Salary payments and award entitlements

This extract from a recent Federal Court appeal decision sets out the legal principles which apply when determining when payments to an employee under a contract of employment may also satisfy applicable award obligations.

“Did the Bank discharge its obligations to pay award-wages?

I will commence with the first question which deals with whether the obligations upon the Bank to pay to each employee for each relevant pay period the wages provided for by the Banking, Finance and Insurance Award 2010 (Award), were discharged by the monthly payments made to the employees by the Bank (monthly payments) as payments due under the “Basic Cost Responsibility” (BCR) component of the remuneration payable to the employees under their respective contracts of employment.
By its submission, those payments were characterised by the Bank as payments of a monthly salary owed to the employees under their contracts of employment and, as payments of salary, capable of discharging the concurrent obligations imposed upon the Bank by the Award to pay the wages owed to the employees. Conversely, those payments were characterised by the employees as an advance on commissions owed to the employees under their employment contracts with the Bank and, as payments of commissions, incapable of discharging any concurrent Award obligation to pay the employees the wages they were owed.
As I will explain, the dispute as to the proper characterisation of the monthly payments is to be resolved by reference to the proper construction of each of the employment agreements in question. If those agreements imposed an obligation upon the Bank to pay a salary for the hours worked by the employees, then the payments made in discharge of that obligation would also discharge the closely correlative and concurrent Award-based obligation to pay the wages also owed by the Bank. Conversely, if there was no contractual obligation upon the Bank to pay the employee a salary for hours worked, the relevant payments made by the Bank should be construed as paid in satisfaction of the Bank’s contractual obligation to pay the employees commissions earned. The payment of commissions would not, for the reasons I also explain, serve to discharge the concurrent Award‑based obligation upon the Bank to pay each employee their wage in respect of each pay period in question.
It is not in contest that during the claim period, the employment of each of the employees was covered by the Award. The Award is in a familiar form largely consistent with the form taken by many “modern awards” made under the Fair Work Act 2009 (Cth) (FW Act). The Award imposes numerous obligations upon the Bank, each of which is enforceable by reason of the requirement made by s 45 of the FW Act that “[a] person [to whom the award applies] must not contravene a term of a modern award”. The Award provides for an employee to be engaged on a full-time, part-time or casual basis (cl 10). It provides that a full-time employee will work an average of 38 ordinary hours per week (cl 10.1) and be paid the “minimum wages” set out in cl 13. Part-time employees are to be paid on a pro-rata basis for each ordinary hour worked at the rate of no less than 1/38^thof the minimum weekly rate of pay for a full-time employee (cl 10.2). The Award regulates work performed outside of ordinary hours of work (ie overtime) and provides that it be paid at specified penalty rates (cl 23). Employees must be paid “their salaries” weekly or fortnightly or monthly if mutually agreed (cl 20).
As will be apparent from those observations about the terms and nature of the Award, the remuneration which an employee is entitled to under the Award is time-based and not results or performance based. Employees are remunerated under the Award in exchange or in consideration for the time spent in providing their labour to their employer. Mainly the remuneration provided for by the Award is referred to as a “wage” but sometimes as a “salary”, however, the label is of no moment to the issues that here arise. It is convenient that I refer to the Award obligation to pay for the performance of ordinary hours worked as the obligation to pay “award-wages”. It is necessary to appreciate that the claims made by the employees in respect of the Bank’s failure to pay wages concerned the alleged non‑payment of award-wages only, there being no claims made for unpaid overtime.
It is not in contest that each of the monthly payments made to each employee by the Bank were for sums in excess of the amounts due in respect of each employee’s entitlement to award‑wages. Nor is it in contest that the relevant payments made to the employees by the Bank were payments made under their contracts of employment and in discharge of the contract-based remuneration owed to them. Those contracts provided for a remuneration structure which is somewhat unusual and which made no reference to the Award. However, as I will explain, the absence of any reference to the Award does not mean that the entitlements due to the employees under the Award were not capable of being satisfied or discharged by the contractual payments received by them.
It is well-settled in employment law that a single payment can concurrently satisfy both a contractual and an award-based or a statutory-based obligation to pay an employee the remuneration to which that person is entitled: Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 at 431 (Dixon J). Thus, to take a simple example, if the contract provides for a weekly wage of $1,000 in exchange for 38 hours of work, the payment by the employer of $1,000 pursuant to that contractual obligation will also satisfy the employer’s concurrent obligation under an industrial award to pay $850 for the working by the employee of a 38 hour week.
There are, however, recognised limitations upon the circumstances in which an employer may claim that a payment made to an employee under contract was effective to discharge an outstanding award-based or statutory-based entitlement. The relevant cases are largely summarised in the reasons of North and Bromberg JJ in Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate (2015) 240 FCR 578 at [40]-[67] and further supplemented by White J in WorkPac Pty Ltd v Rossato (2020) 278 FCR 179 at [824]-[859]. For present purposes, those limitations are sufficiently recounted in the observations I made in Rossato at [221]-[222] as follows:

