[2012] FWA 8393 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Paul Davidson
v
Adecco Australia Pty Ltd T/A Adecco
(U2012/8543)
COMMISSIONER BOOTH |
BRISBANE, 4 OCTOBER 2012 |
Application for unfair dismissal remedy - jurisdictional objection - high income threshold.
[1] Mr Paul Davidson (the Applicant) has made an application for relief for unfair dismissal under section 394 of the Fair Work Act 2009 (the Act).
[2] The Applicant began his employment with Adecco Australia Pty Ltd (Adecco) on 8 August 2008 as Area Manager, Queensland. He was dismissed from his employment with the Adecco on 15 May 2012.
[3] Adecco objects to the Applicant’s application proceeding on the ground that, at the time of dismissal, he was not protected from unfair dismissal by the Act because the sum of his annual earnings, calculated in accordance with the Fair Work Regulations 2009, exceeded the high income threshold, which at the applicable time was $118,100.
[4] The Applicant submits that he falls within the unfair dismissal provisions of the Act because his earnings do not exceed the threshold.
Relevant legislative framework
[5] Section 394 of the Act allows a person who has been dismissed to apply to Fair Work Australia (the Tribunal) for an order under Division 4 part 3-2 of the Act.
[6] However section 396(b) requires the Tribunal to decide whether the person is protected from unfair dismissal. This jurisdictional question is required to be decided before determining the merits of any application under section 394(1).
[7] Section 382(b) 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.
[8] Regulation 3.05 “explains how to work out amounts for the purpose of assessing whether the high income threshold applies in relation to the dismissal of a person at a particular time”. The Tribunal must work out the applicant’s earnings in accordance with that regulation and other statutory provisions. These include the following sections of the Act.
(1) A full-time employee is a high income employee of an employer at a time if:
(a) the employee has a guarantee of annual earnings for the guaranteed period; and
(b) the time occurs during the period; and
(c) the annual rate of the guarantee of annual earnings exceeds the high income threshold at that time.
(2) An employee other than a full-time employee is a high-income employee of an employer at a time if:
(a) the employee has a guarantee of annual earnings for the guaranteed period; and
(b) the time occurs during the period; and
(c) the annual rate of the guarantee of annual earnings would have exceeded the high income threshold at that time if the employee were employed on a full-time basis at the same rate of earnings.
(3) To avoid doubt, the employee does not have a guarantee of annual earnings for the guaranteed period if the employer revokes the guarantee of annual earnings with the employee’s agreement.
(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.
The Relevant Facts
[9] The Applicant entered into a Contract of Employment with Adecco. It states, relevantly, as follows:
ITEM 6 |
THE DUTIES |
The Employee shall perform the duties of Area Manager- Queensland as varied from time to time and other duties as directed by the Adecco | ||
ITEM 7 |
ANNUAL SALARY |
$79,000 per annum pro rata (32 hour week) | ||
ITEM 8 |
ADDITIONAL BENEFITS |
Superannuation in accordance with Clause 5 of the Contract; Performance Bonus in accordance with Adecco Policy, which is subject to review and may be varied from time to time; Travel allowance of $16,000 per annum to be used in accordance with Adecco Policy. Pursuant to Adecco Policy, then Employee shall not be entitled to claim reimbursements for any work related travel in the Queensland metropolitan and surrounding area ( or such other area as provided for), including but not limited to kilometres travelled, vehicle costs including insurance, parking and tolls | ||
ITEM 9 |
MINIMUM ATTENDANCE |
Monday to Thursday 8.30 am – 5.30 pm |
Clause 1 of the Agreement offers the following definition:
“Fixed Remuneration Package” means the Fixed Remuneration Package to be provided to the Employee under Clause 4.1 and Clause 7 and set out in Item 7 of the Schedule
Clause 4 provides as follows:
4. Remuneration
The Adecco shall pay to the Employee an Annual Salary as described in Item 7 of the Schedule. The Salary shall be review at the discretion of the Adecco with due cognisance of the Employee’s performance
4.1 Should it be deemed that the Employee’s employment is coved by an Award, the annualised salary described in Item 7 of the Schedule shall be inclusive of all remuneration to which the Employee is lawfully entitled including but not limited to wages, overtime, penalties, premiums, allowances and loadings.
…
4.4 The Adecco will provide to the Employee the additional benefits set out it Item 8 of the Schedule and such other benefits as the Adecco may determine from time to time.
Clause 7 of the contract provides:
7.1 The employee’s maximum ordinary hours of works [sic] are 38 hours per week. The Employee will be required to perform reasonable additional hours.
7.2 The Employee agrees that the salary referred to in Clause 4 is payment for all time worked which may be required to reasonably perform the duties, irrespective of the number of hours which are worked, or the number fo days on which the hours are worked.
7.3 Whilst the Employee is required to perform the Duties in accordance with Clause 3, the Employee agrees to adhere to at least the minimum attendance requirements described in Item 9 of the Schedule (or as otherwise directed by the Employee’s Manager).
