Ai Tee Alicia Eng v Checkmarx Australia Pty Ltd [2023] FWC 1606

1 Fair Work Act 2009 s.394—Unfair dismissal Ai Tee Alicia Eng v Checkmarx Australia Pty Ltd (U2023/4638) COMMISSIONER YILMAZ MELBOURNE, 5 JULY 2023 Unfair Dismissal – Jurisdictional Objections – High Income Threshold [1] Ms Ai Tee Alicia Eng has applied to the Commission for a remedy under s.394 of the Fair Work Act 2009 (the Act) in relation to her former employment with the Respondent, Checkmarx Australia Pty Ltd (Checkmarx). [2] The matter was listed for a jurisdictional hearing concerning whether Ms Eng’s annual earnings exceeded the high-income threshold. [3] Ms Eng was employed from 18 August 2020 until 11 January 2021 in the position of Regional Sales Manager1 and dismissed on 10 May 2023.2 [4] Checkmarx contends that Ms Eng’s application should be dismissed on the basis that her income exceeded the high-income threshold and therefore she was not a person protected from the unfair dismissal provisions of the Act. The indexed high-income threshold applicable at the time of the dismissal was $162,000 per annum. [5] Ms Eng was self-represented and Checkmarx was represented by DLA Piper. As the evidence concerning coverage of industrial instrument and earnings was not contested the parties agreed for the matter to be determined on the papers. The submissions [6] Ms Eng provided short submissions acknowledging that her earnings exceeded the high income threshold,3 however, she had hoped that the Respondent would waive the jurisdictional “point” and she invited the Commission to do so also to save costs in further litigation through the courts. Ms Eng further acknowledged that her employment was not covered by either a modern award or enterprise agreement.4 Ms Eng attached to her outline of submissions her letter of appointment,5 letter of termination, email correspondence regarding a performance improvement plan,6 an undated performance improvement plan for the period 21 March to 21 April 2023, letter outlining an adjustment to the salary package dated February 2023 and the Form F3. The Form F3 states that the dismissal date is flawed and that she is entitled to [2023] FWC 1606 DECISION -- 1 of 6 -- [2023] FWC 1606 2 continued salary and commissions.7 Ms Eng states that her dismissal is unfair because during 2022 the sales staff were made redundant in Australia, however due to her performance, she retained her position and received a pay rise in early 2023.8 She further submits that management in Singapore were responsible for placing her on a contrived and “defective” performance improvement plan for four weeks which was unachievable. Ms Eng further states that the process of the “performance management’ and dismissal lacked fairness and she seeks a remedy. [7] The letter titled “2023 Compensation Statement”9 provides an adjustment to Ms Eng’s salary package. The letter is short and the body follows: “As an appreciation of your contribution to the Company, your compensation package will be changed effective January 1st, 2023, as follows: Your Annual Base Salary will increase to 206,000 AUD. In addition, your Annual On-Target Variable pay for 2023 will increase to 164,800 AUD. Your Annual On-Target Earnings ("OTE”) will increase to 370,800 AUD. The changes above reflect an annual increase of 3.0% in your total OTE. The change in the Annual Base Salary will be reflected in the normal February cycle. You will also be paid a one-off catch up payment in the February payroll to reflect the retroactive Base Salary increase. Apart from the abovementioned changes, your terms of employment shall remain the same. I want to take this opportunity to thank you for your efforts and commitment to our company’s growth and wish you another great year of success.” [8] Checkmarx note that Ms Eng concedes that her employment was not covered by a modern award or enterprise agreement and that her income exceeded the high income threshold.10 [9] Checkmarx submits that for an applicant to be eligible to bring an unfair dismissal claim before the Commission, the Commission must determine whether the Applicant is protected under s.382 of the Act. It contends that it is not disputed that a modern award or enterprise agreement did not apply to Ms Eng’s employment and her annual rate of earnings as demonstrated by the Applicant’s tendered evidence11 showed a fixed salary of $206,000 excluding superannuation. Checkmarx submit that the relevant high income threshold at the time of Ms Eng’s dismissal was $162,000 per annum. Finally, Checkmarx submit that the Commission cannot dispense with the need to determine jurisdiction and relies on the evidence produced by the Applicant. The legislation -- 2 of 6 -- [2023] FWC 1606 3 [10] The matter of jurisdiction must be established before an unfair dismissal can be considered on its merits. The matter of jurisdiction is not an optional process, or one where the Commission can dispense with to avoid costly litigation in the court system. Division 2 of the Act sets out when a person is protected from unfair dismissal. [11] Section 396 of the Act, identifies the initial matters that must be considered relating to an application before merit. These initial matters include: a. Whether the application was made within the statutory time frame; b. Whether the person is protected from unfair dismissal; c. Whether the dismissal was consistent with the Small Business Dismissal Code; and d. Whether the dismissal was a case of genuine redundancy. [12] Ms Eng’s application was made within 21 days of the dismissal. Sections 396 (c) and (d) are not relevant nor contentious. However, s.396 (b) refers to the provisions contained in s.382 of the Act. [13] Section 382 of the Act concerns the matters that Ms Eng identifies as the jurisdictional “points” which she would like waived. Relevantly, s.382 of the Act