[221] The legal principles relied upon by WorkPac have been the subject of numerous authorities. An extensive survey of the authorities is given in the reasons of White J and it is not necessary to undertake that exercise again here. Those authorities have largely been based on observations first made by Sheldon J in Ray v Radano [1967] AR (NSW) 471 at 478-479 and adopted and re-expressed by the Full Court (Keely, Ryan and Gray JJ) in Poletti v Ecob (No 2) (1989) 31 IR 321 at 332-333 as follows:

It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whichever obligation or obligations he or she wishes. See Halsbury’s Laws of England, 4th ed, vol 9, paras 505 and 506.

[222] The first situation expresses a limitation (“first limitation”) upon the capacity of an employer to bring into account for one purpose monies paid for a different contractual purpose. The second situation expresses a limitation (“second limitation”) upon monies appropriated to one debt being brought into account to discharge a different debt.

The second limitation referred to in the extract just cited (second limitation) is, as there explained, an application of the common law rules governing payments by a debtor to a creditor. To illustrate by way of a simple example, if an employer is indebted to an employee for unpaid wages but also for an unpaid clothing allowance and makes a payment which is designated as a payment made for the wages owed, the employer cannot later claim that the payment was made in discharge of the debt owed in respect of the clothing allowance. The second limitation looks to the debt the payment was intended to satisfy. However, the second limitation upon an employer’s capacity to claim that an entitlement has been paid for was not here relied upon by the employees and I need not be further detained by it.
In contrast, the first limitation cited above (first limitation) relies upon the contract and what the parties have agreed to be the purpose of the payment which the contract requires be made. Again to illustrate by example, if the parties have agreed that for each ordinary (ie non‑overtime) hour of work performed the employee be paid $50 in circumstances where the applicable award provides for a minimum hourly rate of $30 for ordinary hours of work, an employer cannot claim the over-award payment of $20 per hour as a payment made for a different purpose, such as the satisfaction of an award obligation to pay for overtime work performed by the employee.
As the first limitation is a matter of contract, it follows, as I said in Rossato at [234] that:

… if a payment is made pursuant to a contract its purpose will be governed by the contract and must be objectively ascertained by reference to the common intention of the parties as understood by a reasonable person in the position of each of the parties taking into account the text of the contract as well as the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

