[2020] FWC 5264

FAIR WORK COMMISSION

DECISION

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

Ms Catherine Chieng
v
Rio Tinto Aluminium Limited T/A Rio Tinto Alcan Gove
(U2020/9686)

COMMISSIONER SPENCER

BRISBANE, 21 OCTOBER 2020

Application for an unfair dismissal remedy – jurisdictional objection – high income threshold – application dismissed.

INTRODUCTION

[1] Ms Catherine Chieng (the Applicant) made an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that the dismissal of her employment by Rio Tinto Aluminium Limited T/A Rio Tinto Alcan Gove (the Respondent) was harsh, unjust or unreasonable.

[2] The Respondent raised the jurisdictional objection that the Applicant’s renumeration was in excess of the high-income threshold pursuant to s.332 and s.333 of the Act. The parties were provided with Directions, setting out the legislative criteria to be considered. Both parties provided submissions and evidence addressing the high-income threshold matter. A jurisdictional Hearing was conducted by telephone, given the geographical location of the Applicant, outside of Brisbane. This decision only concerns the jurisdictional issue, as to whether the Applicant’s “earnings” and “non-monetary benefits” were less than the high income threshold amount, pursuant to s.382(b)(iii) of the Act.

[3] Given that there were issues in dispute and contested facts, in relation to the components applicable to the high income threshold and the level of the high income threshold that was applicable, in accordance with the Full Bench decision of Keira Fletcher v Little Darlings Early Development Center, 1 and s.397 of the Act, a Hearing was required to be held.

[4] The Applicant was represented by Mr Ron Hope, Principal of Northern Legal. The Respondent was represented by Mr Pawel Zielinski, solicitor of Minter Ellison, instructed by Mr Ben Quinn of the Respondent. Due to the complexity of the jurisdictional objection and the merits of the substantive matter, both representatives were granted permission to appear, pursuant to s.596 (2)(a) and (c) of the Act.

[5] Whilst not all the submissions and evidence are referred to in this decision, all of such have been considered.

BACKGROUND

[6] The Applicant was employed as an environmental advisor for the Respondent’s Gove Operations site.

[7] The Applicant commenced employment with the Respondent on 15 June 2004. The Applicant was dismissed for alleged continued performance issues, by way of a dismissal letter, sent to the Applicant’s legal representative on 30 June 2020. The Applicant refuted the reasons for the dismissal.

[8] The termination letter stated:

“30 June 2020

Dear Cathy

Termination of Employment

On 19 November 2019, Rio Tinto Aluminium Limited (‘the Company’) met with you to formally notify you that the Company was considering terminating your employment due to continued performance issues since the commencement of your first Performance Improvement Plan (PIP) on 15 January 2019 and the implementation of a second PIP on 6 August 2019. Examples of your unsatisfactory performance issues are:

• Failure to complete assigned work within relevant timeframes. In particular:

- you did not complete Gove Partnership actions as required by the due dates which delayed the engagement of an external consultant to review the current system. A scope of work for the engagement was due on 31 August 2019 but was not submitted until 14 October 2019.

• Failure to challenge and intervene when health and safety systems or standards were not being met. In particular:

- you did not challenge when personnel were presenting to respirator fit testing with facial hair, which is against site standards; and

- you obtained external consultant data on hand arm vibration for Gove tooling but rejected that data without substantial reasoning, and presented ERA specific data to Gove personnel instead without appropriate justification.

• Failure to prioritise workflow in accordance with business needs resulting in improved time management. In particular:

- you did not prioritise business critical work that required considerable thought, such as reviewing and improving the Chemical Management System and implementing a fit testing program;

- you prioritised the Water Monitoring Work Instruction instead of the more critical Chemical Management system; and

- you did not prioritise populating statistical spreadsheets for end of year reporting, adapter for respirator fit testing or the finalisation of an ear plug trial that began in July 2019.

• Failure to be a visible and supportive Health and Safety member to the business when delivering HSE outcomes/standards. In particular, leader feedback received indicated that you put up road blocks and that your usual response is “it’s not my job” or “I’m too busy”.

• Failure to independently identify opportunities to improve efficiency of service delivery and internal processes by scope development, implementation of strategies to resolve and measurement of success.

You have been advised on multiple occasions since the commencement of your PIP that failure to meet the performance standards of your role could result in the termination of your employment with the Company.

As a result of the ongoing performance issues, you were invited to show cause as to why your employment should not be terminated. You submitted an email to me on 24 June 2020 for this purpose.

The Company has considered all of the responses you have provided but its initial view remains unchanged. The Company remains of the view that you cannot perform your role to the required standard. Consequently, the Company has decided to terminate your employment effective today 30 June 2020. (emphasis added)

The Company will not require you to work your notice period. You will receive payment in lieu of five weeks’ contractual notice as well as payment for any unused leave that you may be entitled to. These payments will be paid into your normal bank account. You will receive a payslip setting out those payments. Please see the attached policy for detail in relation to your relocation from Gove.

Free and confidential counselling will remain available to you and your immediate family members through the Company’s Employee Assistance Program (EAP) for a further three months from today. The contact number for the Company’s EAP BSS is (redacted).

