Last month, Fashion Group International (Sydney) hosted a business seminar on new employment laws for the industry. Assia Benmedjdoub spotlights two recent legal cases involving fashion retailers, with full coverage of the seminar set for Ragtrader’s next edition.
The Fair Work Act came into effect in July 2009, with comprehensive changes to the terms and conditions of employment for all Australians. These changes include matters relating to modern awards coverage, unfair dismissal, agreement making, National Employment Standards and adverse action.
As advised on www.ragtrader.com.au, industry organisation Fashion Group International recently hosted a seminar to discuss these changes and their implications for the sector. The two cases below illustrate some of the challenges fashion retailers have faced in the last two months.
CASE ONE: TAKE-HOME PAY ORDER
Fast Future Brands, which employs close to 800 workers and operates retail chains Valleygirl and Temt, was recently ordered to provide a female staff member with nine months’ back pay. National workplace relations tribunal Fair Work Australia made the ‘take-home pay order’ after it was revealed the staff member was receiving less pay under the new modern award.
While the award saw pay rates fall in some states, protective measures were introduced to prevent employers from paying their workers less than they were receiving under the previous award. If this occurs, a ‘take-home pay order’ will force businesses to cover any monies owed.
Due to her situation as a full-time student and single mother of two children, the Fast Future Brands employee only worked Sundays for three- to four-hour shifts. Under the new regime, her hourly rate fell from $19.83 to $16.47, with total take-home pay falling from $39.66 to $32.94 once a 200 per cent Sunday loading was taken into account.
At a hearing in Melbourne, Fast Future Brands agreed her rate of pay had been reduced but said the amended rate was “in line with what the modern award had specified”. A representative of the company also stated an offer had been made for the employee to work additional hours to make up for lost income.
In his ruling, Fair Work Australia senior deputy-president Les Kaufmann described the alternative as unacceptable.
“Whilst I accept that the employer did not wish to decrease the applicant’s take home pay, and thus offered her additional hours, I do not accept that the offer is acceptable as an alternative to a take-home pay order. The employer, in essence, is seeking that the employee work more hours for less pay.”
While the modern award allows lower pay rates for new employees, existing employees in the same or comparable position must receive the same or higher rate of pay than previously.
Bernie Brookes, chief executive of department store Myer, has been an outspoken critic of the new IR system and described the penalty rates for casual and part-time staff on Saturdays and Sundays as “barbaric”. Part of the award, which came into effect on January 1, obliges the retail sector to pay double time on Sundays.
CASE TWO: UNFAIR DISMISSAL?
Queensland streetwear chain Universal was cleared of an unfair dismissal claim by one of its male employees, after it was revealed the claim did not apply to his income threshold.
Under the Fair Work Act 2009, a worker is protected from unfair dismissal if they are covered by a modern award or enterprise agreement, or if their earnings are less than the high income threshold, which rose from $108,300 to $113,800 under the new system. The Universal employee was a menswear buyer with a gross annual wage of $115,605 prior to his dismissal earlier this year.
As part of his case against the chain, he argued that his “true income” should be taken into consideration and that his taxable earnings were well below the threshold. This included work-related expenses such as car, mobile phone, home office, international telephone cards, business-use internet, computer accessories, printing and postage.
His taxable income for 2008/09 for instance was $102,312. The employee also claimed that he had received a separate car and phone allowance until 2009 when, under the advice of his general manager, he accepted an increase in his base wages to cover costs instead.
It was claimed the general manager advised he “would be financially better off receiving a gross payment of a higher salary and making the deductions for work-related expenses through his own tax return”. This in turn put his pay rate above the high-income threshold.
Fair Work Australia Commissioner Donna McKenna dismissed the employee’s claims however, stating that deductions for work-related expenses in his income tax return were not relevant in ascertaining his earnings for the purposes of the Fair Work Act. Put simply, taxable income did not come into the equation.
“The Act defines the meaning of earnings and [his] earnings, as wages, were above the high income threshold.”
McKenna said if she were to accept his argument relating to taxable income, there could be different outcomes for employees who were on identical wages above the threshold.
“For example, if Employee A chose to have a very expensive personal vehicle and Employee B had a far less expensive personal vehicle, which they each used for identical amount of work-related travel commitments for the same employer, Employee A may have claims for work-related deductions that far exceed those of Employee B.”