Secondly, the second limitation is dependent upon substance not form. It will have no application where there is a “close correlation between the nature of the contractual obligation and the nature of the award obligation” and a close correlation may exist despite those obligations being differently labelled: Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia (2001) 111 IR 227 at [47], [51]-[52] (Black CJ, Wilcox and von Doussa JJ) and Linkhill at [98] (North and Bromberg JJ). As was explained in Linkhill at [98], it is the subject matter of the contractual obligation for which the payment was made which must be examined and found to closely correlate with the award obligation said to be discharged by the payment.
The essence of what appears to be the fundamental point made by the employees in application of the second limitation, is that the monthly payments made to them by the Bank were made in discharge of the Bank’s contractual obligation to pay each of them commissions pursuant to the remuneration structure of their contracts of employment.
If the employees are correct to say that the monthly payments made to them were for commissions owed by the Bank, they would also be correct to contend that the contractual purpose of the obligation imposed upon the Bank by their contracts of employment to pay a commission is not closely correlated with the purpose of the Award obligation to pay award‑wages for the hours worked by an employee. A commission is ordinarily a results-based payment and not a time-based payment and for that reason there would ordinarily be insufficient correlation between the purpose of a contractual obligation to pay an employee a commission based on results or performance and an award obligation to pay a wage for the hours worked by the employee. Each case, however, will turn on its own facts. Poulos v Waltons Stores (Interstate) Ltd (1986) 10 FCR 429 provides an illustration of a particular circumstance in which the payment of a commission was held not to discharge an employee’s entitlement to award‑based wages.
Those observations are, however, somewhat beside the point. That is so because in this case and as I understand the Bank’s submission, the Bank does not seek to avoid the application of the second limitation by relying upon a close correlation between the nature of an obligation to pay a commission and an obligation to pay a wage for hours worked. The Bank’s case is that the monthly payments were not commission payments. The Bank contended that in each month in question two separate streams of payments were made to each of the employees, each paid on different dates and on a different basis. The first stream (which I have called the monthly payments) was a “BCR payment” which comprised the salary component of the BCR. The second stream was said to be, and was not disputed to be, a commission payment. It is the payment of the salary component of the BCR which the Bank contended discharged the obligations imposed on it by the Award to pay each of the employees their award-wages for each of the pay periods in question.
The employees’ fundamental response to the Bank’s contention that the Award obligation to pay the award-wages was discharged by the payments made for salary was simply that there were no payments made for salary. Instead, they submitted that all the monthly payments made by the Bank were made in satisfaction of the Bank’s contractual obligation to pay the employees the commissions earned by them pursuant to the commission-based remuneration structure provided for by their contracts.
The employment contracts are largely in the same form but are not identical. The fifty employment agreements in question may be organised into eight groups as the reasons of Wheelahan J do at [136]-[162] and in the First Schedule to those reasons. His Honour has set out in the Second Schedule to those reasons extracts from each form of agreement sufficient to identify the terms of the contracts which are of significance to the constructional exercise here required of determining whether the contracts obliged the Bank to pay a salary beyond any obligation to pay commissions. I will first deal with what Wheelahan J has identified as the Form One contracts, which include the contract of Mr Wardman and twenty-four other employees.
The relevant principles for construing a contract are well known. The common intention of the parties to a contract is to be objectively ascertained which normally “requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). Further, as French CJ, Nettle and Gordon JJ said in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [51] “a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’”.
Of primary significance to the constructional exercise are the terms of the clause headed “Remuneration”. The clause is not well drafted. It begins by explaining that the employee will be “remunerated under the Employer’s Commission Base Structure as part of the Employer’s Basic Cost Responsibility (BCR) system”. While those references suggest the existence of documents which detail the nature and form of what is referred to as the Basic Cost Responsibility system, the terms of that policy or arrangement are not incorporated and do not form part of the contract. Instead, what the contracts seem to do is refer to aspects of the BCR system without identifying the whole of it. It seems to me that for that and other reasons, the contracts are not clear and in particular as to whether the references therein made to “salary” are intended to refer to a notional cost to the Bank relevant only for calculating the commission payable to the employee or, on the other hand, an actual cost to the Bank providing a guaranteed base level of remuneration to the employee which is not dependent upon employee performance and the achievement of commission targets.
If the references to “salary” are intended to only refer to a notional cost, notional in the manner just identified, then I would agree with the employees’ characterisation of the monthly payments as commission payments paid in advance. Consequentially, I would also accept the uncontested contention of the employees that such payments were not capable of discharging the Bank’s obligation to pay the award-wages they were due.
If, on the other hand, the contracts intended to provide the employees with a guaranteed monthly payment payable irrespective of whether any commission targets were met and commission was thereby earned, the contracts should be construed as obliging the Bank to remunerate the employees for the time-based provision of their labour. Further, if that is the purpose of the contractual obligation to pay a salary, that purpose has a close correlation with the purpose of the Award obligation to pay employees an award-wage for the time-based provision of their labour. Accordingly, the discharge of the contractual obligation by the monthly payments would have concurrently discharged the Award-based obligation to pay the employees the award-wages due in each of the months in question.
The constructional exercise is not free from difficulty. Whilst I have not reached a clear view, I have been persuaded that the preferable construction of the Form One contracts is that the Bank is obliged to pay the employees a monthly sum for their time-based provision of labour irrespective of whether any commission targets are met and any commission is earned by the employee.
It is sufficiently clear that when, in the opening paragraph of the “Remuneration” clause, the contracts refer to the “BCR” they are referring to a dollar figure said to represent “the total cost of your employment”. In the Form One version of the contracts, unlike some of the other forms of the contracts, the second sentence of the “Remuneration” clause does not specifically refer to salary as a cost component of the BCR. Despite that, it is clear enough given the later references made to salary, that the employee’s salary cost is a component of the BCR.
As part of the BCR, the salary component is relevant to the function of the BCR of providing a financial benchmark which the commissions generated by the employee must satisfy before commissions which exceed the benchmark become payable. The discernible concept which underpins that function is the idea that before the employee should become entitled to commission income, the commissions generated by the employee should off-set the “costs of employment” of the employee incurred by the Bank. So much is made sufficiently clear by the Form One contracts as a whole including the following terms, the first from the “Remuneration” clause and the second from the “Payment of Commission” clause:

You will be allocated a BCR, which is a recoverable allocation against any commission earned.

