What’s in a name: The effect of a position title on Modern Award coverage

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by Ruth Collins & Mark Cox  

It is a common misconception amongst employers that a senior position title and high income can exclude an employee from being covered by a modern award. Not so. Instead, employers must look to the principle purpose of the position the employee was performing to assess whether it is covered by the classifications of roles covered by the award. This was recently re-affirmed by the Fair Work Commission in two decisions: Karen Muscat v Chase Commercial Pty Ltd [2018] FWC 1389 (Karen Muscat) and James Kaufman v Jones Lang LaSalle (Vic) Pty Ltd T/A JLL [2017] FWC 2623.

These decisions are a reminder that employers need to take care when determining if an employee is covered by a modern award because of the consequent risk of exposure to unfair dismissal and/or award breaches.

Background of Muscat decision

Ms Karen Muscat was employed by Chase Commercial in the position of Director of Asset Management.

Following her termination Ms Muscat made an application to the Fair Work Commission for unfair dismissal. Chase Commercial made a jurisdictional objection asserting that Ms Muscat was not eligible to bring a claim for unfair dismissal because she earnt over the high-income threshold and was not covered by an award or enterprise agreement.

The dispute then was whether Ms Muscat was in fact covered by the Real Estate Industry Award 2010 (Real Estate Award) despite her apparently senior position title and high salary.

Ms Muscat argued that she was actually “a property manager with a fancy title so [she] could mix with other owners of high calibre”.

Chase Commercial argued that Ms Muscat was not simply a property manager because of her title and authority, and autonomy within the company.

Decision

The Commission highlighted that “an examination is necessary of the nature of the work undertaken and the circumstances in which Ms Muscat was employed to do the work in order to ascertain the principal purpose for which she was employed”.

This required an examination of the classification in Real Estate Award of the role of Property Management Supervisor and the specific duties and responsibilities performed by Ms Muscat.

The Commission did not accept that, just because Ms Muscat had authority to determine management fees, she fell outside the Real Estate Award. In fact, the Commission thought that role did fall within “significant initiative, judgment, decision making and problem solving in relation to landlord and tenant or strata title management matters” referred to in the Award.

The Commission held it was wrong to say a role fell outside of the Award just because aspects of the role did not fall within the Award classifications.

Likewise, the Commission did not accept that arguments from Chase Commercial in relation to Ms Muscat’s other duties that may be said to fall outside the Award classifications (temporary trust account responsibility, autonomy in working hours, involvement in hiring employees, salary increases, and reporting lines).

Nor was the Commission persuaded that her title of “Director” meant she was not covered by the Real Estate Award; instead finding that “it was a title granted to her when the role was first created” and “was chosen by Chase, in what one would expect to be a desire to promote or add legitimacy to Chase’s ability to manage commercial property”.

On this basis, the Commission determined that Ms Muscat was covered by the Real Estate Award and was therefore protected from unfair dismissal.

Kaufman decision

In similar circumstances last year the Fair Work Commission, in James Kaufman v Jones Lang LaSalle (Vic) Pty Ltd T/A JLL [2017] FWC 2623, found that an individual holding the position title of “Regional Director, Capital Markets” was actually covered by the Award and fell under the classification of Property Management Supervisor. Again, the Commission looked closely at Mr Kaufman’s actual role and duties. The fact that he was a director was put in the context of the fact that there were a very large number of directors in the global business. It was not that Mr Kaufman did not actually take part in high level business management decisions that might accompany more common director positions.

Key takeaways

These decisions make clear that when determining modern award coverage employers must look to the “principle purpose” of the employee’s position. This requires an assessment of the duties and responsibilities that the employee is performing, with reference to the relevant modern award classification.

Employees who also perform higher functions, or are given a senior position title, or are paid a high salary will not necessarily be excluded from award coverage.

Misunderstanding or lack of care in award coverage may mean that an employee earning above the high-income threshold may still be able to make a claim for unfair dismissal, as was the case in Karen Muscat, or award breach claims.

As specialist employment lawyers, MDC Legal regularly advises employers on award coverage and compliance.

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