If you have any questions regarding this letter, please contact me on (redacted).

Yours faithfully

Shona Girardi
Manager Health and Hygiene (East Coast)”

[9] There was disagreement between the parties in regard to the date that the Applicant’s dismissal took effect. The Applicant submitted that her dismissal took effect on 1 July 2020, which would result in the relevant high-income threshold being $153,600.

[10] The Respondent argued that the dismissal took effect immediately, on 30 June 2020. The Respondent relied upon the termination letter that was issued to the Applicant, which stated that the Company had decided to terminate the Applicant’s employment effective from 30 June 2020. For a dismissal effected on or before 30 June 2020 the high income threshold was $148,700.

[11] The Applicant’s legal representative noted, at the Hearing, that the Respondent emailed the Applicant’s termination letter to him at 7:43pm on the date of the letter, 30 June 2020. The Applicant’s representative submitted that this was sent to him rather than the Applicant, given her mental health at the time of dismissal. He stated that given receipt of the email after regular business hours, it was communicated to the Applicant on 1 July 2020 and therefore the high income threshold amount applicable, at that date was $153,600. The Respondent did not challenge at the Hearing, the circumstances as submitted, of the notification of the Applicant’s letter of termination to her solicitor.

RELEVANT LEGISLATION

[12] Pursuant to s.394 of the Act:

“394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.

Note 1: Division 4 sets out when the FWC may order a remedy for unfair dismissal.

Note 2: For application fees, see section 395.

Note 3: Part 6 1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

(3) The FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.”

[13] Section 382 of the Act relevantly sets out when a person is protected from unfair dismissal:

“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.”

[14] As set out, the high-income threshold is currently $153,600 per year (having increased to this level on 1 July 2020). The high-income threshold for the period 1 July 2019 to 30 June 2020 was $148,700.

[15] Section 333 of the Act defines the high-income threshold:

“High income threshold

(1) Subject to this section, the high income threshold is the amount prescribed by, or worked out in the manner prescribed by, the regulations.

(2) A regulation made for the purposes of subsection (1) has no effect to the extent that it would have the effect of reducing the amount of the high income threshold.

(3) If:

(a) in prescribing a manner in which the high income threshold is worked out, regulations made for the purposes of subsection (1) specify a particular matter or state of affairs; and

(b) as a result of a change in the matter or state of affairs, the amount of the high income threshold worked out in that manner would, but for this subsection, be less than it was on the last occasion on which this subsection did not apply;

the high income threshold is the amount that it would be if the change had not occurred.”

[16] Section 332 of the Act sets out what are considered earnings:

“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

(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;

(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 291-175 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.”

[17] Regulation 3.05 of the Fair Work Regulations 2009 (Cth) (FW Regs) has been made for the purposes of determining whether an employee has earnings that exceed the threshold referred to in s.382(b)(iii) of the Act. That provision of the Regulation states as follows:

“FAIR WORK REGULATIONS 2009 - REG 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.

…

(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

(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) the FWC can estimate a real or notional money value of the benefit; the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”

SUMMARY OF APPLICANT’S MATERIAL

[18] The Applicant was employed on a base salary of $112,810. The Applicant submitted that she was not covered by an Enterprise Agreement or Modern Award. The Respondent agreed with this. The Applicant considered that the applicable high income threshold rate was $153,600, as her termination of employment was communicated to her on 1 July 2020. It was submitted that the dismissal letter was sent to her legal representative only, at 7:43pm on 30 June 2020 out of concern for the Applicant’s mental health. The Applicant’s representative stated that he did not convey this to the Applicant until the next day, being 1 July 2020. Therefore, it was argued that this was the date of dismissal and the high income threshold was $153,600.

Remote area travel assistance (RATA)

[19] The Applicant was eligible for a remote area travel assistance (RATA) of $22,720 per annum. All of the Respondent’s Gove employees are entitled to the RATA. The Applicant submitted that the RATA allowance was analogous to a travel allowance. In making this assertion the Applicant referenced the Respondent’s internal policy document, that states:

"RTG ("Rio Tinto Gove") appreciates the increased cost of travel in and out of Gove, given the remote location. Rata provides support to our Gove employees and their families to help assist in travel away from Gove" 2

[20] The Applicant submitted that the RATA is paid to Gove employees in contemplation of offsetting employee's expenses for travel costs, incurred from their place of employment. Those costs are substantial given the remoteness of Gove Operations.

[21] The Applicant relied on the 2012 decision of Davidson v Adecco Australia Pty Ltd, 3 where Commissioner Booth found that a $16,000 car allowance was not considered earnings, pursuant to s.332 of the Act. The Applicant submitted that the RATA should be considered comparable to a vehicle allowance and treated as such, as per the Adecco decision, rather than as earnings.

[22] The Applicant further submitted that a plain and ordinary reading of s.332(1) does not support the interpretation of RATA as being considered earnings for the purposes of s.332 as it does not conform with any of the s.332(1) subsections, on a plain reading of the provision.

Remote area allowance

[23] The Applicant was also in receipt of a Gove remote area allowance of $28,202.50 per annum. The Applicant did not contest that this this allowance formed part of the Applicant’s earnings for the purposes of s.332 of the Act.

