Key takeaways
- The Federal Court’s decision arguably limits (or at least complicates) the coverage of the BFI Award. It provides a more restrictive view of coverage than many orthodox interpretations which considered the Award to have “across the board” coverage up to “middle management” within a banking, finance or insurance business.
- However, employers in the industry should take care – and seek legal advice – before drawing broad conclusions from the outcome of the case.
- While not the primary focus of the case, the decision is also of interest for its comments on offsetting remuneration against award entitlements. The Court displayed a willingness to uphold the employer’s argument that commission (in a commission-only payment arrangement) could be offset against award entitlements.
In depth
Background
In Ord Minnett Holdings Pty Limited v. Theodorou [2025] FCA 721, an employee worked as a ”Private Client Adviser” and then ”Associate Advisor” on a commission-only basis for the financial services company, Ord Minnett. He claimed that he was entitled to payment of award entitlements worth more than AUD 245,0000 on the basis that the principal purpose of his role was “to undertake work as a private client adviser and as a financial planner” and that he was consequently covered by the Level 6 classification of the BFI Award.
Award coverage
At the time, the Level 6 classification of the BFI Award was described in the following terms:
This level covers those who perform a middle managerial role primarily to control the conduct of a part of the employer’s business and in which decisions are regularly made and responsibility accepted on matters relating to the administration and conduct of the part of the business. Those responsible for managing more than 10 people must be classified at this level provided that this level 6 classification does not cover classes of employees:
- Who, because of the nature or seniority of their role, were not traditionally covered at all by awards; or
- Who perform work that is not of a similar nature to work that has previously been regulated at all by awards.
Indicative job list — branch manager, human resources or fraudulent relations manager, financial planners, information technology specialists, relationship manager, senior analyst, subject matter manager, divisional manager.
In the first instance, the Court agreed that the employee was covered.
Ord Minnett appealed on the basis that the principal purpose of the employee’s role was to undertake work as a stockbroker, and not as a financial planner.
On appeal, the Court:
- Construed the words “middle managerial role” in Level 6 to refer to managers in the ordinary sense: those who control (subject to senior management) a part of an entity’s business primarily by directing the work of other employees.
- Considered that there was ambiguity as to the extent the employee “made decisions” and “accepted responsibility” (as referred to in the description) as part of his daily duties. Further, it held that the reference to “administration and conduct” of a business connotes taking responsibility for directing the operations of a team of people, rather than for carrying out particular transactions.
- Held that the indicative job list expands the scope of coverage of Level 6 beyond “middle managerial” roles in any ordinary sense of that term, but that the employee did not fall within any of the descriptions in the indicative list. The closest fit was “financial advisor”. However, the Court understood a financial advisor to be a person who gives clients strategic advice about building wealth or planning for retirement, while the employee was found to advise clients only as to the performance of investments they had made.
On the basis of the above, the Court found that the role was not award covered.
The Court suggested that, to be covered by Level 6, an employee must be performing a “managerial” role, or fall neatly within one of the other roles listed in the “indicative job list” set out in the description.
Interestingly, neither in the first instance nor on appeal does it appear that consideration was given to whether the employee might be covered by Level 5 (or lower) of the BFI Award if he was not covered by Level 6. Level 5 of the BFI specifically refers to “a specialised role”, “requiring formal qualifications and/or specialised vocational training”, as a basis for coverage separate to operating in a “managerial” role. It is unclear to the writers why the employee’s role in this case could not fall within this description.
Set off
The decision also made interesting findings in relation to an employer’s ability to “set off” commission payments made to the employee against the entitlements he said were owing to him under the BFI Award.
The employee had been remunerated by way of commission only and the employee’s employment contract did not appear to contain a set off clause.
At first instance, the Court rejected the argument that commission could be set off against award entitlements on the basis that the Court did not consider that the commissions were of the same kind, or directed to the same purpose, as the obligations to make payments under the BFI Award.
On appeal the Court indicated that it would have come to a different view to that of the primary judge, on the basis of the principles of “general law” and “restitution”.
This was on the basis that the employee’s own evidence was that the commissions he was paid constituted the entirety of his remuneration. Justice Kennett stated:
It would be a strange result if an employee who entered into an employment contract providing for remuneration by commission only, and received those commissions over a period of years, could insist on those commissions being completely ignored in a reckoning of their rights against the employer.
