Director delusion: FWC finds title of “Director” not sufficient to defeat award coverage

To be protected from unfair dismissal the Fair Work Act 2009 (Cth) (FW Act) requires an employee to:

  • Have completed the minimum period of employment; and
  • Earn less than the high income threshold; or
  • Be covered by a modern award or enterprise agreement.

It has often been the case that “managers” and senior officers of an enterprise will not be covered by a modern award or enterprise agreement, given the executive level responsibilities they have, and therefore not protected from unfair dismissal.

However, in a recent decision the Fair Work Commission (FWC) has found that a Director was covered by the Real Estate Industry Award 2010 (the Award) and able to bring a claim for unfair dismissal.

In Muscat v Chase Commercial Pty Limited T/A Chase Commercial [2018] FWC 1398, the Applicant was employed in the position of Director of Asset Management for a commercial real estate agency (the Respondent). The Applicant was dismissed from her employment in November 2017 and lodged an unfair dismissal application.

The Applicant submitted that she was covered by the Award, and that her duties were the same as the level 3 Property Management Supervisor classification under the Award, or in the alternative, that she earned less than the high income threshold.

The Respondent lodged two jurisdictional objections, submitting that the Applicant was not covered by the Award and that she earned in excess of the high income threshold. The Respondent gave evidence that the position of Director of Asset Manager was a member of the senior management team and submitted that the Applicant had executive level responsibilities similar to that of a business partner. Specifically, the Applicant had access to the trust account and to the bank accounts of the business, indicating the position of trust and responsibility that she held.

The Respondent also provided an overview of the Applicant’s duties which included managing a team of employees, setting management fees for properties, setting targets and revenues and providing monthly reports.

Critically, in evidence, one of the Respondent’s directors agreed that the Applicant performed the duties of Property Management Supervisor as listed in the Award but submitted that other factors, such as the trust given to the Applicant to have access to the trust account and autonomy in negotiating management fees meant that she was not covered by the Award. 

The Applicant relied on a previous decision of the FWC in Kaufman v Jones Lang LaSalle (Vic) Pty Ltd T/A JLL [2017] FWC 2623 (Kaufman) where it was held that an employee of a real estate agency who held the title of director was an Award covered employee.

The Respondent submitted that the circumstances in Kaufman were factually different and it should not be applied. For example, in Kaufman there was a hierarchical structure to the business and there were other employees with the same job title whereas the Applicant was the only employee with the Director title and reported directly to the Respondent’s directors.

The Applicant claimed that she was Award-covered because the purpose of her position was to manage the portfolio, which included management and renegotiating leases, and the supervision of one Assistant Property Manager. The Applicant submitted that these duties were captured by the Award classification definition of a Level 3 employee. Moreover, the Applicant stated that she had access to the trust account for only a short period of time.

To determine whether the Applicant was covered by the Award, the FWC had regard to the principal purpose test, which required the FWC to consider the nature of the Applicant’s work and whether that fell within the coverage of the Award. The FWC was satisfied that:

  • the Applicant’s duties fell under the classification of Level 3 Property Management Supervisor under the Award; and
  • the principal purpose of her position was to lead the property management team.

The FWC dismissed the Respondent’s submissions. In relation to the Applicant’s title, the FWC stated: “I am not persuaded that the title of ‘Director’ caused Ms Muscat to be elevated beyond the status of an Award employee.”  It noted that she was initially earning a base salary of $80,000 and found that the title was used to give legitimacy to the Respondent’s business. The FWC was also not persuaded that the factual circumstances were different to Kaufman because of the flat structure, noting that the Respondent was a small real estate agency where employees may report directly to directors.

Having found the Applicant to be Award covered and therefore protected from unfair dismissal, the Respondent’s jurisdictional objections were dismissed. The matter was reallocated for determination of the unfair dismissal dispute.

Lessons for employers

Employers should always think carefully when determining whether an employee is award covered or award-free. In this case, the title of “Director” did not result in the employee being award-free. The courts will always go beyond titles to determine the principal purpose of positions when determining modern award coverage.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog.

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