[2012] FWAFB 6108 |
FAIR WORK AUSTRALIA |
REASONS FOR DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT KAUFMAN |
MELBOURNE, 24 JULY 2012 |
Appeal - permission - high income threshold - ‘rate of annual earnings’ - whether provision of motor vehicle to be included in calculation.
[1] Mr Francesco Zappia, the appellant, applied for a remedy alleging that the termination of his employment was unfair. His employer, the respondent, objected to the jurisdiction of Fair Work Australia to entertain the matter on the basis that the appellant was not protected from unfair dismissal as he was not covered by a modern award, an enterprise agreement did not apply to his employment, and the sum of his annual rate of earnings, etc. was above the high income threshold. 1
[2] The matter was heard by Senior Deputy President Hamburger who, on 18 April 2012, accepted the argument of the respondent and dismissed the application for a remedy.
[3] The appellant seeks to appeal the decision pursuant to section 604 of the Fair Work Act 2009 but may only do so upon being granted permission to do so by Fair Work Australia. By operation of section 400, permission to appeal may not be granted in relation to a matter of this kind unless Fair Work Australia considers that it is in the public interest to do so.
[4] His Honour set out the relevant statutory framework as follows:
[3] Section 382 (b) of the Fair Work Act 2009 (the Act) provides that for a person to be protected from unfair dismissal one or more of the following must apply:
‘(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.’
[4] At the time of the applicant’s dismissal (1 December 2011) the high income threshold was $118,100 per annum.
[5] In relation to earnings, s.332 of the Act provides that
‘(1) An employee’s earnings include:
(a) the employee’s wages; and
(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and
(c) the agreed money value of non-monetary benefits; and
(d) amounts or benefits prescribed by the regulations.
(2) However, an employee’s earnings do not include the following:
(a) payments the amount of which cannot be determined in advance;
(b) reimbursements;
(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;
(d) amounts prescribed by the regulations.
Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).
(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:
(a) to which the employee is entitled in return for the performance of work; and
(b) for which a reasonable money value has been agreed by the employee and the employer;
but does not include a benefit prescribed by the regulations.
(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:
(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;
(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997) of the employee;
(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.’
[6] With regard to benefits other than the payment of money, regulation 3.05(6) provides:
‘If:
(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and
(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332 (3) of the Act; and
(c) FWA is satisfied, having regard to the circumstances, that:
(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and
(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and
(iii) FWA can estimate a real or notional money value of the benefit;
the real or notional money value of the benefit estimated by FWA is an amount for subparagraph 382 (b) (iii) of the Act.
[5] As no modern award covered the appellant and no enterprise agreement applied to him in relation to the employment, the only issue to be determined was whether the appellant was protected from unfair dismissal by operation of section 382 (b)(iii) of the Act. His Honour found that he was not.
[6] In determining the appellant’s annual rate of earnings his Honour found that at the time the appellant was dismissed on 1 December 2011 his salary, or wage, was $92,500. This had been increased from $90,000 on 1 March 2011. His Honour found that the employer’s contribution to a superannuation fund on behalf of the appellant of one percent above the statutory requirement was to be taken into account in calculating the Applicant’s annual rate of earnings in accordance with section 382(b)(iii) of the Act. His Honour accordingly added $925 as well as $284.67 and $92.70 in respect of the respondent's contributions to salary continuance insurance and a lifestyle benefits program respectively.
[7] The main dispute between the parties related to the value, if any, to be attributed to the provision by the respondent to the appellant of a fully maintained vehicle, as well as the payment by it of associated toll charges and parking facilities. There was also a difference between the parties as to whether the sum of the appellant's annual rate of earnings was the quantum of his annual salary at the time of the termination of his employment ($92,500) or the amount that the appellant had actually earned in the 12 months prior to his dismissal ($92,083.30).
[8] His Honour dealt with the annual rate of earnings aspect thus:
[9] ... The most natural way of construing the expression annual rate of earnings in s.382 is by reference to the annual rate of earnings at the time of the applicant’s dismissal. If Parliament had wished to refer to the average amount earned over the previous 12 months it could easily have done so. I note, for example, that in setting the compensation cap in relation to unfair dismissal, s.392 specifically refers to the amount that the employee received (or was entitled to) during the 26 week period immediately before the dismissal.
[9] On the appeal, Mr I Latham, of counsel, who appeared for the appellant both at first instance and on the appeal, submitted that his Honour had erred in his construction of the expression ‘annual rate of earnings’. In our view his Honour was clearly correct. Section 382 of the Act relevantly provides that a person is protected from unfair dismissal at a time if, at that time, the sum of the person's annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold. It is clear that the time at which the annual rate of earnings must be ascertained is at the time of the termination of the person's employment. What needs to be ascertained is the annual rate of earnings at that time, not the annual earnings to that time (the amount earned in the 12 months to that time). 2
[10] There are two issues in relation to the matter of the provision of the motor vehicle. The first is whether the provision of a fully maintained company car constituted a non-monetary benefit within the meaning of that expression as defined by section 332(5)(a) of the Act. If it did constitute such a benefit, the second is, whether Fair Work Australia is satisfied:
[11] In our respectful view, his Honour correctly found at [15] that the motor vehicle was used primarily for private purposes and that its provision constituted a significant part of the appellant’s remuneration. Accordingly its provision constituted a non-monetary benefit. His Honour was also correct in holding at [17] that an employee’s travel between home and normal place of employment is personal rather than work related travel and in his satisfaction that he should consider the benefit for assessing whether the high income threshold applied.
[12] A reasonable money value of the benefit not having been agreed upon, his Honour, pursuant to regulation 3.05(6) of the Fair Work Regulations 2009, was satisfied that he could estimate the real or notional value of the benefit. He did so by adopting a method that has oft been used by Fair Work Australia and its predecessor. His Honour did not err in so doing, nor did he fall into error in the manner of coming to his estimate of its real or notional value.
[13] Finally, his Honour was correct in taking into account the value of the tolls paid by the respondent in respect of the private portion of the appellant’s travel. It matters not that this was by way of reimbursement, rather than by direct payment. The payment of the tolls was a benefit other than payment of money for the purposes of regulation 3.05(6). In the event that it was not, applying a purposive approach to the interpretation of the word “reimbursements” in section 332(2)(b) of the Act, the word does not contemplate reimbursements of outlays incurred for private, as approved by business, purposes. The payment by an employer for an employee’s private outgoings, whether directly or by way of reimbursement, clearly constitutes part of that employee’s remuneration.
[14] Having found that his Honour did not err in any of his findings or in his conclusion, we are not of the view that it is in the public interest to grant permission to appeal. The appeal is dismissed.
SENIOR DEPUTY PRESIDENT
1 Fair Work Act 2009, section 382(b).
2 See Kunbarllanjna Community Government Council v H. W. Fewings Print Q0675 where a Full Bench of the Australian Industrial Relations Commission came to a similar conclusion in respect of the relevant provisions of the Workplace Relations Act 1996.
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