Dec 313/97 M Print N9963

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996

s.170CE application for relief

A. Condon

and

G James Extrusion Company

(U No. 30255 of 1997)

DEPUTY PRESIDENT WATSON MELBOURNE 4 APRIL 1997

Termination of employment - jurisdiction

DECISION

This is an application pursuant to s.170CE of the Workplace Relations Act 1996 (The Act) by A Condon (the applicant) in respect to the termination of his employment by G James Extrusion Company (the respondent). In its notice of appearance (Form R19) the respondent objected to the application on jurisdictional grounds, identified in a 14 February 1997 letter as being that the applicant was not engaged under an award and received remuneration in excess of $64,000 per annum prior to his termination and was therefore excluded by virtue of Regulation 30BB, a regulation arising out of s.170CC of the Act.

Accordingly the matter was listed for the purpose of deciding the jurisdictional issued on 4 March 1997. The hearing was conducted by way of a telephone linkup, with the Commission and the applicant in Melbourne and the respondent in Brisbane. At the completion of the telephone hearing, arrangements were made for additional written submissions by the parties.

The applicant was represented by Mr A McDonald and Mr A Winnett. The respondent was represented by its corporate lawyer, Mr S Keune.

S.170CC of the Act provides that Regulations made exclude from the operation of specified provisions of Division 3 of Part VIA of the Act specified classes of employees including in s.170CC 1 (e) "employees in relation to whom the operation of the provisions causes or would cause substantial problems because of:

(i) the particular conditions of employment; or

(ii) the size or nature of the undertakings in which they are employed"

s.170CC(2) states:

"(2) Without limiting, by implication, the class of persons that may be prescribed for the purposes of paragraph (1)(e), the regulations may identify as a class of employees for the purposes of that paragraph employees not employed under award conditions and to whom subsection (3) or (4) applies."

DECISION - ALLEGED UNLAWFUL TERMINATION

s. 170CC(3) which is immediately relevant states:

"(3) This subsection applies to an employee if:

(a) the employee's remuneration immediately before the termination of employment was not wholly or partly determined on the basis of commission or piece rates: and

(b) the rate of remuneration applicable to the employee immediately before the termination exceeds a rate specified, or worked out in a manner specified, in the regulations (the specified rate)."

Regulation 30B excludes from the operation of Subdivisions B, C, D, E and F of Division 3 of Part VIA of the Act, a range of categories of employees including in 30B(f);

"an employee:

(i) who is not employed under award conditions; and

(ii) to whom subsection 170CC(3) or (4) of the Act applies"

Regulation 30BB prescribes the specified rate for the purpose of paragraph 170CC(3)(b) and (4)(b) of the Act as $64,000 per year, subject to indexation in accordance with regulations 30BF.

There is agreement that the applicant was not employed under Award conditions and the indexation in accordance with regulation 30BF has no immediate effect.

Accordingly the issue in dispute between the parties is whether or not the rate of remuneration applicable to the applicant's employment immediately before his termination exceeded the specified rate of $64,000.

Submissions

The respondent submitted that the Federal Parliament had used the word "remuneration" in s.170CC(3) and (4) rather that the term "relevant wage" which was used in relation to similar exclusions in s.170CD in the Industrial Relations Act 1988. He submitted that "remuneration" is a wider term that "relevant wage" (May v Lilyvale Hotel Pty Ltd (May) unreported decision of Wilcox CJ, Industrial Relations Commission of Australia 628/95).

He submitted that further support for this definition is found in the equal remuneration convention which defines the term remuneration as including the ordinary basic or minimum wage or salary and any additional emoluments whatsoever payable directly or indirectly, when in cash or in kind, by the employer to the worker and arising out of the workers'employment.

He submitted in the context of the present application that remuneration would include salary, company motor vehicle, telephone and superannuation.

2

DECISION - ALLEGED UNLAWFUL TERMINATION

He submitted that the rate of remuneration applicable to the applicant was:

$

Salary	57,500.00
Telephone	405.96
Company Motor Vehicle	12,644.00
Superannuation	3,450.00
Remuneration	73,999.96

He submitted that the remuneration exceeds the specified rate and he is excluded from the operation of the relevant provisions of the Act.

The applicant traced the inclusion of the terms "relevant wage" and "remuneration" in the Industrial Relations Act 1988 and examined decisions dealing with the meaning of each (Ardino v Count Financial Group Pty Ltd (Ardino) unreported decision of Wilcox CJ Industrial Relations Court of Australia 139/94, May and Daw v AWU-FIME Amalgamated Union, unreported decision of Tomlinson JR Industrial Relations Court of Australia 67/95).

