Note: An appeal pursuant to s.604 (C2012/3682) was lodged against this decision - refer to Full Bench decision dated 24 July 2012 [[2012] FWAFB 6108] for result of appeal.

[2012] FWA 3208

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Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Francesco Zappia
Universal Music Australia Pty Limited T/A Universal Music Australia




Whether protected from unfair dismissal; high income threshold.

[1] Mr Francesco Zappia (the applicant) applied for an unfair dismissal remedy on 8 December 2011. His employer, Universal Music Australia Pty Ltd (the respondent) indicated on 9 January 2012 that it had a jurisdictional objection to the application, and opposed the matter proceeding prior to a determination of this issue. In particular, the respondent denied that the applicant was 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.

[2] The matter was referred to me for determination. Written submissions were filed and a hearing was held on 30 March 2012. At the hearing, the respondent was represented by Mr B Fogarty, and the applicant by Mr I Latham. Evidence was given by the applicant, Mr Jacobsen, the respondent’s IT General Manager, and Ms S. Lawrence, solicitor for the respondent.

The Statutory Framework

[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:

[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

[6] With regard to benefits other than the payment of money, regulation 3.05(6) provides:


[7] Neither party suggested that the applicant was covered by an enterprise agreement or a modern award. The question to be determined then is whether the applicant is prevented from being protected from unfair dismissal by virtue of s.382(b) (iii).

[8] The respondent bears the evidentiary onus to support its objection that the applicant was not protected from unfair dismissal. The wording of r. 3.05(6) (c) implies that FWA has a degree of discretion in deciding whether it should consider a benefit for the purposes of assessing whether the high income threshold applies to a person at the time of dismissal. Once it has been determined that a benefit meets the criteria contained in r.3.05 (6) (a) and (b), FWA must consider whether it is satisfied, having regard to the circumstances, that each of r.3.05(6) (c) (i), (ii) and (iii) apply.

[9] First, I must determine the applicant’s annual rate of earnings. At the time the applicant was dismissed he was in receipt of a salary (or ‘wage’) of $92,500. This had been increased from $90,000 on 1 March 2011. Mr Latham submitted that I should adopt a figure of $92,083.30 representing the applicant’s earnings over the 12 months prior to his dismissal. That approach would not be correct. 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.

[10] Section 332(2)(c) excludes from the definition of annual rate of earnings contributions paid to a superannuation fund that are required by legislation. However in addition to statutory superannuation, the respondent contributed an additional amount of 1 per cent of salary (that is, $925) to a superannuation fund on behalf of the applicant. This is an amount applied or dealt with on the applicant’s behalf, and must therefore, in accordance with s.332(1)(b) be included in calculating the applicant’s earnings.

[11] It is not in dispute between the parties that the respondent paid $284.67 per year on behalf of the applicant for salary continuance insurance, and paid $92.70 per year on behalf of the applicant for the applicant’s participation in the API Leisure & Lifestyle Employee Benefits Program. These amounts should be included in calculating the applicant’s earnings in accordance with s.332(1)(b).

[12] The main dispute between the parties related to the provision of a fully maintained company car (and associated toll charges and parking facilities). Mr Jacobsen’s witness statement indicated that:

[13] Clause 3.5 of the applicant’s employment contract included the following:

[14] Mr Latham submitted that the value of the car should not be included on the basis that the vehicle was in effect a ‘tool of trade’. He referred to the phrase used in the contract; ‘for your use while performing your duties’, and contended that the car was necessary to enable the applicant to go from one place of work to another. He referred to Rofin 3 in which a Full Bench of the Australian Industrial Relations Commission drew a distinction between the provision of a motor vehicle as part of a salary package and the provision of a motor vehicle as a piece of equipment supplied by the employer to enable the employee to perform the job. The Commission stated:

[15] In the circumstances of this case however, despite the wording in the employment contract, the motor vehicle was used primarily for private purposes. It was the use for business purposes that was incidental. In reality, the provision of the motor vehicle constituted a significant part of the applicant’s remuneration package. Therefore, it would be consistent with Rofin to have regard to the value of the private use of the company car.

