WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION CITATION : 2019 WAIRC 00653 CORAM : SENIOR COMMISSIONER S J KENNER HEARD : MONDAY, 8 JULY 2019 DELIVERED : THURSDAY, 22 AUGUST 2019 FILE NO. : B 54 OF 2019 BETWEEN : KAREN KOBA Applicant AND CREST PERSONNEL PTY LTD Respondent Catchwords : Industrial Relations Law (WA) - Contractual benefits claim - Claim for underpayment of wages in accordance with rate contained in written employment contract and assignment agreement - Respondent relied on doctrine of mistake - Principles applied - Daily rate agreed between the parties prior to written agreement - Doctrine of unilateral mistake applies - Unfair and inequitable to enforce payment - Order issued Legislation : Industrial Relations Act 1979 (WA) Result : Application dismissed Representation: Counsel: Applicant : In person Respondent : Mr M Procopio of counsel Solicitors: Respondent : Procopio Legal Case(s) referred to in reasons: David Securities Pty Ltd and Others v Commonwealth Bank of Australia (1992) 175 CLR 353 Hotcopper Australia Ltd v David Saab [2001] WAIRC 03827; (2001) 81 WAIG 2704 New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 Case(s) also cited: Triantopoulos v Shell Company of Australia Ltd [2011] WAIRC 00004; (2011) 91 WAIG 67 Reasons for Decision Background 1 The applicant commenced employment with the respondent, a labour hire business, on 1 May 2014. On 8 May 2014, the parties entered into a written “On-Hire Employee Employment Agreement”. Part of the parties’ arrangement was an Assignment 99 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1487 Agreement, also executed on 8 May 2014, that “on-hired” the applicant as a Procurement Specialist to the host organisation, Apache Energy Ltd. The Assignment Agreement was for the period of 1 May 2014 to 31 March 2015. As a Procurement Specialist, the applicant was required to purchase items on behalf of Apache. 2 Prior to the applicant’s employment with the respondent, the applicant was contracted to Apache through an alternative labour hire company, Black Gold Solutions. In September 2013, Apache enacted changes to the engagement and administration of contracts, which included consolidating its pool of personnel agencies to seven, and excluding BGS. To commence further assignments to Apache, the applicant was required to be employed with an alternative labour hire company of her choice, from those that remained on the panel of agencies utilised by Apache. It was around this time that the applicant contacted Mr Gallacher, a consultant of the respondent, and the parties commenced email discussions. Discussions leading up to the Agreement 3 On 8 April 2014, Mr Gallacher sent an email to the applicant requesting the applicant’s daily or hourly pay rate. On the same date, the applicant responded and advised that her daily rate (inclusive of superannuation) was $458.99. On 17 April 2014, Ms Anderson, a contract administrator at Apache, sent an email to Mr Gallacher, copying in the applicant, which advised that the applicant’s daily rate was in fact $472.46. This was due to a 2.7% increase that the applicant was eligible for. On 17 April 2014, the applicant replied to Ms Anderson’s email advising that the rate of $472.46 was also incorrect as the applicant’s role had recently increased to include service orders. It was not at all clear what this meant, as the applicant had provided her rate of pay to Mr Gallacher, as requested and nothing was further said about it. Mr Gallacher was not copied into this email. These emails were tendered as exhibit A2. 4 The applicant gave evidence that six days into her employment, she was provided with the Agreement and the Assignment Agreement, already signed by the respondent. The applicant said she noticed some “obvious differences” from her previous employment contract with BGS. The notice period had been reduced from seven to five days, her hours had increased from 37 and a half per week to 40 hours per week and she could no longer claim overtime. 5 The Assignment Agreement contained a higher daily pay rate than the rate of $472.46 discussed between the applicant and Mr Gallacher. Clause 9 read as follows: 9. Daily Rate of Pay Your rate of pay on this assignment, unless otherwise advised in writing, shall be Pay Rate 1st April 2014 – 30th June 2014 Office Rate: $536.24 per day (inc Super 9.25%) Site Rate: $616.68 per day (inc Super 9.25%) Offshore Rate: $713.20 per day (inc Super 9.25%) Pay Rate 1st July 2014 – 31st March 2015 Office Rate: $537.47 per day (inc Super 9.5%) Site Rate: $618.09 per day (inc Super 9.5%) Offshore Rate: $714.83 per day (inc Super 9.5%) This daily rate of pay includes all entitlements as set out in your Employment Agreement. Your pay period will be fortnightly 6 The respondent submitted that the daily pay rates specified in the Assignment Agreement were in error. The applicant’s daily remuneration rate was mistakenly specified as being the general rates charged by the respondent to Apache in respect of the respondent’s service provided to Apache, and not the daily rate of pay for the applicant. The respondent says the error was obvious and would have been apparent to the applicant, who did not provide any specific explanation or evidence as to how her role changed, to warrant a $75 to $80 increase per day. The parties entered into the Assignment Agreement to confirm the agreed remuneration and the length of the applicant’s placement, not to increase the previously agreed daily pay rate, on the respondent’s submissions. 