[2012] FWA 9266

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Neville Hudson
v
Coonawarra Jack Winery Pty Ltd T/A Coonawarra Jack Winery
(U2012/12668)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN

ADELAIDE, 30 OCTOBER 2012

Termination of employment - jurisdiction - high income threshold - award free status - contract of employment - small business.

[1] On 27 August 2012 Mr Hudson lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act), through which he asserted that the termination of his employment with Coonawarra Jack Winery Pty Ltd (Coonawarra Jack) was unfair.

[2] Coonawarra Jack lodged an objection to the application on the basis that Mr Hudson was not covered by the FW Act unfair dismissal legislation and that he was engaged under a contract for a specified task. The conciliation process did not occur.

[3] Section 396 requires that Fair Work Australia (FWA) decides four preliminary issues before considering the merits of the application. A hearing for this purpose was convened on 29 October 2012. At this hearing Mr Hudson represented himself by video from Naracoorte and Coonawarra Jack was represented by its Winery Manager, Mr Lees.

[4] I have considered the initial matters identified in s.396.

[5] The application was lodged within the statutory time limit.

[6] Sections 382 and 383 state:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following 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.

Note: High income threshold indexed to $123,300 from 1 July 2012

383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.”

[7] Mr Hudson commenced work at Coonawarra Jack on 17 July 2011. His employment concluded on 20 August 2012. Hence, irrespective of whether Coonawarra Jack was a small business employer, for the purposes of s.383, he had completed at least the minimum employment period referenced in s.382(a).

[8] Mr Hudson was engaged as a Senior Winemaker. He reported to the Winery Manager and to the Company Directors. All of the Winery production and laboratory staff reported to him. Having considered Mr Hudson’s duty statement, I have concluded that he held a senior management function.

[9] The Wine Industry Award 2010 covers employers in the wine industry and their employees in the classification specified in that Award 1. There is no classification which relates to Mr Hudson’s position, and I have concluded that he is not covered by a modern award.

[10] No enterprise agreement applies to Coonawarra Jack.

[11] Section 332 states:

“332 Earnings

(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.”

[12] The High Income Threshold from 1 July 2012 is $123,300.

[13] Regulation 3.05 deals with the assessment of the high income threshold. As Mr Hudson was not a piece worker the relevant components of that regulation are set out below:

“3.05 When a person is protected from unfair dismissal — high income threshold

(1) For subparagraph 382 (b) (iii) of the Act, this regulation 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.

Note Under section 382 of the Act, a person is protected from unfair dismissal if specified circumstances apply. One of the circumstances is that 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.

....

Benefits other than payment of money

(6) 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.”

[14] There is no dispute that Mr Hudson’s employment contract provides for an annual salary of $100,000. The contract provides for the provision of a motor vehicle in the following terms:

“11.1 The Employee will be provided with an appropriate motor vehicle which may be used for his reasonable private use. The Company shall bear all running costs for the motor vehicle provided. The Employee shall be responsible for the motor vehicle and be personally responsible for all traffic infringements imposed.

11.2 The vehicle may be allocated from the existing vehicle fleet at the Company’s discretion and shall be subject to replacement as and when deemed appropriate by the Company.

11.3 As the custodian of a vehicle, the Employee may be required to provide transport for other Company staff to and from their place of work.” 2

[15] Similarly there is no dispute that superannuation is addressed in the following terms:

“A Superannuation contribution of 12.6% will be paid by the Company into the superannuation fund nominated by the Employee. If the Employee does not provide their preferred superannuation fund provider the company will nominate a default provider on behalf of the Employee.”

[16] The parties both agreed that $3503 was the amount paid to Mr Hudson over the past year in excess of the minimum legislation obligations.

[17] Coonawarra Jack has assessed Mr Hudson’s income on the following basis: 3

[18] Mr Hudson’s position is that the commercial value attaching to the vehicle was negotiated at $10,000.

[19] The vehicle provided to Mr Hudson was a 2009 Holden Colorado. Neither Mr Hudson nor Mr Lees could recall the number of kilometres travelled by the vehicle over the course of the year prior to the termination of Mr Hudson’s employment, but both agreed that it would be in the order of 30,000 km. I note that this travel is consistent with the Coonawarra Jack estimate of fuel used. Mr Hudson’s position is that 60% of the vehicle utilisation was for work purposes. Mr Lee’s position is that 25% of the vehicle use was for work purposes. I have concluded that both these estimates are subjectively determined. Notwithstanding this, I have relied on Mr Lees estimate for the purposes of this calculation.