…

Commission payments will be first applied against BCR allocation, including the cost of packaged items, if any, for the year to date. Once your commission payments exceed the BCR allocation and the cost of all packaged items, the remaining commission balance will be paid to you. Payroll tax and workers compensation charges on commission payable (i.e. commission earned less BCR allocation) will be borne by the Employer.

If that was the only function for the “salary” contemplated by the contracts, the salary would be notional and solely concerned with the calculation of commissions in the sense earlier described. However, the contracts do not limit the intended function of a salary to that of merely being a financial benchmark relevant to the calculation of commissions payable to the employees. There are two provisions which serve to demonstrate that the salary is intended as an entitlement to remuneration which the employee is entitled to be paid, irrespective of any entitlement the employee may or may not have to be paid a commission. Both provisions are in the “Remuneration” clause. The first states:

Your base net salary will be payable monthly on the 15^th day of each month (being two weeks in arrears and two weeks in advance) by direct deposit to a bank account.

The second is the third paragraph of the “Remuneration” clause (emphasis added):

If your earned commission is less than your BCR allocation at the end of the month, this deficit will be rolled forward to the next month and offset against available net commission. To the extent that your earned commission is less than your base BCR allocation in a given year, you will not be required to pay the shortfall to the Employer, however, your base rate will be revised and may be reduced by the Employer in line with the Minimum Performance Clause of this Agreement. The Employer may also reduce your BCR allocation at any point throughout the Commission year if it appears to the Employer that your earned commission will be less than your base BCR allocation for the year.