provides: When a person is protected from unfair dismissal A person is protected from unfair dismissal at a time if, at that time: (a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and (b) one or more of the following apply: (i) a modern award covers the person; (ii) an enterprise agreement applies to the person in relation to the employment; (iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold. [14] Of further relevance is s.332 of the Act which defines earnings as follows: Earnings (1) An employee‘s earnings include: (a) the employee‘s wages; and (b) amounts applied or dealt with in any way on the employee‘s behalf or as the employee directs; and -- 3 of 6 -- [2023] FWC 1606 4 (c) the agreed money value of non-monetary benefits; and (d) amounts or benefits prescribed by the regulations. (2) However, an employee‘s earnings do not include the following: (a) payments the amount of which cannot be determined in advance; (b) reimbursements; (c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies; (d) amounts prescribed by the regulations. Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed). (3) Non-monetary benefits are benefits other than an entitlement to a payment of money: (a) to which the employee is entitled in return for the performance of work; and (b) for which a reasonable money value has been agreed by the employee and the employer; but does not include a benefit prescribed by the regulations. (4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies: (a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed; (b) the employer is required to contribute to the fund for the employee‘s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee; (c) the employer is required to contribute to the fund for the employee‘s benefit under a law of the Commonwealth, a State or a Territory. [15] The high-income threshold is an amount prescribed in regulation 2.13 of the Fair Work Commission Regulations 2009 (the Regulations). The amount is indexed annually and for the financial year 2022-2023, the amount was $162,000.00. [16] I cannot waive the jurisdictional “points.” The Act requires the Commission to consider applications by persons that are covered by the protections. I am required to consider whether Ms Eng is protected from unfair dismissal taking into consideration s.382 of the Act. -- 4 of 6 -- [2023] FWC 1606 5 [17] Firstly, I must consider Ms Eng’s annual rate of earnings as set out in s.332, and secondly, I am to consider whether there are any amounts to be added to the annual rate of earnings because of the factors arising from the Regulations. Consideration [18] For the purposes of s.382 of the Act, I am satisfied that Ms Eng has met the minimum employment period, but does not meet the protections afforded by ss.382 (b)(i),(ii) and (iii). [19] Firstly, it is not in dispute that Ms Eng has completed the minimum employment period with her employer.12 Secondly, it is not in dispute that neither a modern award13 nor enterprise agreement14 applied to Ms Eng’s employment. Thirdly, the sum of annual rate of earnings of $206,000 representing the fixed sum excluding superannuation is not contentious and exceeds the high income threshold provided for in the Regulations.15 [20] The annual base salary of $206,000 is a fixed rate excluding superannuation and exceeds the high income threshold. In addition, Ms Eng earned variable compensation up to $164,800 per financial year. These variable earnings were referred to as commissions by Ms Eng. No evidence was tendered regarding whether the commissions constituted an agreed money value pursuant to s.332(1)(c ) or payments which are excluded earnings as they cannot be determined in advance pursuant to s.332 (2)(a) of the Act. In any event, the annual base salary excluded Ms Eng from protection from unfair dismissal, therefore it is unnecessary to determine the relevance of the commissions to the jurisdiction question, whether Ms Eng’s income exceeded the high income threshold. For purposes of clarity, I am satisfied that the earnings of $206,000 per annum excluded superannuation as the letter “2023 Compensation Statement” amended the contract of employment which initially provided a salary of $200,000 per annum excluding superannuation. Conclusion [21] The question to be determined in this matter was whether Ms Eng was a protected person for unfair dismissal pursuant to s.382 of the Act. Ms Eng satisfied the minimum employment period requirement, however she did not have coverage under a modern award or enterprise agreement, therefore any protection rested on whether her income was below the high income threshold. The evidence was not contested, including the annual rate of earnings which was a fixed annual base rate of $206,000 which exceeded the threshold of $162,000 at the time of the dismissal. I have determined that Ms Eng did not meet the requirement of s.382 of the Act to have protection from unfair dismissal under the Act. [22] The application is accordingly dismissed. I will issue an order separate to this decision, to this effect.16 -- 5 of 6 -- [2023] FWC 1606 6 COMMISSIONER Printed by authority of the Commonwealth Government Printer <PR763842> 1 Offer of employment dated 9 August 2021. 2 Termination of employment letter dated 26 April 2023. 3 Applicant’s Outline of submissions at Q7c. 4 Applicant’s Outline of submissions at Q7a and Q7b. 5 Providing a fixed salary of $200,000 per annum, excluding superannuation and up to a maximum of $160,000 variable compensation per financial year. 6 Dated 21 and 26 April 2023. 7 Q1.5. 8 Form F2 Q.3.2 9 Letter dated February 2023. 10 Respondent’s Outline of submissions at Q7a, 7b and 7c. 11 2023 Compensation Statement. 12 Section 382(a). 13 Section 382(b)(i). 14 Section 382(b)(ii). 15 Regulation 2.13 of the Fair Work Commission Regulations 2009. 16 PR763843 -- 6 of 6 --