Determining Award Coverage: A difficult but necessary task
Whether an employee is covered by an award or not can be difficult to determine. However, it is important for businesses to determine what award/s apply so that you can provide the correct terms and conditions to your employees.
Incorrectly determining award coverage, or assuming that there is no award which covers an employee can result in underpayment claims against an employer.
If you get it wrong, your business can also be exposed to other claims, such as an unfair dismissal, which is discussed in the following case.
Case Study: Kaufman v Jones Lang LaSalle (Vic) Pty Ltd
Mr Kaufman was a real estate professional for JLL, who earned well above the high-income threshold. He held a number of positions with JLL during his employment and was ultimately promoted to the position of Regional Director. In December 2016, Mr Kaufman’s position was made redundant.
Mr Kaufman subsequently made an unfair dismissal claim about the termination of his employment. JLL objected on the basis that the termination was a genuine redundancy and also that Mr Kaufman was not entitled to be protected by the unfair dismissal jurisdiction.
Where an employee earns more than the high-income threshold, as Mr Kaufman did, he could only bring an unfair dismissal claim if a modern award or enterprise agreement covered his employment. While there was no enterprise agreement that applied, Mr Kaufman argued that his employment was covered by the Real Estate Industry Award 2010.
JLL said in response that Mr Kaufman’s role was a senior management position that went well beyond the classifications in the award. They claimed his seniority within the organisation, his remuneration and remuneration structure, his significant leadership and business development responsibilities, and the general requirements and accountabilities of his role indicated that no classification in the award applied.
The Commission considered the issue and held that Mr Kaufman’s role fell within the definition of a “property sales representative” within the Real Estate Industry Award 2010 and consequently the award did apply to his employment. On this basis, Mr Kaufman was able to bring an unfair dismissal claim.
Tips For Determining Award Coverage
In determining award coverage, employers should consider:
- High levels of remuneration may not indicate whether a role is award covered.
- Where an employee’s role does not clearly fit into one award or one classification within an award, the “principal purpose” of the employee’s role should be considered.
- The question of award coverage is not determined by an employee’s title – it is the duties the employee performs that will be of significance.
In addition, employers should be aware that if employees are not covered by an industry award they may be covered by an occupational award (for example, the Clerks-Private Sector Award). It is also possible for more than one award to apply to a business.
Lessons For Employers
Employers are required to comply with the terms and conditions of any applicable awards. Adverse consequences can flow from applying the wrong award. We recommend that employers seek advice about award coverage, prior to employees commencing employment to ensure that they get it right from the outset.