Value of Housing and Power

[24] During her employment the Applicant received housing and power that was provided by the Respondent. The Applicant submitted that the value of the housing and power should not be taken into consideration when calculating her level of income at the time of her termination. The Applicant submitted that given there was no agreed monetary value (of this non-monetary benefit) between the Applicant and Respondent, on that basis, it could not be considered ‘earnings’ for the purposes of s.332(1)(c) of the Act.

[25] Accordingly, the Applicant considered that the total value of the Applicant’s ‘earnings’ for the purposes of s.332 was less than the high income threshold; as it was $141,012.50, ($112,810 base salary and $28,202.50 Gove remote area allowance).

SUMMARY OF RESPONDENT’S MATERIAL

[26] The Respondent submitted that in calculating the Applicant’s earnings for the purposes of s.332 of the Act, the Commission should take into account the Applicant’s base salary of $112,810, the remote area allowance of $28,202.50, the $22,720 RATA and the $29,484 attributable to accommodation benefits provided to Ms Chieng and her family.

[27] The Respondent submitted that the Applicant’s dismissal took effect (as per the dismissal letter) on 30 June 2020, and on that basis the relevant high-income threshold amount is $148,700. The Respondent referred to the fact that the Commission used ‘calendar days’ and not business hours (as referred to by the Applicant’s solicitor in assessing a day), when calculating a ‘day’ for the purposes of determining a lodgement date. The Respondent further submitted that it is immaterial which high-income threshold figure is adopted, as the Applicant’s ‘earnings’ exceeded both high income threshold figures, based on the Respondent’s calculation.

[28] The Respondent noted that the Applicant admitted that her dismissal was notified to her on 30 June 2020 as she had recorded such, at question 1.3 of her unfair dismissal application. The Respondent further noted that she had stated that the dismissal did not take effect until the following day, in accordance with question 1.4 of her unfair dismissal application. They submitted that this assertion made on her behalf was unclear, her representative did explain the basis of such, at the Hearing.

[29] The Respondent agreed with the Applicant’s submission that her employment was not subject to a Modern Award or Enterprise Agreement.

[30] Ms Larna Comenos, the Principal Advisor – Employee Relations for the Respondent provided a witness statement which outlined the contested issues in relation to the Applicant’s earnings.

The Applicant’s base salary and Gove remote area allowance

[31] The Applicant’s letter of offer was accompanied by a schedule, setting out her renumeration and benefits, providing that as of 24 January 2014, she was entitled to a base salary of $98,308; and a remote area allowance of $24,577, which is described in the letter of offer as:

“While at Gove, you will receive an allowance the Company has declared for the Gove area, which equates to 25% of your base salary. Your allowance will be at the rate of $24,577 per annum, paid monthly.”

[32] The Respondent submitted that as a result of a remuneration review in 2020, those sums were, as at 1 March 2020, $112,810 and $28,202.50 respectively. The Respondent recognised that these sums comprised the Applicant’s earnings at the time of her dismissal and were not contested by the Applicant.

The remote area travel allowance (RATA)

[33] The Respondent submitted that the remote area travel allowance of $22,720 per annum should be included in the calculation of the Applicant’s earnings for the purposes of the s.332 of the Act.

[34] In terms of the travel allowance, Ms Comenos stated:

“12. Now shown to me and marked LC-8 is a true and correct copy of the Remote Area Travel Assistance (RATA) Guidelines that applied to Ms Chieng’s employment at the time of her dismissal.

13. The RATA Guidelines deal with the quantum of travel allowances payable to RTA employees (save for those who have less than 12 months service, are FIFO employees, trainees, casuals and part timers).

14. In summary, the RATA Guidelines are administered as follows:

A. RTA employees can request the payment of the allowance in advance, which they can then use to pay for the cost of travel out of Gove. They can request the allowance in advance of travel. Within 30 days of travel, the employee must submit a declaration in respect of the costs incurred for the travel. If the advance was in excess of the costs that were incurred, the excess amounts to normal wages, from which PAYG withholding is subsequently deducted. Otherwise, RTA pays FBT on the allowance.

B. RTA employees can request the payment as a reimbursement of funds that they incur once they complete their travel. FBT also applies to such a payment.

C. If RTA employees choose not to travel in a year, they can elect to have the whole of their RATA entitlement paid out, in which case the whole sum is treated as wages, and PAYG withholding is applied to it.

15. At the time of Ms Chieng’s dismissal, the RATA Guidelines provided an entitlement of $5,680 for eligible employees and each dependant child and dependant spouse. The RATA Guidelines encourage the taking of the RATA entitlement each year, although they do allow for a limited accrual of the entitlement from year to year. Ms Chieng’s final payslip showed that sums of:

a) $6,551;

b) $2,146;

c) $7,884; and

d) $3,595.

Were paid out as RATA entitlements for herself, her husband, and her two children.” 4

[35] In summary terms, the Respondent stated that in accordance with the Full Bench decision of Sam Technology Engineers Pty Ltd v Mr Andrew Bernadou, 5 (Sam Technology), there could be no dispute as to whether the RATA could be captured within the definition of earnings for the purposes of s.332 of the Act. This distinction is dealt with further in the decision.