7 The applicant’s position was that the increased daily rate was not unexpected. This was due to the noticeable differences in her contract conditions, as outlined above. Additionally, the applicant said labour hire agencies apply varying mark-ups which alter the rate payable to employees. The applicant did not discuss these changes with Mr Gallacher as in her mind, the higher rate made sense. She submitted that the email chain between the applicant, Mr Gallacher and Ms Anderson (exhibit A2) was inconclusive as both the applicant and Ms Anderson provided incorrect rates that were based on a 37-hour week and not a 40-hour week. There was also a suggestion in the applicant’s evidence of change in duties at about the time that she commenced with the respondent, but this was vague and unclear. It certainly was not said that there was such a change in duties and responsibilities to warrant a large increase in pay. There was also no reference to this in the correspondence between the applicant and the respondent, prior to her commencement. In any event, the applicant accepted that at no time did anyone from the respondent suggest to her, or agree, prior to receiving the Assignment Agreement, that she would be receiving an increase in her then daily rate of $75 to $80. 8 The applicant’s original claim was for the denied contractual benefits of payments in the sum of $31,280.04 and overtime in the sum of $10,883.77. The applicant abandoned the claim for overtime and proceeded with the claim for unpaid wages. Discussions after commencement of employment 9 On 6 June 2014, the applicant sent an email to Mr Gallacher asking him to follow up on her “back pay” to 1 April 2014. The applicant says this was payable to her due to her rate increase in the Assignment Agreement. The applicant also requested a follow up on the first half of her incentive bonus, a bonus received by employees for signing up with the respondent. The applicant sent a 1488 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 99 W.A.I.G. second email to Mr Gallacher on 11 June 2014, confirming she had reviewed her payslip and had not received any back pay or portion of her incentive bonus. The applicant requested an update. The applicant followed up again by email on 17, 21 and 22 July 2014. As to the back pay, this needs to be put in context. The evidence revealed that the additional 2.7% to be paid to the applicant, was also to apply for the final few months of the applicant’s employment with BGS. The applicant agreed that the amount in issue was $248.40. This was referred to in the applicant’s emails to Mr Gallacher of 6 and 11 June 2014 (see exhibit R4). The applicant was also following up on payment of the first half of her sign on bonus. 10 On 23 July 2014, Mr Gallacher emailed the applicant and advised that the respondent had included incorrect rates in the applicant’s Assignment Agreement and attached a revised agreement with adjusted rates (see exhibit R6). On 29 July 2014, the applicant replied to Mr Gallacher asking if the respondent could process her pay earlier than usual for this pay period. The applicant said she had budgeted using the rates in her Assignment Agreement and had consequently fallen short. She did not say anything about or dispute what Mr Gallacher had said regarding the respondent’s error in the schedule to the Assignment Agreement (see exhibit R7). The applicant did not sign the document sent to her by Mr Gallacher with the revised daily rates of pay. 11 The respondent submitted that the applicant was paid the agreed rate of $472.46 throughout the period of her employment and curiously, the applicant did not raise a complaint at the time of Mr Gallacher’s email of 23 July 2014, or at all, throughout the remainder of her employment. The applicant’s assignment to Apache was extended for a further year on 1 April 2015 to 31 March 2016, at the rate of $473.54. Again, the respondent submitted that the applicant raised no objection to being paid this amount. A copy of the second Assignment Agreement was tendered as exhibit R9. The second Assignment Agreement contained the same rate as the corrected first Assignment Agreement. Again, as with the corrected Assignment Agreement sent by Mr Gallacher to the applicant on 23 July 2014, the second Assignment Agreement was also not signed by the applicant, although she worked under these terms and conditions and was paid at the rate specified in it for the duration of her employment under it. Additionally, on the evidence, at no time from 1 April 2015 to 31 March 2016, did the applicant raise any issue with her daily rate of pay, as set out in the second Assignment Agreement. 