each year to the 30th June in the following year.  However, where an employee is known to be leaving shortly after the 30th June in any year Professional Indemnity Insurance can be paid for a limited period only and not for the full year.  Because the Applicant failed to notify the Respondent of his intention to resign prior to the 15th May 2001, Professional Indemnity Insurance premium was paid on behalf of the Applicant for the full year from 1st July 2001 to 30th June 2002.

21       To answer the question as to whether the Applicant has been denied a benefit under his contract of employment it is necessary to ascertain the terms of the contract of employment, in particular what are the benefits that the contract provides.  Clause 5 and Item 8 of the Schedule to the contract provide for a gross annual salary, together with commission and bonuses to be paid to the Applicant.  Part of that remuneration is payment of the practising certificate fee and professional indemnity insurance premium whilst the Applicant is employed.  It is apparent from Item 19 Clause 2 that the Applicant is required to reimburse the Respondent for any period for which the practising certificate and/or indemnity insurance are in force whilst the employee is not employed by the employer.  It is clear that there is only an entitlement to have those items paid, for the period of the Applicant's employment.  In this case there is no entitlement to payment of those items beyond 8 August 2001. 

22         A similar issue was considered by Industrial Magistrate P G Malone SM in Australian Liquor, Hospitality and Miscellaneous Union, Miscellaneous Workers Division, Western Australian Branch v Board of Management, Fremantle Hospital and Hospital Service (Unreported, Complaint No 87 of 1997, delivered 17 November 1997) where it was argued that the employer had breached a provision in a Federal award containing a similar provision to s.17D of the MCE Act.  The award provision prohibited a deduction being made from an employee's wages unless the employee had authorized the deduction in writing.  The factual circumstances were that a deduction of pay had been made from an employee's pay following a period of industrial action.  Pursuant to s.187AA of the Workplace Relations Act 1996 the employer was prohibited from making a payment to an employee during a period in which the employee engaged or engages in industrial action.  The Respondent made a deduction of pay, not in the period to which the employee engaged in industrial action, but from a later pay period.  The Magistrate found in that case that as the statutory provision prohibited payment there was no deduction within the meaning of the award because there was no entitlement to pay for the period in which the employee engaged in industrial action.  The Learned Magistrate found that the employee had no legal entitlement to receive the monies.  In particular that monies overpaid, that is monies paid to the employee in the period which she engaged in industrial action, when recovered from the next pay could not be considered a deduction within the meaning of the word "deduction" in the award.

23         The Applicant argues that the decision of the Full Bench in Conti Sheffield Real Estate v Brailey (1992) 48 IR 1 in which it was held that the provisions of the Truck Act 1899 (now repealed) prohibited a claim of a set-off in respect of a debt against monies owed by way of commission.  However, the provisions of the Truck Act provided for a much wider prohibition on deductions from employee's wages than Part 3A of the MCE Act.  Further, the facts of that case are in my view distinguishable from the facts raised in this matter in that there was no consideration of whether the debt sought to be set off against the employee's claim was money due and owing as part of her remuneration under her contract of employment. 

24         In my view Clause 2 of Item 19 empowers the Respondent to make a deduction from the Applicant's pay, as the words "The Employee must reimburse the Employer for any period during which the Practising Certificate and/or the Professional Indemnity Insurance are in force whilst the Employee is not employed by the Employer" constitute an amount the employer is authorized to deduct under the contract of employment within the meaning of s.17D (1)(b) of the MCE Act. 

25         Alternatively it is my view, that s.17C and s.17D of the MCE Act are not intended to operate so as to prevent an employer from recovering from monies outstanding on one item (namely salary and accrued annual leave that is due and owing under the contract of employment), an amount which is due and owing by an employee pursuant to the express terms of a contract of employment.  Given there is no entitlement to have the practice certificate fee or the professional indemnity insurance premium paid for any period after the employment relationship ceases and the contract expressly provides for recovery of any amounts that have been paid for a period after employment ceases, it is my view that no deduction has been made in the terms provided for in s.17D of the MCE Act. 

26         Further, claims under s.29(1)(b)(ii) of the Act do not extend to all contractual obligations but to a "benefit".  The word "benefit" is very wide.  In Balfour v Travelstrength Limited (1980) 60 WAIG 1015 at 1015 Johnson C observed:

 "… the word "benefit" ought to be wide enough to allow an employee to bring to the Commission a matter in which the employee believes he has been deprived of some advantage, entitlement, right, superiority, favour, good or perquisite by the action of the employer in contravention of a provision of the contract of service."

27         When regard is had to the meaning of "benefit" in s.29(1)(b)(ii) of the Act it is my view that there is no entitlement to the money claimed, as the money claimed cannot be said to a benefit in contravention of a provision of the contract of employment.

28         Although the Respondent has put forth other grounds why the application should be dismissed, in light of my findings I have not found it necessary to consider those grounds.  I will make an order that the Applicant's application be dismissed.

Costs

29         The Respondent seeks an order against the Applicant for costs of the Respondent on an indemnity basis.  Pursuant to s.27(1)(c) of the Act the Commission is empowered to "order any party to the matter to pay to any other party such costs and expenses including expenses of witnesses as are specified in the order, but so that no costs shall be allowed for the services of any legal practitioner, or agent".  The test to be applied in awarding of costs under s.27(1)(c) of the Act is set out in Brailey v Mendex Pty Ltd t/a Mair & Co Maylands (1992) 73 WAIG 26 in which the Full Bench held at 27:

 "The question is what does the phrase "costs and expenses" mean?  "Costs", as defined above, includes all of the expenses.  No costs are allowed for the services of a legal practitioner or agent.  Thus, the professional costs element is eliminated.

 …

 The application, too, must be determined under s.26 of the Act.  However, part of that equity and good conscience includes what is settled law in industrial matters that costs ought not be awarded, except in extreme cases, (eg) where proceedings have been instituted without reasonable cause (see Hospital and Benevolent Homes Award (1983) AILR 409 where costs were awarded in a matter where the applicant terminated the proceedings after putting the respondent to the expense of defending without obtaining an order)."

30         In my view it cannot be said that this is an extreme case so as to warrant an order for costs.  This case does not fall within that category.