Those provisions make it sufficiently clear that the Bank is obliged to pay a salary (or what, in employment contracts which value a capacity to earn commission, is often called a “retainer”) and that the employee is entitled to retain the salary paid. The salary is not merely a notional cost and, because the employee is entitled to retain the payment irrespective of whether sufficient commission is earned in the relevant year to allow the cost to be off-set against commission earned, the payment of the salary cannot be characterised as no more than an advance on future commission payments. The characterisation of the monthly payments as an advance on future commission earnings was critical to the construction contended for by the employees. That characterisation is not to be preferred because the employees are entitled to retain the salary payment irrespective of whether the cost can be off-set against future commission earnings. The better view is that the monthly payments are payments made for their stated purpose – a payment of the employee’s “base net salary”.
It is important I think to pause and consider the discernible rationale for the bolded words in the third paragraph. To my mind, the provision recognises the intent of the parties that the employee be remunerated despite the employee not achieving or sufficiently achieving commission targets which would entitle the employee to be paid a commission. There is here a recognition that the employee should be paid something for his or her time-based provision of labour irrespective of whether those efforts result in particular performance targets being met. That is the usual purpose of what is commonly referred to as a “retainer” in an employment contract which provides for remuneration to be earned by way of commissions. The idea that despite substantial effort an employee should earn nothing at all runs counter to both common employment practices and makes little commercial or industrial sense even where it is obvious, as is here the case, that the parties contemplated that incentivising forms of remuneration would very substantially account for the employee’s likely earnings. That rationale, in my view, very significantly supports the view that the monthly payments were intended to provide a minimum guaranteed level of remuneration and should not be characterised as merely an advance on future commission earnings.
I appreciate that the capacity given to the Bank in the third paragraph of the “Remuneration” clause to unilaterally reduce the employee’s salary runs somewhat counter to the rationale I have just identified. However, a capacity to reduce is not necessarily to be construed as a capacity to eliminate, especially where to eliminate or even to reduce the employee’s salary to a level lower than the minima acceptable to the employee would make no commercial or industrial sense. It may, in that context, be inferred that it was intended that the discretion given to the Bank would be exercised reasonably. In any event, it seems to me that the identified rationale is the only discernible rationale available to explain the intention of the parties.
Despite the infelicitous drafting and consequent ambiguity, I read the reference to “base BCR allocation” in the third paragraph of the “Remuneration” clause as a reference to salary. The word “salary” is used synonymously with “base BCR” in the “Payment of Commission” clause, where the expression “your salary/base BCR” is used. There are many occasions where “base BCR” seems to be utilised not interchangeably but in contrast with “BCR”. Furthermore, the adjective “base” connotes that a component rather than the whole of the BCR is being referred to and the component of the BCR being referred to in the third paragraph of the “Remuneration” clause must be the salary component of the BCR because that is the only component which could be retained by the employee, as it is the only component which the contract requires be paid to the employee. In any event, even if “base BCR” meant the whole of the BCR, the sentence in question can only be sensibly construed as providing that so much of the BCR which has been paid to the employee (which must include their “base net salary … payable monthly”) may be retained by the employee.
I acknowledge that there is some tension between the provision in the third paragraph of the “Remuneration” clause providing that the employee “will not be required to pay the shortfall” and the sentence which Senior Counsel for the employees described as the “critical sentence in our case”, being the sentence set out above at [27] stating that the BCR “is a recoverable allocation against any commission earned”. However the two provisions are reconcilable. The latter is a statement of the general rule that the BCR will be offset against commissions generated by the employees. The former is intended to identify an exception to the general rule specific to the salary component of the BCR. The exception must obviously have been intended to prevail.
The employees also pointed to the sixth paragraph of the “Remuneration” clause dealing with the packaging of remuneration. That was asserted to be an exception to the capacity of an employee to retain the salary paid in circumstances where the salary was packaged and not off‑set by commission earnings earnt within the same year. It is not clear to me that the provision is an exception at all. The contracts contemplate the packaging of commission earnings, as the provision set out at [27] above confirms. It seems to me that is the more likely subject of the provision. If the packaging of “salary” was its subject then the provision would sit in conflict with the provision which permits the employee to retain his or her “salary”. Given the rationale for the latter provision as described above, it would be strange if it were intended that salary paid in money and salary paid through a salary packaging arrangement were intended to be treated differently.
Lastly, some assistance to the construction I prefer is provided by the “Termination of Appointment” clause, in that the clause requires the Bank to pay four weeks of “salary” to the employee in lieu of notice. Further, the “Remuneration” clause’s disallowance of any claim for overtime, supports the conclusion that at least some remuneration payable under the contracts are directed to the time-based performance of work.
For the purposes of the present analysis, the Form One contracts are not relevantly different to the Form Two, Three, Four, Five, Six and Seven contracts. The reasons of Wheelahan J characterise Mr Marr’s contract as the only Form Eight contract and for reasons I will explain, the terms of that contract are sufficiently different to warrant separate considerations. I note that the employees’ case was put on the basis that, relevantly, all the contracts were the same because the BCR remuneration model was said to be the same for every employee. Senior Counsel for the employees acknowledged that whilst the wording of some of the provisions amongst the various contracts differed, that “did not impact on the model”. Putting to one side Mr Marr’s contract, I agree that all of the contracts are not relevantly different. My analysis of the Form One contracts applies equally to those other contracts.
Turning then to Mr Marr’s contract. That contract relevantly states (emphasis added):
Remuneration

2.1 Remuneration Package

You will be employed under the Bank’s Commission Based Structure. This structure provides a base package (BCR), combined with structured commission payments. Employees remunerated under a Commission Based Structure are not eligible to claim overtime or other penalty rates.

2.2 Base Package (BCR)

Under this structure, a base package remunerated under the Bank’s Basic Cost Responsibility Plan (BCR) will be treated as an advance on commission. The BCR represents the total cost of employment inclusive of superannuation, fringe benefits tax, payroll tax, and workers compensation insurance. BCR levels are reviewed annually, and effective 1 July. To the extent that an employee does not earn enough commission to cover their base BCR in a given year, they will not be required to repay MBL, for the given year in any subsequent years, however their BCR rate will be revised and may reduce in line with Clause 2.3 below

2.3 Minimum Performance Criteria

Individual employees’ minimum performance levels will be set in consultation with the Adviser and then reviewed annually to establish levels at which an Adviser must consistently perform.