12 The applicant ceased working for the respondent in March 2016. The applicant said the delay in commencing these proceedings was due to the fact she was previously unaware she could pursue contractual benefits after her employment with the respondent had ceased. Denied contractual benefits – general principles 13 The principles applied in denied contractual benefits claims are well settled. The claim must relate to an “industrial matter”; the claimant must be an employee; the claimed benefit must be a “contractual benefit” as being one to which the employee is entitled under their contract of service; the relevant contract must be one of service; the benefit must not arise under an award or order of the Commission; and the benefit must have been denied by the employer: Hotcopper Australia Ltd v David Saab [2001] WAIRC 03827; (2001) 81 WAIG 2704 at 2707. Mistake 14 The respondent relied upon the doctrine of mistake. It submitted that at common law, mistake comprehends not merely just a belief arising from an erroneous conclusion to a matter of fact or law, but also comprehends a mistaken belief arising from inadvertence to, or ignorance of the existence of a fact or legal requirement. In this regard, the respondent relied upon the High Court decision of David Securities Pty Ltd and Others v Commonwealth Bank of Australia (1992) 175 CLR 353. The respondent further submitted that had the respondent paid the incorrect rate specified in the Assignment Agreement to the applicant, that the applicant would have been under an obligation to make restitution for the difference in accordance with the doctrine of mistake (New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662). 15 As a matter of contractual principle, common mistake occurs when the employer and employee have agreed the terms of the employment contract, however the written document does not accurately reflect the agreement. A unilateral mistake in contract law can arise when one party mistakenly believes that a written agreement is accurate, while the other party is aware of the mistake and acts unconscionably in relation to it (See generally Chitty on Contracts Volume 1 General Principles, Twenty Seventh Edition, Chapter 5). 16 A court can grant the rectification of a contract to accurately reflect the common intention of the parties. An employer asserting that the employment contract contains a mistake will need to establish that the parties agreed to the term prior to recording the agreement in writing; the written contract does not accurately reflect the agreement; that it was the continuing intention of the parties, from the time the term was agreed until the time the written contract was formed, that the term remained as agreed; and if rectification were to be granted, the written contract would give effect to the common intention of the parties. The Agreement 17 The Agreement, read with the Assignment Agreement, provides different daily pay rates for office, onsite and offshore work. The listed amounts increased slightly from the period 1 April 2014 – 30 June 2014 to the period 1 July 2014 – 31 March 2015. Clause 10 of the Agreement, titled ‘rate of pay’ reads as follows: 10. RATE OF PAY 10.1. Your hourly or daily rate of pay when performing an Assignment will be as set out in the Assignment Agreement. 10.2. CREST pays you above the minimum pay rate that is required by the relevant Workplace Laws, and all the monetary obligations imposed on CREST under those Workplace Laws, including the relevant modern award, are included in the amounts that CREST pays you. 10.3. This means that all monetary entitlements - including but not limited to overtime, allowances, penalties, loadings and other amounts to which you are or may become 99 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1489 entitled under any Workplace Law - are satisfied by, and may be offset against the amount you are paid in excess of the minimum required pay rate. 10.4. If the provisions of any Workplace Law entitle you to any other amounts by way of wages, penalties, allowances, contributions, or any other entitlement whatsoever, this will be absorbed in and set off against the rates, entitlements and benefits set out in this Employment Agreement and the Assignment Agreement that applies to your employment. 10.5. The payment of a rate of pay on any particular Assignment shall not provide you with any right to continuing payment of such rate of pay on alternative Assignments. 10.6. Nothing in this Clause shall import the terms of any Workplace Law in to this Agreement. 10.7. During any Assignment, CREST will pay you in arrears the amount to which you are entitled by virtue of this Employment Agreement and the applicable Assignment Agreement less all taxes required by law. Your pay period will be as set out in the applicable Assignment Agreement. 10.8. You must not discuss your hourly rate of pay with anyone while you are engaged by CREST under this Agreement. 10.9. CREST will make superannuation contributions on your behalf in accordance with our legislative obligations. 10.10. If incorrect payments occur due to administrative problems or errors in interpreting or processing timesheets, these errors will be rectified by applying a negative or positive adjustment to your pay, as appropriate. This would usually occur in the next pay period. 10.11. CREST reserves the right to reclaim any amounts overpaid in error. You agree that any overpayments are immediately repayable by you to CREST as a debt. You agree that overpayments may be deducted from any monies owed to you by CREST, in the next week's pay period or upon termination of assignment, as applicable. If no such monies are owing to you, you agree to repay the amount immediately, unless we have agreed alternative repayments terms. 