He then considered the introduction of the term remuneration s.170CC of the Act. He submitted on the basis of Ardino and Brown v Listaglen Pty Ltd, (unreported decision of Murphy JR, Industrial Relations Court of Australia 157/94) that it would appear that the Federal Parliament full intended that the definition "relevant wage" would be replaced with a more expansive definition than that which was relied upon, for the purpose of the exclusion, under the Industrial Relations Act 1988.

He submitted that the definition of remuneration in Ardino should be seen as encompassing both pecuniary benefits and no-pecuniary benefits with the emphasis on benefits.

The applicant submitted that benefit to him from the personal use of the motor vehicle was limited, in that the vehicle was supplied for business purposes with personal usage restricted to driving to and from work from his residence. A statutory declaration signed by the applicant stated that he was required by the respondent to sign a statement headed insurance and declaration re: "Business Use Only: Vehicle, issued by the respondent. It included instructions to custodian that "This vehicle is provided for use in connection with the business of the company. Private use of this vehicle is restricted to direct travel between your home and workplace". The document also contained a declaration by custodian (identified as the applicant) stating: "I declare that my use of this vehicle for the year ending 32 March 1996 has been in accordance with the above instructions". The declaration was signed by the applicant and dated 29.3.96 The applicant attested in his statutory declaration that similar forms were completed by other employees - Valenti and Cook.

(The respondent in reply stated that the form had been completed incorrectly by the applicant and was only required in relation to one tonne or greater commercial vehicles. The applicant's letter of appointment states that he was provided with a fully maintained car for business and personal use, with his spouse as his only other named driver; Fringe Benefit Taxation of $2618.26 being paid in respect of the applicant's vehicle in 1996).

3

DECISION - ALLEGED UNLAWFUL TERMINATION

The applicant submitted that when the benefit of the motor vehicle to the appellant was calculated as the proportion of the total cost attributable to the kilometres travelled to and from work, the benefit was $3749.70 per year.

In relation to superannuation, the applicant submitted remuneration should only include superannuation contributions which are voluntary contributions in the form of salary sacrifice. He submitted that the superannuation contributions made in respect of the applicant were those required to meet the respondents obligations under the Superannuation Guarantee Legislation and does not form part of his remuneration having regard to Ardino.

The applicant submitted that the remuneration in the application constituted;

$

Salary	57,500.00
Telephone	221.40
Company Motor Vehicle	3,749.70
Remuneration	61,471.10

The applicant submitted that the remuneration fell below the specified rate of $64,000.

DECISION

The term remuneration was the subject of consideration by the Industrial Relations Court in the context of the s.170EE(3) cap of compensation which could be awarded under the Industrial Relations Act 1988. S.170EE(3) referred to "remuneration". The 1988 Act also contained reference to :"relevant wages" in relation to the exclusion of non award employees relevant wages exceeded a defined amount in s.170CD, a provision otherwise broadly comparable to the current exclusion in s. 170CC (3) and (4) of the Workplace Relations Act.

The Workplace Relations Act 1996 no longer utilises the term "relevant wages" in respect to the exclusion of relevant non-award employees. The provisions in both s.170C (cap on compensation) and s. 170CC (exclusion by regulation) employ the term "remuneration".

There appears to be a difference intended by the Parliament between the terms. In this context, it can be noted that the Industrial Relations Act 1988 employed the term "remuneration" in setting the cap on compensation which could be awarded (s.170EE(3) of that Act. The term "remuneration" is retained for that purpose within s. 170CH(8)).

In relation to the different terms employed in the 1988 Act, Wilcox CJ of the Industrial Relations Court of Australia, observed:

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DECISION - ALLEGED UNLAWFUL TERMINATION

"That Parliament intended "remuneration" in s.170EE(3) to cover more than salary and wages is suggested by the Act itself. the amending legislation that inserted the present s.170EE (Act no.97 of 1994) also inserted s.170cd. That section excludes from subdivisions B, C D, E and F of Division 3 employees whose "relevant wages" exceed particular amounts. Plainly, the work "remuneration" was chosen, for s.170EE(3), in order to denote a concept wider than wages. Non-monetary benefits are not wages: see Ardino v Count Financial Group Pty Ltd (1994) IRCR 221 at 228-229. But they fall within the concept of remuneration." [May]

It would follow that in further amending the Act and, in doing so, replacing the term "relevant wages" with "remuneration" in respect to the exclusion by regulation, the Parliament intended to replace ':wages" with the wider term "remuneration" for the purposes of the exclusion within s.170CC(3).

