Paid only on commission, he won award pay, then lost it on appeal

What happened

Mr Theodorou began working for Ord Minnett in March 2012. His title was "Private Client Adviser" and, from April 2013, "Associate Adviser". His job was to develop, maintain and expand a book of clients with money to invest in the products Ord Minnett offered through its Wealth Advice business. He found new investors, advised them, placed their trades and monitored their portfolios.

Apart from his first 18 months, he was paid only by commission, a share of the revenue his clients generated. Ord Minnett pointed out that his commission kept being paid each month whether or not he took leave. He resigned with effect from 13 December 2019.

The claim

In July 2021 Mr Theodorou sued Ord Minnett in the Federal Circuit and Family Court. He said his job was covered by the Banking, Finance and Insurance Award 2010 at Level 6, so he was owed the award's minimum salary (the judgment quotes $56,290 a year for Level 6) and annual leave loading. He also claimed pay for annual leave, personal leave and public holidays under the National Employment Standards (NES), the minimum conditions in the Fair Work Act 2009 (Cth). He put the gross underpayment at $245,483.96, or $231,046.82 after a credit he accepted for one payment.

Because he was paid only commission, he had no "base rate of pay" for working out leave unless the award applied.

Level 6 (clause B6) describes a position that "typically performs a middle managerial role primarily to control the conduct of a part of the employer's business". It ends with an "indicative job list" that includes relationship managers and financial planners. A proviso excludes roles that were "not traditionally covered at all by awards".

The win at trial

In June 2024 the trial judge found for Mr Theodorou. He rejected Ord Minnett's argument that Mr Theodorou was in substance a stockbroker. He read clause B6 broadly: an adviser who controlled his own slice of the business, his book of clients, could fall within it even though he supervised no one. He also held that Ord Minnett had to prove the proviso applied, and that it had not.

He refused to let Ord Minnett count the commissions it had paid against the award salary. Orders followed for Ord Minnett to pay $245,483.96 plus interest, put on hold until the appeal was decided.

Why the appeal succeeded: the legal test

Under the Fair Work Act, an award gives an employee rights only if it applies to them, and it applies only if it "covers" them (ss 46–48). The employee who sues for award pay has to prove that coverage, including, here, that the proviso did not apply.

Justice Kennett held that "middle managerial role" means a manager in the ordinary sense: someone who controls part of a business "primarily by directing the work of others". The words "administration and conduct" pointed to directing a team "rather than for carrying out particular transactions". Mr Theodorou looked after clients, not staff.

The job list did not help him either. Its closest match, financial planner, means someone who gives strategic advice about building wealth or planning for retirement. Mr Theodorou advised clients only about investments they had made through him in Ord Minnett's products, and whether other such investments suited them.

Even if he had fitted the main words, he could not get past the proviso. To show the proviso did not apply, he relied only on one award made in 2006, the CommSec Award. "Traditionally" connotes repeated instances over a period, "probably of decades rather than years". One award was not enough.

What happened to the leave and commission arguments

Outside any award, Mr Theodorou was "award/agreement free". As he accepted that his commission was paid by output, he was a "pieceworker" under the Fair Work Act and its regulations. For a pieceworker, the NES base rate of pay for leave is a floor: if commission during leave falls below it, the employer pays the difference. It did not appear to have been alleged that his commission had fallen below that floor.

Justice Kennett added that, had the award applied, he would have let Ord Minnett set off the commissions. Mr Theodorou's own case was that commission was his pay for doing his job, so it served the same purpose as award salary. It would be "a strange result", the judge said, for commissions received over years to be "completely ignored".

A separate finding that Ord Minnett was too slow to hand over his employee records was also overturned. The appeal was allowed, his claim was dismissed and no order was made for costs.

What this means for you

If you are paid only commission, your rights depend first on whether an award covers you. That turns on what you actually do, measured against the award's classification words, not your job title. If you sue for award pay, it is for you to prove the award applies.

If an award does apply, commission that is paid for the same work may be counted against the award minimum, so the amount actually owed can be far smaller than the gap between your pay and the award rate. If no award applies and you are paid by output, the NES protects your leave as a floor under your income, not as extra pay.

For employers, it is worth stating in commission contracts what the commission pays for. Underpayment claims generally have to be started within six years, so if you think you are owed money, consider getting advice early.