18 Clause 9 of the Assignment Agreement specified the daily rates of pay as provided at par 5 above. Clause 12 of the Agreement titled “hours of work” was as follows: 12. HOURS OF WORK 12.1. Your ordinary hours of work will be specified in the Crest Assignment Agreement or as otherwise prescribed by any applicable Workplace Law. You may be required to work reasonable additional hours in accordance with the Act. 12.2. Where an hourly rate is shown in the Schedule, your rate of pay incorporates payment for any additional amounts payable such as overtime rates, penalties, loadings or like payments under any Workplace Law for the hours of work you perform. 12.3. Where a daily rate is shown in the Schedule, you may be required to perform additional hours of work on a particular day where this is reasonably required by the Client. Your remuneration incorporates payment for all hours worked, including any additional amounts payable for overtime, penalties, loadings or like payments under any Workplace Law for the hours of work you perform. 12.4. In some cases, the Client may have a policy that provides for additional amounts to be paid to you in respect of additional hours. Where the Client agrees to apply these additional payments in respect of an Assignment, CREST will pass the additional payments on to you. This does not give rise to a legal right or benefit enforceable by you. 19 Clause 6 of the Assignment Agreement specified the hours of work as follows: 6. Hours of work Your ordinary hours of work will be Based on a minimum of 9 hour working day Monday to Thursday and on Friday balance of hours to makeup the total of 40 hours. The daily rate shall apply to any overtime worked in excess 45 hours per week or travel. Provided it is approved in advance by the Client. 20 On the termination of her employment with the respondent, the applicant commenced work with another labour hire firm, Competentia. The applicant remained working for Apache as an “on hire” employee, on similar terms to her arrangement with the respondent. Notably, the evidence was that the rates of pay that the applicant was paid by Competentia, for largely the same services performed for Apache (which subsequently changed its name to Quadrant Energy), were very similar to the daily rates the respondent submitted were the correct rates. These rates were paid to the applicant by the respondent, throughout the course of the applicant’s employment. While I do not place too much weight on this evidence, it puts the rates discussed between the applicant and the respondent prior to her commencement in the respondent’s employment, in context. 1490 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 99 W.A.I.G. 21 Evidence on behalf of the respondent was given by Mr Dworakowski who is the company’s owner. He outlined how the respondent business operates. He testified that at the material times, Apache provided the rates that it agreed to pay for staff, and the respondent then added its margin for the fees to provide the services. Therefore, according to Mr Dworakowski, the respondent did not have any direct involvement in the negotiation of the rates of pay to be paid to the applicant. In effect, the respondent paid the rates as stipulated by Apache. He referred to the purchase order from Apache to the respondent for the provision of procurement services. A copy of the purchase order was exhibit R15. Mr Dworakowski said that it was clear from the purchase order that the rate which was inserted into the Agreement and the Assignment Agreement between the applicant and the respondent, incorrectly cited the rates that the respondent charged Apache for its services, which contained the respondent’s margin. 22 Once Mr Gallacher saw the mistake, he sent a revised Assignment Agreement with the correct rates to the applicant on 23 July 2014. The revised and corrected rates were the rates originally proposed by the applicant, plus a 2.7% increase that she was entitled to at that time. The respondent did not at any time, pay the applicant the higher rate that was mistakenly included in the Assignment Agreement. At all material times, the rate paid to the applicant by the respondent was the rate that the applicant originally advised she was then receiving from Apache, including the 2.7% increase, and as contained in the documents sent to the applicant by Mr Gallacher to correct the Agreement, on 23 July 2014. Consideration 23 I have no hesitation in concluding on the evidence that the daily rates included in the applicant’s original Assignment Agreement document contained the wrong rates and those rates were included in the document by Mr Gallacher in error. Those rates were the rates to be paid by Apache to the respondent for the provision of the applicant’s services to Apache as a procurement specialist. These rates included the margin payable to the respondent by Apache, as exhibit R15 makes clear. It would simply be nonsensical and defy commercial logic for the respondent to pay to the applicant the daily rate that Apache was contractually obliged to pay to the respondent, which would mean that no margin would be payable to the respondent for the provision of the applicant’s services. In effect the applicant’s services would be provided to Apache by the respondent free of charge. 