Judge and FWO create confusion in car rental industry

A decision by a Federal Circuit Court Judge has thrown the car rental industry into confusion about the award coverage of its workers.

For over a decade, the Fair Work Ombudsman and its predecessor government agencies have held that customer service staff are covered by clerical awards and car cleaners are covered by vehicle industry awards. Where a staff member might perform both customer service and car cleaning duties, they were paid according to whichever award/classification attracted the higher rate.

Now, because of the decision made in this case, (SURACE v PEOPLESMOVE PTY LTD), the Fair Work Ombudsman has changed its mind and, on their website, is advising:

Retail Award

The Retail Award covers employees of car rental businesses who:

  • perform administrative work at the business retail premises, for example the shop front where you hire the vehicle
  • organise bookings, receive payments and sell extra products or services to customers
  • work as car washers and detailers.

Clerks Award

The Clerks Award covers employees of car rental businesses who perform administrative work away from the business retail premises, for example in the head office.

Why is it a problem?

Sure there are new legal precedents that come along but the problems here are threefold:

  1. The decision appears to be flawed (and I’m not a lawyer but I don’t need to be to reach that conclusion in this case based on the evidence)
  2. The Fair Work Ombudsman’s interpretation of the decision also appears to be flawed
  3. The effect of the decision (if applied as the Fair Work Ombudsman has determined it should be) is to really complicate award designation in the industry unnecessarily.

What was this case about?

Mr Surace brought an underpayment of wages claim against his former employer  Peoplesmove Pty Ltd (trading as Carhood). He performed a mix of customer service, car cleaning and supervisory/team leader duties and claimed that he was covered by the Clerks – Private Sector Award 2010. That was opposed by the former employer who argued that he was award-free or, alternatively, covered by the Miscellaneous Employees Award 2010.

So the Judge had to first determine the question of award coverage for this worker.

What is the basis for the decision?

There appears to have been conflicting evidence about just how much time this worker spent on supervisory duties versus customer service versus car cleaning functions.

The Clerks – Private Sector Award 2010 was ruled out as it technically covers employees “wholly or principally engaged in clerical/administrative duties” and the Judge felt that this was not the case with Mr Surace, notwithstanding the long history of clerical award coverage of customer service functions in the industry.

Then the Judge considered the question of the “Retail Award” :

  1. The Respondent submits that the Retail Award is not applicable to the Respondent’s business, because cl.3.1 of the Retail Award “defines explicitly and with limitation the establishment must be one of the below definitions”.[3] This submission misconceives the ordinary meaning of cl.3.1 of the Retail Award. The list of businesses specified in cl.3.1 of the Retail Award under the definition “general retail industry” are clearly not an exhaustive list of businesses that fall within the scope of the Retail Award. This is made clear by the opening words in the definition of general retail industry: “general retail means the sale or hire of goods or services to final consumers for personal, household or business consumption including…” (emphasis added). Clearly, by the use of the word “including”, the identified retail businesses do not exhaust the type of retail business which may fall within the meaning of “general retail industry”.
  2. The ordinary meaning of the definition of “general retail industry” can be read as meaning “the sale or hire… of services to final consumers for personal… or business consumption”. I am satisfied that the Respondent’s business involves the hire of a service (car-sharing) to final consumers (traveling to and from the airport) for their personal or business consumption. The fact that the business of the Respondent is novel does not preclude its service from falling within the definition of “general retail industry.”
  3. Accordingly, I find that the Respondent operates a business within the meaning of “general retail industry” of cl.3.1 of the Retail Award.

What is wrong with that decision?

The decision correctly notes that  “general retail means the sale or hire of goods or services to final consumers for personal, household or business consumption”.

However, that clause in the General Retail Industry Award 2010 also lists a number of exclusions (not mentioned in the decision) and one of those exclusions is: “motor vehicle retailing and motor vehicle fuel and parts retailing”.

So, if retailing includes “hire of goods or services” and “motor vehicle retailing” is specifically excluded from coverage of this award, how can car rental be covered by the General Retail Industry Award 2010?

The simple answer is that logically it can’t, notwithstanding this judicial decision.

Why the Judge ignored that very explicit exclusion in the Award is a mystery.

What then is wrong with the FWO interpretation of this decision?

  1. The Judge made a decision in an individual case based on a particular mix of duties – it was about that worker, not the entire industry and it should be viewed as such.
  2. If there is a concern about whether that decision affects traditional award coverage of the industry, perhaps that question should be referred to the Fair Work Commission whose role it is to determine award matters. That would provide greater clarity for the industry.
  3. The decision did not consider award coverage of car cleaning functions at all – there is no mention of that and it specifically did not address coverage under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 which has car cleaner classifications and includes in its coverage “the repair and servicing of motor vehicles in the establishment of an employer ……who is engaged in the motor vehicle rental business”.
  4. As the decision did not in any way comment on award coverage of car cleaning activity let alone make any decision on that, how could the FWO reasonably determine that the current award provisions are not applicable and that car cleaning at a retail site now falls under the General Retail Industry Award 2010?

Are there deeper problems?

Unfortunately, yes there are.

Our Award system remains ridiculously complicated and difficult to navigate for the average business owner or employee. That was a significant contributing factor in the decision in question – the Judge had to make a determination of award coverage for an employee whose duties spanned multiple awards (according to traditional award coverage determinations) and seemingly looked for an easy solution to this, even if it was technically the wrong answer.

The irony in this case is that the Judge could have made an alternate decision that would have made much more sense and actually simplified the Award coverage issues for the industry.

The Vehicle Manufacturing, Repair, Services and Retail Award 2010 has Salesperson classifications but the authorities have traditionally held the view that Sales did not include rental sales. If the Judge had applied the retailing definition in the General Retail Industry Award 2010 (ie including hire of goods and services) to the Vehicle Award which otherwise covers car rental and so designated the Vehicle Award as the industrial instrument in this case, the industry would have one award to cover most activities.

An opportunity missed.

By Peter Maguire