[20] The RAA fixed cost estimate for a comparable Holden Colorado is $241.73 per week. That costing takes into account the vehicle purchase costs, depreciation, interest registration and insurance, fuel and servicing. Running costs have been assessed by the RAA at $0.2511 per kilometre. If the vehicle travelled 30,000 km this would involve costs of $20,102.96 per year. I have discounted this amount by 25% to take into account Mr Lee’s estimate of work usage. This gives a total value of the provision of the vehicle to Mr Hudson of $15,077.22.

[21] Notwithstanding that, I consider that the RAA costing approach represents the more appropriate costing methodology, I have compared this costing with that provided by Mr Lees. Mr Lee’s cost estimates totalled $23,924. If that amount is reduced by 25% to take account of the estimated work usage, this gives a total value to Mr Hudson of $17,943.

[22] I have included in Mr Hudson salary, $3503 being the superannuation payment in excess of the minimum employer superannuation obligations.

[23] Mr Hudson was provided with an employer funded mobile telephone. His evidence was that he used this for work purposes given that he was generally available to be called in to work. Additionally, Mr Hudson agreed that he used the telephone for private purposes. Whilst the extent of this private use was not clear I have taken it to be 50% and have assessed the income component of the mobile telephone to be $600.

[24] Mr Hudson was reimbursed for relocation expenses. I have not included this amount in the calculation of his earnings on the basis that it was a reimbursement for agreed expenses.

[25] The total assessment of earnings applicable to Mr Hudson on this basis is $119,180.22 per annum. Even if I accepted the Coonawarra Jack vehicle costing assessment, Mr Hudson’s total remuneration value would be $122046 per annum. This is less than the current high income threshold such that Mr Hudson is protected from unfair dismissal.

[26] Mr Hudson can only be unfairly dismissed if in fact he was dismissed. Section 385 states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if FWA is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[27] Section 386 defines the meaning of dismissed.

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[28] Mr Hudson was engaged under a written contract. It was not a contract for a specified period of time. Mr Hudson was employed for a particular job but he was not employed for a specified task or season which then concluded giving rise to the termination of his employment. The mere specification of duties or tasks does not, of itself, exclude employees from unfair dismissal protection. None of the circumstances set out in s.386(2) apply in this situation.

[29] Mr Lee’s advice to me was that he terminated Mr Hudson’s employment.

[30] Accordingly, I have concluded that Mr Hudson was both dismissed and was also protected from unfair dismissal under the FW Act.

[31] Section 396(c) requires that I determine whether the Small Business Fair Dismissal Code has application. Section 388 states:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[32] Section 23 defines a small business employer in the following terms.

“23 Meaning of small business employer

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[33] If Coonawarra Jack was a small business employer at the time of the termination of Mr Hudson’s employment, s.388 requires that I initially consider whether that dismissal was consistent with that Code.

[34] Mr Lees has provided a list of 19 employees, including Mr Hudson, as at mid August 2012. Mr Hudson has expressed doubt about whether three or four of these 19 employees can be included on the basis that they were not casual employees engaged on a regular and systematic basis. Consequently, even if those three or four employees are excluded from the Coonawarra Jack list of employees, the employer had more than 15 employees at the time of the termination of Mr Hudson and hence the Small Business Fair Dismissal Code does not have application.

[35] Finally, in terms of s.396, there is no suggestion that the termination of Mr Hudson’s employment was a genuine redundancy.

Conclusion

[36] I have concluded that Mr Hudson was dismissed, and that he was protected from unfair dismissal. The Small Business Fair Dismissal Code does not have application in this situation. The Coonawarra Jack objections to Mr Hudson’s application are dismissed. An Order [PR530875] giving effect to this decision will be issued.

[37] As I indicated to the parties I will arrange for the parties to have access to a member of FWA to facilitate conciliation. This is an entirely voluntary process. The matter will be listed for hearing on 3 December 2012 in the event that it is not settled. Directions for this hearing will be issued shortly.

SENIOR DEPUTY PRESIDENT

Appearances:

N Hudson on his own behalf.

M Lees representing Coonawarra Jack Winery.

Hearing details:

2012.

Adelaide (and Videolink to Naracoorte)

October 29.

 1   Wine Industry Award 2010, clause 4

 2   Exhibit CJ1

 3   Extract from Coonawarra Jack Winery correspondence dated 28/9/12

Printed by authority of the Commonwealth Government Printer

<Price code C, PR530831>