If the adviser does not meet their individual performance criteria as determined in the annual performance review and has not repaid their annual BCR advance, effective the next remuneration year the rate of BCR will reduce. In this instance where BCR was $80,000 per annum, the reduced BCR would be $60,000 per annum. Where BCR was $60,000 the reduced BCR would be $40,000 per annum. BCR would not reduce below $40,000 per annum.

Where minimum performance criteria are not achieved formal performance counselling will commence.

2.4 Commission Structure

…

2.6 Payment of Commission

Commission will be paid quarterly in arrears. All commission payments (as outlined in the Commission Structure) will be applied to the advanced BCR amount for the quarter, until the advanced balance is reduced to zero.

The commission year will be specified as the period 1 April in a given year to the following 31 March.

Once the BCR advance amount for the quarter has been reduced to zero, the remaining commission balance will be paid in full. Payroll tax and workers compensation charges on commission payable (minus BCR advance) will be borne by the business. Commission payments can not be credited to the individual’s BCR entitlement to provide a surplus or rollover for the subsequent year. Commission payments can not be credited to the individual’s BCR to increase the base BCR.

It appears to me that the terms of cl 2.1 expressly acknowledge that there are two components to Mr Marr’s remuneration – a “base package” being the BCR and secondly remuneration by way of commission payments.
There is no reference made to Mr Marr being paid a salary, the word salary is not found at all, but it is clear enough that the Bank is to provide the “base package” by paying to Mr Marr what clause 2.2 describes as his “base BCR”, being the sum paid to Mr Marr which is retained by him irrespective of whether any off-setting commissions are generated.
There is no indication as to when Mr Marr is to be paid the “base BCR”. Consistently with the unchallenged finding of the primary judge, I have assumed Mr Marr was paid pro-rata on a monthly basis as were the other employees, but the assumption makes no difference to the analysis.
For largely the same reasons as pertained to the other forms of contract, the payment of the base BCR should not be characterised as the payment of commission. Indeed Mr Marr’s contract may be said to more clearly identify that there are two separate components to the remuneration made available to him – a guaranteed “base package” together with commission income.
The first sentence in cl 2.2 providing that the “base package…will be treated as an advance on commission” is not saying that the base package payments required to be paid by the Bank are to be paid as commission. Properly construed the sentence is merely saying that for the purposes of calculating the commissions due to Mr Marr, the payments of the base package (ie the base BCR) will be deemed to be commission payments.
Although differently worded to contracts in Form One to Seven, there is no reason for reaching a different conclusion in relation to Mr Marr’s contract.
For those reasons, I have concluded in respect of each employee and each pay period in question, that the monthly payments made by the Bank discharged the Bank’s obligation to pay the award-wages due. In reaching that conclusion and for the reasons given by Wheelahan J at [163]-[191] I have not regarded the “BCR policy”, the letter of 18 June 2010 or the asserted failure of the Bank to have utilised the annual salary or flexibility provision in the Award, as of relevance to the issues I have determined.

Did the Bank discharge its statutory obligations to provide paid leave and provide payment for public holidays?

I respectfully agree with the conclusions reached by Wheelahan J that the statutory obligations upon the Bank to provide paid leave and payment for public holidays were discharged by the monthly payments. The nature of paid leave generally and the nature of paid leave as provided for under ss 90, 99, 106 and 116 of the FW Act is that it has two relevant elements. It is firstly an entitlement provided to an employee to be absent from work and secondly, and despite that absence, an entitlement to be paid for the period of the absence: see Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) (2019) 270 FCR 513 at [148] (Bromberg and Rangiah JJ); Rossato at [226] (Bromberg J).
The only claim made by the employees was a claim in relation to that part of the statutory entitlements which required that the employees be paid whilst absent, each of those statutory obligations providing that the employee be paid “the employee’s base rate of pay for the employee’s ordinary hours of work in the period”. In the case of the employees here in question, that entitlement was an entitlement to be paid what I have referred to as their award‑wages. For the reasons already given, the employees were paid their award-wages in respect of the entirety of the claim period (including any periods of leave or absence and during any public holiday), because they were paid the monthly payments and those payments discharged what was owed by the Bank in respect of award-wages.

Did the Bank discharge its Award obligation to pay leave loading?

Clause 24.3 of the Award required the Bank to pay a loading of 17.5% during a period of annual leave. For the reasons given by Wheelahan J, the obligations upon the Bank to pay leave loading were not discharged other than in respect of Mr Haslem, Mr Mackenzie and Mr Ryan.

Conclusion