[36] The Respondent submitted that the RATA must be considered earnings for the purposes of s.332 of the Act and taken into account in determining the Applicant’s earnings, as it did not fall within any of the carve out clauses, set out within s.332(2) of the Act. That is, the RATA could not be considered a reimbursement or an amount of which cannot be determined in advance. The Respondent argued that the RATA was not a speculative entitlement, and that it should be considered earnings for the purposes of s.332.

Accommodation provided to the Applicant and her dependants

[37] The Respondent submitted that the housing and power provided to the Applicant should be prescribed a value of $29,484 and that this figure should be included into the calculation of the Applicant’s earnings for the purposes of s.332 of the Act. The Respondent acknowledged that there was no agreed value of this accommodation benefit, between the Respondent and Applicant. However, the Respondent argued that this agreed value could be implied in the circumstances and should form part of the Applicant’s earnings for the purposes of s.332 of the Act.

[38] The Respondent acknowledged that the Applicant was charged $13 a month for the accommodation that was provided to her and her family. The Respondent noted that this accommodation was a four bedroom house in the Nuluhmby area. The Respondent submitted that the accommodation and power provided to the Applicant did not have an explicit agreed value in accordance with s.332(1)(c) of the Act. However, the Respondent argued that the $13 charged to the Applicant, could only be considered a notional amount, and should not be considered as objectively reasonable in the circumstances.

[39] The Respondent submitted that in accordance with s.332(1)(c), an agreed value of the accommodation benefit could be implied by using the market value of the accommodation provided to the Applicant and reducing this amount by $13 per month. The Respondent argued that this figure should amount to a yearly figure of $29,484.

CONSIDERATION

Award or Enterprise Agreement coverage

[40] In order to consider the jurisdictional objection, it must first be determined if the Applicant’s employment was covered by a Modern Award or subject to an Enterprise Agreement. It is determined and both parties confirmed in their submissions that the Applicant’s employment was not subject to a Modern Award or Enterprise Agreement, rather, the Applicant was employed under a common law contract.

[41] In these circumstances, in order to be a person protected from unfair dismissal, for the purposes of s.382 of the Act, the Applicant must therefore earn less than the high income threshold amount, as per s.382(b)(iii).

Date termination took effect

[42] As a preliminary matter it must be determined when the Applicant’s dismissal took effect. The parties were not in agreement in relation to the date that the dismissal took effect. The Applicant argued that the dismissal took effect on 1 July 2020, however the Respondent argued that the dismissal took effect on 30 June 2020, as per the effective date expressed in the dismissal letter. The date of dismissal has a real effect on the high income threshold amount that should be applied in this assessment. If it is found that 1 July 2020 is relevant date that the dismissal took effect, then the correct high income threshold amount is $153,600, whereas if the date of dismissal is found to be 30 June 2020, then the high income threshold amount is $148,700.

[43] The relevant test to consider in assessing the date of dismissal, is that the dismissal does not take effect unless and until it is communicated, to the employee who is being dismissed. 6 Further, where the communication is in writing only, the communication must be received by the employee in order for the termination to be effective.7

[44] In this case the Respondent argued that the Applicant was notified of her dismissal by way of a dismissal letter, dated 30 June 2020. The dismissal letter (set out in [6]) stated:

“Consequently, the Company has decided to terminate your employment effective today 30 June 2020.”

[45] The Applicant submitted that the dismissal took effect the day after she received this dismissal letter, on 1 July 2020. At Hearing, the Applicant’s solicitor stated that the Applicant’s dismissal letter was emailed directly to himself, and not the Applicant, at 7:43pm on 30 June 2020. The Applicant’s solicitor stated, given this was after business hours, that he then notified the Applicant of the dismissal on 1 July 2020.

[46] The Respondent maintained that the Applicant was notified of her dismissal on 30 June 2020, citing the letter of termination and the Form F2 where the Applicant recorded that she was notified of her dismissal at 7:43pm on 30 June 2020. The Respondent further asserted that it is immaterial which date is determined, as they submitted that the Applicant earned above either of the relevant high income threshold amounts.

[47] In consideration of the notification of dismissal, the test set out in Ayub v NSW Trains, 8 sets out that the dismissal, when made in writing, does not take effect until such a time as it is received by the Applicant. The Applicant (in circumstances where the dismissal letter was served to her legal representative) in this case, was reasonably not in receipt of the dismissal notification until 1 July 2020. On this basis, it can be deemed that the date that the dismissal took effect was 1 July 2020. As a result of this, arguably the high income threshold amount of $153,600 is the relevant amount that should applied in the determination of the Applicant’s earnings.

High income threshold

[48] The Applicant was in receipt of the following renumeration at the time of her dismissal:

• Base salary of $112,810;

• Remote area allowance of $28,202.50;

• Remote area travel allowance (RATA) of $22,720;

• Accommodation benefits of $29,484; and

• Medibank private health insurance valued at $1,723.20.

[49] Given that the parties confirmed that the Applicant’s employment was not covered by a Modern Award or an Enterprise Agreement, it is necessary to consider whether the Applicant’s income exceeded the high-income threshold.

