In our experience, many employers are under the false impression that, if they put an employee on a ‘common law contract’ and give them a fancy job title, they will be award-free, particularly if they are paid well above the award rates.

The recent case of Karen Muscat v Chase Commercial Pty Limited [2018] FWC 1398 reminds us that this just isn’t always true.

Background

Ms Muscat was employed by property agent Chase Commercial Pty Ltd (Company) as its Director of Asset Management for 8½ years until her dismissal in November 2017. When Ms Muscat brought an unfair dismissal claim, the Company challenged her right to bring such a claim on the basis that she was paid above the high income threshold under the Fair Work Act 2009 and was not covered by the Real Estate Industry Award 2010 (Award).

Ms Muscat argued she actually performed the duties of a Property Management Supervisor and was therefore covered by the Award and eligible to bring the claim.

Fair Work Commission’s decision

Commissioner Hunt noted the prior decision in Kaufman v Jones Lang LaSalle (Vic) Pty Ltd [2017] FWC 2623. In that case, despite being employed as the ‘Regional Director’, the employee was nevertheless covered by the Award because he performed the duties of a Property Sales Representative.

Commissioner Hunt looked at the work actually performed by Ms Muscat and the circumstances of her employment to ascertain the principal purpose of her employment. He agreed with Ms Muscat that her role was effectively and principally that of a supervisor, and noted Ms Muscat’s evidence:

“There was no team. Like I said I didn’t – they used to have meetings with all the other directors of the franchisee that would do budget planning, they’d go and have golf days and stuff. I was never party to any of that. I was an employee. I was a property manager with a fancy title so I could mix with other owners of high calibre. That was all it was.”

Commissioner Hunt found Ms Muscat did have some additional responsibilities but these did not alter her principal purpose which was to manage the employer’s property portfolio. This meant Ms Muscat met the definition of a Property Management Supervisor under the Award even though she was called a director, had access to the employer’s trust accounts, a salary that was almost double the industry norm, the ability to set management fees and a high degree of accountability.

Accordingly, Ms Muscat was able to pursue her unfair dismissal claim against the employer.

Key takeaways

  • An employee’s job title and salary will not determine whether they are award-covered or award-free – you must look at the work actually performed by the employee and whether such duties fall within the definition of one of the job classifications under the relevant award.
  • An employee who is given additional responsibilities or a higher level of authority or who is referred to as being a member of staff on a common law contract may still be award-covered if their principal purpose is to perform duties covered by the award.
  • If an employee is award-covered, not only will they be able to bring an unfair dismissal claim, they will be entitled to various benefits under the award. This may mean the employer has inadvertently breached the award by, for example, not paying overtime, penalty rates or allowances. This could lead to a successful claim for back pay and the imposition of a penalty.
  • It is therefore very important to ascertain which of your employees are, or may be, covered by a modern award and ensure, if they are award-covered, your terms and conditions of employment are consistent with the award.

Thank you to Joshua Richards for his contribution to this article.

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