[16] While the personal value of the company car does not form part of the applicant’s earnings as defined by s.332 (because there has been no agreement as to the monetary value of this benefit) the tribunal has the discretion to estimate the real or notional money value of the benefit in accordance with r.3.05(6). In all the circumstances, I consider that I am able to, and should, make such an estimate. The applicant argued that the records produced with regard to the motor vehicle are incomplete and unreliable. However, I am satisfied, given the evidence both of the applicant and the respondent, that I have sufficient material on which to base such an estimate. Moreover, as private use of the vehicle formed a significant part of the applicant’s overall remuneration package it would be inappropriate to exclude it from my calculations.

[17] There was some debate about the concept of what constitutes work-related travel. In my view it is well understood that an employee’s travel between his or her home and normal place of employment is personal rather than work-related travel. For example, the cost of such travel is not normally compensated for by an allowance in Modern Awards.

[18] I agree with the submissions of the respondent that the approach adopted by the Full Bench in Fewings 5 is the correct one to apply in the circumstances of this case.

[19] The Full Bench in that decision stated:

[20] The respondent agreed with the applicant’s estimate that he drove the company car a total of 30,114 kilometres in the year before his termination, based on his calculations using receipts received after filling the car with fuel 6.

[21] The applicant's primary place of work was at the respondent's premises at 3 Munn Reserve, Millers Point. On occasion, according to Mr Jacobsen, the applicant was required to travel to the respondent's premises at 107 Vanessa Street, Kingsgrove 7.

[22] According to Mr Jacobsen, the business use travel of the applicant was limited to driving between Kingsgrove and Munn Reserve and attending a limited number of external business appointments 8. Mr Jacobsen used security records to estimate that the applicant made a total of 16 trips in the company car between Kingsgrove and Munn Reserve during the 12 months prior to his termination9. This would amount to around 545 kilometres. There was some disagreement about the number of external business meetings the applicant was required to attend10. Based on the evidence of the applicant, I estimate that these trips would add up to another 735 kilometres. This leads to an estimate of 28,834 kilometres of private use travel (96% of the total kilometres driven over the course of the year).

[23] Applying the relevant NRMA cost per kilometre of 69.79c 11 yields a figure of $20,123 as the value of the benefit to the applicant.

[24] The respondent paid for secure parking facilities for the applicant’s use at Munn Reserve. It is clear from the evidence that the applicant utilised these facilities when he drove the company car to work at Munn Reserve on weekdays 12. I have already determined that his use of the car between home and Munn Reserve was private. The cost of the parking spot was $5,072.8813. Multiplying by the personal usage of the vehicle gives a figure of $4,870.

[25] The applicant incurred toll fees while travelling between his home and place of work. I have already determined that these trips are private rather than work-related. These fees were reimbursed by the respondent, to the tune of $664.92 in the 12 months prior to his dismissal. This is a personal benefit for which the tribunal can estimate a real money value in accordance with r.3.05(6).`

[26] Adding the various amounts together comes to $119,460. This is above the high income threshold.


[27] The sum of the applicant’s annual rate of earnings, together with all the other applicable amounts worked out in accordance r.3.05(6), is more than the high income threshold. Accordingly the applicant was not protected from unfair dismissal at the time of his dismissal. His application is dismissed.



B Fogarty, of counsel, for the respondent

I Latham, of counsel, for the applicant

Hearing details:

30 March

 1   Exhibit U1, paragraph 9

 2   Exhibit U1, Annexure A

 3   Rofin Australia Pty Ltd v Newton [1997] IR 78

 4   Ibid at 82-3

 5   H.W. Fewings v Kunbarllanjnja Community Government Council 7 May 1998 Print Q0675

 6   Exhibit Z2, paragraph 12, Exhibit U2, paragraph 4 and PN10

 7   Exhibit U1, paragraphs 11

 8   Exhibit U1, paragraph 14

 9   Exhibit U1, paragraphs 16-17

 10   See for example, exhibit Z2, paragraphs 18 and 25

 11   Exhibit U3, Annexure A

 12   Exhibit U2, paragraph 19

 13   Exhibit U1, Annexure I

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