[50] Section 382(b)(iii) of the Act provides that (absent a relevant Award covering the person or an enterprise agreement applying to the employment) 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 accordance with the Regulation, is less than the high income threshold.

[51] The high-income threshold amount was $153,600 at the time of the Applicant’s dismissal on 1 July 2020. The Applicant’s base salary of $112,810 was agreed between the parties. The contention arose in relation to the inclusion of the RATA and whether the employer provided housing and power, should be considered (as non-monetary income) for the purposes of s.382(b)(iii) of the Act.

[52] It is noted that the Respondent, having raised the jurisdictional objection, bears the onus to demonstrate that at the time of the Applicant’s dismissal, she was in receipt of full time equivalent annual earnings, as defined, above the high income threshold.

Applicants earnings at the time of her dismissal

[53] In relation to determining when the Applicant’s earning should be calculated, the Full Bench noted in Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia 9:

“… 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)”.

[54] At the time that the Applicant was dismissed, her base salary was $112,810. The Respondent submitted that this figure was a result of a remuneration review in 2020 and calculated as of 1 March 2020. Both parties acknowledged this figure to be correct.

Gove remote area allowance

[55] The Applicant’s letter of offer was accompanied by a schedule, setting out her renumeration and benefits, providing that as of 24 January 2014, she was entitled to a base salary of $98,308; and a remote area allowance of $24,577, which is described in the letter of offer as:

[56] The Respondent submitted that as a result of a remuneration review in 2020, those sums were, as at 1 March 2020, $112,810 and $28,202.50 respectively. The Respondent recognised that these sums comprised the Applicant’s earnings at the time of her dismissal and were not contested by the Applicant.

[57] The parties were not in dispute in relation to the Gove remote area allowance being included in the Applicant’s earnings for the purposes of s.382 of the Act, and it is considered that this amount should be included in the calculation of the Applicant’s earnings. The resulting figure (for the aggregate of these two amounts) of $141,012.5 comprising amounts attributable to the Applicant’s earnings, at the time of her dismissal. These were not in dispute between the parties.

The remote area travel allowance (RATA)

[58] The Respondent submitted that the RATA amount of $22,720 should be taken into account for the purposes of calculating the Applicant’s annual rate of earning for the purposes of s.332 of the Act.

[59] The Respondent noted that the Applicant contested that the RATA sum could be taken into account for the purpose of ascertaining her annual rate of earnings, and the Applicant had relied on the case of Mr Paul Davidson v Adecco Australia Pty Ltd T/A Adecco (Adecco) 10 in support of this assertion.

[60] The Respondent stated that Adecco was concisely summarised in Pasznicki v Expro Group Australia Pty Ltd (Pasznicki), 11 which stated:

“[34] In Davidson v Adecco Australia Pty Ltd T/A Adecco …, Commissioner Booth found in the circumstances of that case that the travel allowance paid to the employee was not wages because the allowance was paid in contemplation of offsetting the employee’s expenses in providing, running and maintaining his own vehicle for the purposes of performing his duties. According to Commissioner Booth, the allowance recompensed the employee for business related costs and therefore could not be categorised as a payment for his work or services.

[35] In the Davidson Case the employee’s contract provided that a travel allowance of $16,000 must be used in accordance with the company policy. The contract went on to provide that, pursuant to the relevant company policy, the employee was not entitled to claim reimbursements for any work related travel. The employee in question was employed as a sales agent. He was required to travel between 20,000 – 30,000 km per year over a large geographical area on company business. At the hearing he tendered at statutory declaration claiming all the travel he undertook in his vehicle was business related and he undertook little or no personal travel. There was also evidence tendered that the entire travel allowance was spent on business related travel.” (emphasis added)

[61] The Respondent submitted that it was on that basis, that the entire travel allowance was spent on business related travel, that Booth C found that the travel allowance in Adecco did not fall within the categories of payments referred to in s 332(1)(a) and (b) of the Act.

[62] The Respondent further noted that the case of Adecco, was distinguished in Pasznicki, on the basis that the evidence in that case demonstrated that the relevant travel allowance, was payable even though the travel was far more incidental to the role of the employee in that case; and what work travel was undertaken, was the subject of separate reimbursements. In those circumstances, and where the employer in Pasznicki had no unilateral right to withdraw the travel allowance, Binet DP was satisfied that the sum was part of the 'wages' paid to the employee, and that it was not a reimbursement.

[63] The Respondent submitted that Binet DP's finding on the reimbursement point was uncontroversial, in circumstances where the Explanatory Memorandum to the Fair Work Act provided that, for the purposes of s.332 of the Act:

“Other payments that are excluded from the definition of earnings are reimbursements for expenses incurred on behalf of the employer and statutory superannuation contributions.” 12 (emphasis added)

[64] The Respondent argued that the legislative guidance for s.332 of the Act does not disclose an intent to apply a broad meaning to the term 'reimbursement' so as to include sums paid to compensate employees for any and all expenses that they might be incurred, to enable them to provide their labour to an employer. The Respondent offered, by way of example, that although an allowance payable to compensate an employee for the costs of fuel and other expenses, incurred in the use of their vehicle while driving between work sites, may be a reimbursement for the purposes of s 332, 13 an allowance payable to compensate an employee for the costs of travelling to their usual work site, will not. This was set out as the latter is not an expense, incurred on behalf of the employer. The Respondent submitted that this was a view that was endorsed by Bisset C in Monteiro v Valco Group Australia Pty Ltd,14 where, by reference to the Explanatory Memorandum, the Commissioner held that the term 'reimbursement' in s.332 does 'not cover any expense incurred by an employee in their everyday life'.15