[10] The Applicant was paid a salary of $79,000 and was provided with an allowance of $16,000 per annum for costs associated with use of his motor vehicle for Adecco purposes in accordance with Item 8, extracted above, and in accordance with that Item, he was not entitled to claim reimbursement for use of his own motor vehicle.
Applicant’s Submissions
[11] The Applicant submitted that he did not fall within the high income bracket. In his written and oral submissions, and a statutory declaration, he made the following points.
(a) The travel allowance should not be considered as income when calculating the high income threshold. He was provided with a $16,000 travel allowance as compensation for travel expenses related to his need to have a vehicle to perform the duties of his position which covered a significant geographic area, including Adecco’s premises at its Hendra, Wacol and Gold Coast branches.
(b) He was responsible for the expenses involved in providing a vehicle which included the vehicle itself, registration, insurance, fuel, repairs and maintenance.
(c) He travelled between 20,000 - 30,000 km per year in the vehicle, predominantly for Adecco purposes.
(d) The car allowance should not be calculated pro rata. In his oral submissions The Applicant noted that his contract with Adecco described the annual salary as ‘per annum and pro rata’. The travel allowance however was a fixed sum, described as “$16,000 per annum to be used in accordance with Adecco policy”.
(e) His salary should be pro rated to 38 hours per week and not 40 hours a week as asserted on behalf of Adecco.
(f) The Applicant also submitted the “Adecco group HR policy” states the purpose of travel allowance is to compensate an employee for employment-related travel and other associated expenses. Travel allowance compensates employees for all mileage, parking, running costs associated with the use of personal transport or public transport.
(g) Employees in receipt of travel allowance are not allowed to claim mileage, insurance, parking and other running costs.
(h) The car allowance was not a personal benefit but related solely to use of his motor vehicle for Adecco purposes.
(i) The motor vehicle was used solely for Adecco purposes: “It was all work related as I have no need for a vehicle outside my 32 hours per week of work. (At the weekend we preferred to use my wife’s car for personal travel.)”
[12] In his written submissions the Applicant calculated the work related use of his motor vehicle on Australian Taxation Office (ATO) standards to be approximately $15,000 per annum. He stated:
“So it is difficult to understand how Adecco can arrive at the fact that $16,000 was income and carried a $16,000 value to me”
[13] In the course of the hearing I enquired about the nature of the Applicant's employment which was not otherwise in evidence. The Applicant advised that he had had two positions during the past 12 months. The majority of the time he was Area Manager which required visiting all three of Adecco’s branches (Wacol, Gold Coast and Hendra). His second position was more sales focused and described as the South East Queensland Regional Sales Manager. He described his work as being on the road a considerable amount of time as it was sales focused and involved daily visits to clients.
[14] Under cross-examination the Applicant confirmed that the travel allowance was paid in advance and taxed as any other income.
Submissions from Adecco
[15] Adecco objected to the application proceeding on the basis of its assertion that the Applicant was above the high income threshold. Mr Trennery (for Adecco) relied on 2 letters which included calculations but limited explanation as to the basis of those calculations.
[16] Adecco was provided with a further opportunity to provide submissions as to the method of calculating the high income threshold, but no further submissions were provided.
[17] At the hearing, Mr Trennery confirmed the calculations provided in correspondence with the Applicant. Adecco’s assertions included:
- $79,000 base salary; and
- $16,000 car allowance.
[18] Central to Adecco’s calculations are the inclusion of the entire $16,000 allowance as salary, and treatment of the salary thus calculated as pro rata to arrive at the full-time equivalent earnings. Under Adecco’s submissions and calculations, the Applicant cannot make a claim for unfair dismissal.
[19] Under cross-examination Mr Trennery was asked about car allowance. He stated:
Discussion
[20] Adecco, having raised the jurisdictional point, bears the onus of proving that the Applicant is excluded from protection from unfair dismissal under the Act. 1 It falls on Adecco to demonstrate the Applicant was in receipt of a full time equivalent annual earnings above the high income threshold.
[21] The Applicant submits that the car allowance should not be considered as part of the annual earnings when calculating the high income threshold. The $16,000 car allowance was, he argues, compensation for travel expenses related to his need to have a vehicle to perform his duties which covered a significant geographic area including Hendra, Wacol and Gold Coast branches.
Is the travel allowance ‘earnings’?
[22] Adecco submits that the car allowance is an allowance in the nature of salary that should be calculated pro rata to the full-time rate.
[23] The Act defines earnings in section 332.
(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.
[24] To be included as part of an employee’s earnings, the car allowance will need to fall within s332(1)(a)-(d).
[25] The Applicant’s remuneration is contained in Schedule 7 and is described as his ‘annual salary’ of $79,000. This is ‘wages’ and falls within s332(1)(a).
[26] The allowance is separate from the annual salary and is described as an “additional benefit’. Such a benefit will only be earnings if it falls under s332.
