FWO ruling: Award coverage for employees in rental businesses

7 September 2018

On 1 August 2018, the Fair Work Ombudsman issued a ruling on award coverage for employees predominantly involved in car rental operations.

For a number of years, VACC Industrial Relations had provided advice to members that rental officers who are responsible for booking rental vehicles and assisting in the completion of rental agreements were covered under Level 2 of the Clerks - Private Sector Award 2010. Employees who were involved in the washing, cleaning, repair and servicing of the vehicles were covered under classifications in the Vehicle Manufacturing, Repair, Services and Retail Award 2010. The Fair Work Ombudsman did not dispute this interpretation of award coverage for these employees.

Over the last 18 months, however, the Fair Work Ombudsman started reviewing whether these awards were appropriate to cover car rental employees. One reason for the review was that rental employees performed a range of duties as part of their job. For example, an employee could be involved in clerical duties in an office environment taking bookings and finalising rental agreements, checking cars for damage when they were returned, driving vehicles to a depot, picking up and returning customers to airport terminals and washing and cleaning cars.

The Fair Work Ombudsman consulted with VACC Industrial Relations on award coverage and it appeared that as a result they had decided not to change the status quo. However, a recent decision in the Federal Circuit Court in March 2018 prompted the Fair Work Ombudsman to re-examine the award coverage issue. The case involved a company that provided a service out of airports where customers were picked up from the airport, left their cars with the company and those cars were hired out to other customers. On their return the cars were washed and the customers driven back to the airport. The Applicant was the Assistant Manager of the company.

The Applicant argued that his role should be classified as a Level 4 clerical employee under the Clerks Private Sector Award 2010. The Company argued that as a manager he was not covered by an award or, if this were not the case, the applicable award was the Miscellaneous Award. 

After examining the principal functions and duties carried out by the Applicant, the Federal Magistrate concluded the Applicant was employed in a supervisory not managerial capacity. It was decided that as the Company’s business was in hire cars rather than car storage, it was in fact a retail outlet and covered by the General Retail Industry Award.

The Federal Magistrate decided that 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”. He ruled that the Company’s business involves the hire of a service to final consumers (hire of rental vehicles, travelling to and from the airport) for the customers’ personal or business consumption.

Acting on this decision, the Fair Work Ombudsman placed the following revision to the existing award coverage of rental employees on their website.

Where employees perform a range of duties including:

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

The Fair Work Ombudsman has ruled that these employees are now covered by the General Retail Industry Award 2010.

The Clerks - Private Sector Award 2010 covers employees of car rental businesses who perform administrative work away from the business retail premises, such as in the head office.

The Fair Work Ombudsman ruling has important implications for members in terms of wage rates paid to certain rental employees. Members affected by this ruling should contact VACC Industrial Relations.