[65] Further, the Respondent submitted that the Full Bench of the Commission held in Sam Technology Engineers Pty Ltd v Mr Andrew Bernadou, 16 (Sam Technology) that:

A. a vehicle allowance (although the case dealt with a vehicle allowance, the principles set out in that case are equally applicable to travel allowances more generally) will not typically consist of an employee's 'wages' 'save for circumstances where the car allowance is, in reality, paid to the employee as a means of providing the employee with additional income and there is no requirement or expectation that the employee will have to use their car for work purposes'; 17

B. 'reimbursement;' within the context of s.332(2) refers to a repayment of a sum that is incurred, or at least that is expected to be actually incurred, rather than the prepayment of some more general sum; 18

C. importantly:

“the definition of 'earnings' in s.332 of the Act is non-exhaustive and as such, ''earnings'' should be given its ordinary meaning (subject, of course, to the payments and benefits referred to in s.332(1) being included in the meaning of ''earnings'' and the payment and benefits referred to in s.332(2) being excluded from the meaning of ''earnings'').”

D. where a vehicle allowance was paid in circumstances where it was expected that the employee would use their car for work purposes, then it was necessary to consider the private benefit that the person obtained by way of that allowance, with that sum not counting toward the employee's earnings.

[66] The Respondent argued that it is clear from the authorities referred to above, that, where an allowance or other entitlement may be withdrawn at any time, it is not one that is capable of falling within the meaning of earnings under s 332(1) because, as a result of such a discretion, the payment cannot be determined in advance (having regard to s 332(2)(a) of the Act).

[67] The Respondent submitted that, the Applicant’s claim that the RATA effectively amounts to a reimbursement must necessarily fail. It was argued that the fact that the Applicant was provided with an additional sum of money, to assist her to cover the costs of travel to and from Gove is entirely unrelated to any expenses that she might incur on behalf of the Respondent. The Respondent further argued that this is particularly so, when reference is had to the fact that, in the Applicant’s case, the vast bulk of her RATA entitlements, was attributable to her three dependants.

[68] The Respondent argued that the RATA was arguably not a term of the Applicant’s contract of employment. In that regard, the Applicant’s contract of employment provided that:

“In recognition that Gove is in a remote area, you will be eligible for Remote Area Travel Assistance in accordance with the Gove Remote Area Travel Assistances (RATA) Guidelines.”

[69] The Applicant’s contract of employment also provided:

“In addition to the terms and conditions outlined in this contract, you are required to comply with all reasonable directions by the Company and policies, procedures and standards that apply to your employment. Such policies include (but are not limited to) the Company’s Code of Conduct and The Way We Work.

You must familiarise yourself with the Company’s policies, procedures and standards. The Company retains the discretion to vary the policies, procedures and standards.

Failure to comply with Company policies, procedures and standards could result in disciplinary action, which may include termination of your employment.

The benefits provided to you under our policies are discretionary in nature and do not form part of your contract of employment. (emphasis added)

No duty of trust and confidence imposing obligations on the Company can be implied into this contract of employment.

Details of our policies, procedures and standards are available from Human Resources or on the Company intranet.”

[70] The Respondent submitted that it is arguable that the reference to the RATA 'guideline' is intended to be separate and distinct from the 'policies, procedures and standards' referred to in the above carve out clause. However, the Respondent stated that whether the RATA entitlement arises out of a contractual entitlement, is not determinative of it being capable of being determined in advance.

[71] The Respondent further submitted that an important overlay in this matter, was the existence of the Rio Tinto Gove Enterprise Bargaining Agreement 2017 (2017 EA). Although the Applicant was not covered by the 2017 Agreement (as she was a staff employee who did not fall within any of the 2017 EA's classifications). The terms of the 2017 Agreement nevertheless have the effect that the Respondent did not have any discretion to withdraw the entitlements provided under it so far as the Applicant’s employment was concerned. The Respondent stated that this is because the Respondent’s entitlement to make any amendment to the RATA policy, including to the terms of who the RATA policy provided was eligible for RATA entitlements, was restricted by clause 37 of the EA, which was in the following terms:

“37) Remote Area Travel Assistance (RATA)

RATA will be granted to assist Employees and their families in spending time in another locality and maintain family contacts.

The conditions applicable to receiving RATA are set out in the RTA- Remote Area Travel Assistance (Gave) policy.

The amount of RATA shall be adjusted to remain 13% above any movement in the Benchmark as agreed between RTA and the Senior Site Delegates. The annual review of the Benchmark is to occur in January each year and any adjustment will occur following this review. Any other proposed changes to the RATA policy will be by agreement between RTA and the Senior Site Delegates.

Temporary Employees engaged on a fixed term for 12 months or less, Part Time, Casual, Job Sharers, and FIFO Employees are not eligible for RATA.”

