Although the general rule is that employees in management roles are not covered by modern awards, employers must not fall into the trap of assuming that senior employees, such as property managers and CEO’s, are not covered by modern award entitlements like unfair dismissal remedies.
What are modern awards?
According to Fair Work Ombudsman, modern awards are “legal documents that outline the minimum pay rates and conditions of employment.” There are over 100 industry or occupation awards in Australia, so it is important to determine which award applies by looking at the coverage clause which usually categorises employees in a specified class or classes and the job classifications (typically in the pay section or a schedule).
Principal purpose test
To determine whether an Award covers an employee, the ‘principal purpose test’ provided in Carpenter v Corona Manufacturing Pty Ltd must be applied:
‘In our view, in determining whether or not a particular award applies to identified employment, more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed.’
Recent cases have dealt with the issue of whether an employee is covered by an award and thus able to apply for an unfair dismissal remedy.
Ms Karen Muscat was an employee at a commercial real estate agency and her job title at the time of her dismissal was ‘Director of Asset Management’. Accordingly, Ms Muscat applied for an unfair dismissal remedy under s394 of the Fair Work Act 2009 and argued that she was covered by the Real Estate Industry Award 2010.
Even though Ms Muscat’s job title was ‘Director of Asset Management’, the Fair Work Commission (FWC) nevertheless considered whether the duties undertaken by Ms Muscat were supervisory or managerial in nature. After examining the nature of the work undertaken by Ms Muscat and the circumstances in which she was employed to do the work “in order to ascertain the principal purpose for which she was employed”, the FWC found that her dismissal fell ‘squarely within’ the role of Property Manager Supervisor and within the coverage provisions of the Award.
To read the full decision of Muscat v Chase Commercial Pty Limited T/A Chase Commercial  FWC 1398, click here.
The following case below deals with awards that cover employees in managerial roles and provides an exception to the general rule that managers are not covered by modern awards.
Cubillo v North Australian Aboriginal Family Violence Legal Service  FWA 6818
Mrs Cubillo, the Applicant, was employed by Northern Australian Aboriginal Family Violence Legal Service as a Cultural Services Manager, before being appointed to the position of CEO. After being dismissed, Mrs Cubillo filed an application for an unfair dismissal remedy under s394 of the Fair Work Act 2009 as she argued she was covered by the Social, Community, Home Care and Disability Services Industry Award 2010.
One significant issue raised by the Employer in this case was that even though some of an employee’s activities may be subject to award coverage, “if the so-called ‘principal purpose’ for which they are employed is a managerial one then that is the end of the matter” .
Fair Work Australia (FWA) rejected the Employer’s proposition and held that the history surrounding the making of the Modern Award was intended to cover managerial positions in the social and community services sector of the type occupied by Mrs Cubillo. At , Commissioner Deegan states:
“Clearly a number of classifications in Schedule B of the Modern Award anticipate an employee performing a management role and at a very high level. I accept that this is not the case with most awards. With some awards it is clear that management roles are excluded. In this award, however, management roles are clearly included.”
The key takeaway
Employers must know that even though employees in senior positions have job descriptions containing words like ‘manager’ or ‘director’, the job title does not necessarily mean that the employee is a manager and thus excluded from modern award coverage. Employers must also understand that some modern awards contain classifications for managerial positions that allow employees in these roles to be covered by such awards.