[27] The allowance is not wages, because it was paid in contemplation of offsetting the employee’s expenses in providing, running and maintaining his own motor vehicle for the purposes of Adecco’s business. The allowance recompensed him for these business related costs, and cannot be fairly categorised as a payment for the applicant’s work or services. 2
[28] An allowance could not be described as a non-monetary benefit for the purposes of s.332(1)(c), as it is a money amount. Further the sum does not fall into the category of an amount prescribed by regulations for s.332(1)(d).
[29] That leaves only whether the allowance ‘earnings’ covered under s.332(1)(b), namely:
“amounts applied or dealt with in any way on the employee’s behalf or as the employee directs”.
[30] The Applicant’s contract provides:
Travel allowance of $16,000 per annum to be used in accordance with Adecco Policy.
[31] It goes on to state:
Pursuant to Adecco Policy, the Employee shall not be entitled to claim reimbursements for any work-related travel in the Queensland metropolitan and surrounding area (or such other area as provided for) including but not limited to kilometres travelled, vehicle costs including insurance parking and tolls.
[32] The travel allowance is to be used according to Adecco policy. Adecco then prohibits an employee from any entitlements to or reimbursement of work-related travel.
[33] The Applicant asserts that the sum is properly construed as money paid as recompense for his costs in providing, running and maintaining his motor vehicle in order to carry out the work of Adecco.
[34] I conclude that the travel allowance is not an amount dealt with or applied for on an employee's behalf under s.332. It is an allowance paid, and intended to be used only in accordance with Adecco policy. Accordingly the amount is not earnings under s.332.
[35] There was some evidence before the Tribunal about whether the entire travel allowance was spent on work-related travel.
[36] I note from the statutory declaration of the Applicant was that the “car allowance paid by Adecco Propriety Ltd was used for the provision of transport to carry out the role I was employed in”. The statutory declaration also noted the use of the car was business-related with minimal or no personal use.
[37] In H.W. Fewings v Kunbarllanjnja Community Government Council 3 (“Fewings”) a Full Bench of the Australian Industrial Relations Commission comprising Ross VP, Watson SDP and Bacon C considered the proper treatment of a motor vehicle allowance for calculation of salary under the equivalent provision of the repealed Act. Fewings is an authority for calculating a business-use component of a motor vehicle allowance to be excluded from earning. Only the private-use component, if any, is included as ‘earnings’.
[38] The Tribunal has before it the Applicant’s evidence that at least $15,000 of the allowance was, on the ATO basis, business use. At most, on this calculation, $1,000 is able to be included in earnings, if any amount were to be included at all. Adecco did not adduce any evidence to the contrary.
[39] On the basis of the uncontradicted evidence of the applicant, $15,000 is not earnings as defined in s.332. This amount would not, on the authority of Fewings, be included in the Applicant’s salary for the purposes of calculating whether the Applicant is a high income employee.
[40] While this concludes the matter in that the Applicant has established that his income is below the threshold for the purposes of s.394, for the sake of completeness I have also addressed the other matter raised. That is whether the Applicant’s notional hours of work are the equivalent of 38 or 40 hours per week.
Is there a notional 38 or 40 hours per week?
[41] Adecco argues that the relevant full-time hours should be 40 hours per week, not the 38 hours suggested by the Applicant.
[42] Adecco’s proposition that the proper pro-rata calculation should be based on 40 hours is not substantiated by its evidence or the contract of employment. The Applicant asserts a 38 hours basis, and the contract in clause 7 clearly supports that proposition. I find that the intended full-time equivalent hours of the position was 38 hours per week.
[43] The Applicant had provided evidence and submissions that the relevant full-time equivalent hours per week is properly 38 hours; that the car allowance was in the nature of recompense for use of his vehicle for Adecco purposes and therefore not “earnings”; and that in any case, the business related use of the vehicle was the predominant or sole use, and should be calculated at least $15,000 per annum at ATO rates. Adecco bears the burden of proving its assertion that the Applicant’s earnings exceeded the high income threshold. Adecco has not adduced sufficient evidence to the Tribunal to the contrary of any of the Applicant’s points, and has not therefore discharged its evidentiary burden.
Conclusion
[44] Accordingly, the Applicant’s full-time equivalent earnings at the time of his dismissal are to be calculated on the basis of 38/32nds of his salary. I add $1,000 of the car allowance, being the sum the Applicant’s own evidence allocates to private use of the motor vehicle.
[45] Accordingly, the Applicant’s earnings for the purposes of s.329 is a sum of $94,812.50 per annum. This is below the high income threshold.
[46] The Applicant is covered by the Act’s unfair dismissal protections.
[47] The jurisdictional objection of Adecco is dismissed. An order to this effect will issue simultaneously with the decision.
[48] The file shall now be subject to further programming to deal with the application for relief from unfair dismissal.
COMMISSIONER
Appearances:
Mr P Davidson on his own behalf.
Mr D Trenerry for the Adecco.
Hearing details:
2012.
Brisbane:
September 14.
1 Section 382
2 Neither party referred the Tribunal to a definition of “wages. The Macquarie Dictionary defines the term wage as “that which is paid for work or services, as by the day or week”.
3 Kunbarllanjnja Community Government Council v Fewings [Print no.Q0675] (7 May1998)
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