[72] The Respondent argued, that in other words, so long as the Agreement was in force (and its nominal expiry date of 15 November 2020 was well after the Applicant’s entitlement to the RATA for 2020 will have crystallised on 4 September), the entitlements that the Applicant qualified for under the RATA were capable of being determined in advance. The fact that, at some point, the 2017 EA might have been replaced, or clause 37 removed, does not detract from the predictability of the RATA entitlement for the purposes of s 332(2). That section cannot require that a sum be capable of a permanent determination in advance, given that the parties to a contract, always have the right to vary it, including by agreeing to less favourable terms. The RATA cannot be considered as a reimbursement.

[73] In addition, the Respondent submitted that it was not in dispute that the RATA entitlement crystallised on the Applicant’s anniversary of a year's service. However, that fact alone does not mean that the sum was not capable of being determined in advance, or that it should fall outside of the non-exclusive definition of earnings in s.332.

[74] I accept the Respondents submission, that the RATA does not fall outside of the non-exclusive definition of earnings in s.332 of the Act. I am satisfied, on the basis of the reasoning set out, that this figure should be included in the calculation of the Applicant’s earnings for the purposes of s.332.

Employer supplied housing and power

[75] The Applicant was provided with housing and power by the Respondent throughout the course of her employment. Employees of the Respondent who were not originally from East Arnhem Land were provided with accommodation by the Respondent in the town of Nhulunbuy. At the time of the Applicant’s dismissal, she was being housed in a four bedroom home, together with her husband and two children. The cost of all electricity and gas were also paid for by the Respondent.

[76] The Respondent stated that the accommodation provided to the Respondent’s employees were also supported by residential tenancy agreements that set a nominal amount of rent that was payable by employees for the accommodation. In the Applicant’s case, she paid $13 rent, per month, for the four bedroom house.

[77] Section 332 (1)(c) of the Act provides that ‘earnings’ include the ‘agreed monetary value of nonmonetary benefits’. The Applicant submitted that during her employment with the Respondent, there was never any agreement as to the value of non-monetary benefits including the value of housing and power. The Applicant submitted that it would be unfair for the Commission to exercise its discretion to include any value for accommodation or the supply of power given the remoteness of the place of employment, and there was never any agreed value attributed to such.

Was there an agreement to provide a benefit? (reg 3.05(6)(a))

[78] The Applicant’s contract of employment contained the following clause in relation to the provision of accommodation:

“Accommodation The Company provides accommodation and an accommodation benefit for permanent employees residing in Gove in accordance with the Gove Accommodation Policy.”

[79] The Respondent asserted that that in having regard to ‘what a reasonable person would understand by the language’ of the Applicant’s employment contract, in light of the circumstances, it is clear that the provision of accommodation to the Applicant was a contractual term of the contract; and that the Gove Accommodation Policy merely set the parameters for the type of accommodation that would be provided to the Applicant and her family, but was not the source of the right to accommodation.

[80] The Respondent further argued that the following factual matrix was known to the Applicant at the time her contract of employment was made:

“The Applicant’s contract expressly provided that the role which was offered was 'based at Gove' and that she would 'residing in the town of Nhulunbuy on a full-time ongoing basis'.

The contract also provided that offer was 'for a role which [was] to enable [the Applicant] to remain at Gove'.

At the time, the vast majority of accommodation at Nhulunbuy was owned by RTA's related entities, and there only a very limited private rental market. At the time the contract was signed, the Applicant was living in accommodation provided by the Respondent.

Around the time the Applicant’s contract of employment was made, the Respondent’s accommodation policy for Gove set out the nominal rent to be charged under residential tenancy agreements that would be made with its employees, the size of accommodation that employees would qualify for (depending on the size of their family), and the circumstances in which employees might be put up in larger or smaller accommodation than they might have at a particular moment in time. Other than implicitly in the event of a breach of an employee's residential tenancy or termination of employment, the policy did not contemplate any circumstances in which an employee of RTA would not be provided with accommodation during the course of their work.” 19

[81] The Respondent submitted that in those circumstances, a reasonable person would not have understood that the reference to accommodation being provided to the Applicant was not intended to have contractual force. This is particularly so, given that a unilateral withdrawal of that accommodation would have likely made the terms of the employment uneconomical for the Applicant.

Has a reasonable monetary value not been agreed between Rio Tinto and Ms Chieng (reg 3.05(6)(b) and s 332(3))?

[82] The Respondent noted that the Applicant’s submissions conceded that 'there was never any agreement as to the value of non-monetary benefits including the value of housing and power'. The sum of rent chargeable under the accommodation policy was $13 per month. Having regard to the significant cost of rental properties on the private market in Nhulunbuy, the Respondent submitted that the Commission should infer that the rental sum was a nominal one that did not represent a reasonable monetary value of the property.

[83] I accept the Respondent submission that the $13 rent paid by the Applicant, represented a nominal amount and did not accurately represent the monetary value of the property.

Should the accommodation benefit be taken into account? (reg 3.05(6)(c))

[84] The Respondent referred to the decision of Robinson v A J Gandel (Gandel), 20 where Wilson C distinguished between benefits that are purely incidental to employment and those that are not. He also suggested that, where an employee's benefit substantially also benefits an employer, then that may be a factor that might militate against that benefit being taken into consideration for the purposes of regulation 3.05(6).