24 The fact that the respondent had made an error in the Assignment Agreement document was made plain by Mr Gallacher’s email to the applicant of 23 July 2014. Notably, in response, the applicant by email of 29 July 2014 to Mr Gallacher, did not raise any objection to what Mr Gallacher had said. Also, the applicant asked whether it was possible for her to receive her pay earlier, because she had budgeted her spending on the higher rates. The matter of not being paid the higher incorrect rates cited in the Assignment Agreement document and any subsequent claim of underpayment of her daily rates generally, was never again raised by the applicant, either for the remainder of her employment by the respondent or since that time, until the commencement of these proceedings. The only matter raised by the applicant with the respondent thereafter related to her “sign on” bonus, as revealed in email exchanges between the applicant and Mr Gallacher in late August 2014 (see exhibit R8). There was a query in relation to the applicant’s “on site” daily rate as contained in an email from the applicant to Mr Gallacher dated 17 July 2014 (see exhibit R5), but thereafter there appears nothing on the evidence that this issue, or any other matter as to the applicant’s daily rates generally, was further raised or pursued by the applicant. 25 Furthermore, the initial correspondence between the applicant and the respondent in April 2014 (see exhibit R1) is entirely consistent with the applicant and the respondent agreeing on the rates that Apache was paying the applicant when she was engaged by her former labour hire agency. Mr Gallacher requested on 8 April 2014, that the applicant provide her then daily rate of pay and advise who her supervisor was. On the same day, the applicant responded to Mr Gallacher and gave her daily rate as $458.99 per day and told him who her supervisor was. Then, on 9 April 2014, Mr Gallacher responded to the effect that a purchase order would be obtained (from Apache) and confirmation of arrangements in documents would follow. On 17 April 2014, Ms Anderson from Apache advised both Mr Gallacher and the applicant that in fact the applicant’s rate should be $472.46 per day, which would include the 2.7% increase the applicant was then entitled to. I consider that this chain of correspondence evidenced an agreement between the applicant and the respondent for the applicant to be employed by the respondent at her then rate of pay, plus 2.7%, as advised by Ms Anderson. 26 This email correspondence is also consistent with Mr Dworakowski’s evidence that the respondent was not involved in negotiations for daily rates of pay for the applicant, as this was set by Apache. The respondent simply was advised of the rate and would then add its margin for services to it. This is reflected in exhibit R15, the purchase order for the supply of the applicant’s services by the respondent to Apache. The difference in the rates reflects the respondent’s mark up of 13.5% or $63.93 per day on the applicant’s then daily rate. The figure of $473.54 in exhibit R15 as the applicant’s daily rate, reflected the increase in the compulsory superannuation guarantee contribution from 9.25% to 9.5%, as at March 2015. 27 I am therefore satisfied that based on the correspondence in April 2014 between the applicant and the respondent to which I have referred, the agreed daily rate for the applicant’s engagement to commence with the respondent in the provision of services to Apache was $472.46, rising to $473.54 per day in March 2015. There was no evidence of any agreement between the applicant and the respondent, prior to the applicant’s commencement in employment, for the higher daily rates to be paid, for any reason. As I have indicated, any such purported agreement would be commercially nonsensical. Additionally, I am satisfied that the sign on bonus was a significant factor in the applicant’s decision to request employment by the respondent, to continue her work with Apache. 28 Regrettably in this case, an error was made in the completion of the Assignment Agreement document by Mr Gallacher of the respondent. This error was recognised and was corrected by the respondent in July 2014. The written documents signed by the parties in this case at the commencement of the applicant’s employment, did not accurately reflect the agreement reached by them at an earlier point. The respondent communicated this to the applicant as soon as the error was detected and she was aware of the mistake from that time, if not earlier. The doctrine of unilateral mistake applies. 99 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1491 29 In any event, even if this doctrine does not strictly apply, as a matter of equity and good conscience under s 26(1)(a) of the Act, it would be unfair and plainly inequitable to hold the respondent to a document that was so clearly provided and executed in error, and which did not truly accord with the agreement the parties reached in relation to rates of pay. Accordingly, the application must be dismissed. 2019 WAIRC 00654