[85] The Respondent submitted that, in this case, even if it is accepted that the benefit that the Respondent obtained by having the Applicant living close by, is a consideration that weighs in favour of any accommodation benefit, being incidental to her work, the benefit that the Applicant obtained from the arrangement is significantly greater. This is so when regard is had to the fact that it allowed her dependants and spouse to live in that accommodation, essentially rent free, and where it enabled her to avoid the disruption and family disconnection which a FIFO arrangement would otherwise have caused.

[86] The Respondent further argued that it is also appropriate that the benefit be taken into account, in circumstances where the Applicant and her family did not bear the burden of paying utilities associated with the property provided to them by the Respondent.

Can the FWC estimate a notional money value for the benefit?

[87] The Respondent submitted that the true benefit that the Applicant and her family received, it is submitted, must be considered against the cost of comparative properties on the private market. That task is significantly easier than was once the case, given that 250 previous Rio Tinto properties have been transferred to Developing East Arnhem Land (DEAL) in light of Rio Tinto's lower footprint on Gove, given the progressive demolition of its aluminium refinery. It was set out that the sums charged by DEAL for rent appear conservative when compared to those that are rented through the purely private market. That may be related to the beneficial purpose for which DEAL was established, being to spur economic growth in East Arnhem land. In any event, however, even if the lowest figure of $580 (which is charged by DEAL for a four bedroom house) is used, then the notional benefit that the Applicant and her family received is $567 per week, which translates to a benefit of $29,484 per year. It was raised that even if only the benefit that the Applicant received through the accommodation of her family is taken into account, that sum ($22,113, as calculated by dividing the earlier sum by four and multiplying by three to represent the Applicant’s three dependants) easily causes the Applicant’s annual rate of earnings to exceed the high income threshold.

[88] I do not consider that the $13 rent paid by the Applicant constitutes a reasonable monetary value that has been agreed between the parties in relation to the provision of housing and power to the Applicant and her dependants. The Respondent’s submission that it would be appropriate for the Commission to estimate a notional monetary value for the benefit for the accommodation and power is not accepted. On this basis there was no agreed value of these non-monetary benefits and such benefit should not be included in the calculation of the Applicant’s earnings for the purposes of s.332 of the Act.

Private health insurance

[89] The Applicant was provided with Medibank private health insurance valued at $1,723.20 per annum. Neither party made submissions addressing the inclusion of the health insurances as ‘earnings’ for the purposes of s.332, however it is appropriate to consider this amount, in line with the relevant case law and legislation.

[90] The Full Bench in Savannah Nickel Mines Pty Ltd v Crowley (Savannah), 21 found that the cost of a premium for a life insurance policy, which was paid for by the employer, was found to be an amount applied or dealt with on the employee’s behalf and subsequently included in calculating the employee’s income.

[91] The private health insurance paid for by the Respondent, to the benefit of the Applicant, is a comparable benefit in nature to life insurance policy, insofar as it is an insurance policy made for the Applicant’s benefit. In accordance with s.332(1)(b) the private health insurance policy, valued at $1,723.20 per annum, would be considered an amount applied or dealt with in any way on the employee’s behalf and therefore where paid for by the employer, should be considered earnings. On that basis the amount of $1,723.20 should be included in the calculation of the Applicant’s earnings for the purposes of s.332. The inclusion of this figure is determinative of the matter.

Superannuation

[92] Compulsory superannuation contributions are not taken to be included in the calculation of an employee’s earnings for the purposes of s.332 of the Act. 22 The Respondent did not make submissions in regard to their compulsory contributions to the Applicant’s superannuation fund and it can be taken that these contributions were not considered earnings, in accordance with s.332(2)(c) of the Act.

CONCLUSION

[93] For the reasons set out above, the following calculations are applicable to the high income threshold; the Applicant’s base salary of $112,810, the Gove remote area allowance of $28,202.50, the RATA of $22, 720 (and the private health insurance of $1,723.20) are considered earnings for the purposes of s.332 of the Act, and subsequently equate to a total of $165,455.70 at the time of the Applicant’s dismissal. This amount is above either of the high income threshold amounts relevant to the dismissal dates; as set out earlier.

[94] A Modern Award or Enterprise Agreement did not apply to the Applicant in relation to her employment, and as detailed her earnings exceeded both of the relevant high-income threshold amounts, (whether the dismissal date is taken as at 30 June 2020 or 1 July 2020). The Applicant, therefore, in accordance with the legislation, cannot be determined to be a person protected from unfair dismissal as per s.382 of the Act.

[95] Therefore, for the purposes of section 382(b)(iii) of the Act, the sum of the Applicant’s annual earnings and such other amounts worked out in relation to the nature of her work and in accordance with the Regulation, is more than the high income threshold. Accordingly, as per section 382(b)(iii) of the Act, the Commission does not have jurisdiction to hear the unfair dismissal application. The application made pursuant to section 394, is therefore dismissed.

[96] I Order accordingly.

al of the Fair Work Commission with member’s signature.