I adopt and apply the distinction between "relevant wages" and "remuneration" noted by
Wilcox CJ. As a result relevant authority in relation to the term, "relevant wages" is not to the
point. This is conceded by the applicant. Rather, authorities dealing with the term
"remuneration:" are relevant. The guidance which comes from such authorities are reflected in
the Judgement of Wilcox CJ in May. Relevantly, non-monetary benefits do fall within the
concept of "remuneration" as contained in s.170CC(3).

The broader meaning of remuneration referred in May was accepted by the applicant. However, he argued that the focus had to be in non-monetary benefits and that the limited benefit from usage of the motor vehicle and absence of a relevant benefit of the superannuation commitments made on the applicants' behalf were such that when non-monetary benefits are added to the applicant's salary (together with the telephone benefit) the remuneration fell below the 'specified rate' of $64,000 per annum.

It is necessary therefore to consider more closely the issue of superannuation and the provision of some personal benefit to the applicant through the private usage of a motor vehicle provided.

In relation to superannuation the applicant relied on passages in the decision of Wilcox CJ in Ardino to submit that superannuation contributions made pursuant to the Superannuation Government Legislation should not be regarded as remuneration for the purposes of s.170CC(3) and (4).

In Ardino when considering the issue of "relevant wages" Wilcox CJ said for the purposes

of s.170(1) of the 1988 Act:

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DECISION - ALLEGED UNLAWFUL TERMINATION

I do not think it ('relevant wages') includes payments made by an employer on behalf

of an employee pursuant to a binding antecedent obligation whether statutory or contractual.

It is now commonplace for employers to make payments to a superannuation fund in respect of individual employees. This is usually because of a statutory obligation to that effect, sometimes because of a binding contractual obligation. If the situation is that the employer never had any option but to pay the particular monies to a superannuation fund, as distinct from making it available to the employee, the payment cannot be properly described as a wage".

In considering whether superannuation contributions form part of "relevant wages" Wilcox CJ described as the 'critical question' in relation to money payments as being whether the employee ever had an entitlement to receive the money directly and distinguished contributions made in lieu of wages the employee was entitled to receive at the election of the employee,finding that such payments will be included in "relevant wages"·

The consideration of the superannuation issue by Wilcox CJ in Ardino occurred entirely in the context of `relevant wages'. As noted above, Wilcox CJ in May made clear the distinction intended in the 1988 Act between the terms "relevant wages" and "remuneration", with remuneration denoting a concept wider than wages.


Accordingly, I do not accept the applicant's position that the observations of Wilcox CJ in Ardino directed to relevant wages, has immediate application in respect to 'remuneration'.

In my view the observations of Wilcox CJ in Ardino cited above do not have application to the term "remuneration:". Remuneration is a broader concept, with superannuation in my view forming a part of that broader concept, whether by way of statutory obligations or contributions beyond those required by legislation.

The inclusion of superannuation within remuneration in the context of the broader meaning attached to the term in May, is reflected in a decision of Marshall J in Rigby v Technisearch (unreported decision of Marshall J, Industrial Relations Court of Australia; 156/96) In Rigby, Marshall J said:

DECISION - ALLEGED UNLAWFUL TERMINATION

"The applicant earned $59,000 per annum and $5,000 per annum was paid into a superannuation fiend in respect of him by the respondent. In May, the Chief Justice held (at 11-12) that non pecuniary benefits can be included as "remuneration: under sl 70EE(3). I agree with the view of the Chief Justice therein contained, at least in the context of superannuation which is the relevant matter for present consideration. Superannuation contributions by employers are in the nature of payments in respect of work performed by employees. The Australian Conciliation and Arbitration Commission, in its June 1986 National Wage Case, adopted a national wage principle dealing with superannuation. See (1986) 14 IR 187, 212-219. The principle permitted awards to be varied to provide a requirement for employer contributions on behalf of employees to superannuation funds which (did) not involve an equivalent wage increase in excess of 3% of ordinary time earnings of employees' (see at 219). The claim for a superannuation payment was made by the Australian Council of Trade Unions as a claim in lieu of a claim for a 3% wage increase (see at 213).

Superannuation is unquestionably, in my view, when paid into a funds by an employer on behalf of an employee, part of the remuneration of the employee. Award superannuation has grown since 1986 and in addition, the Superannuation Guarantee Scheme underpinned by the Superannuation Guarantee Charge Act 1992 and the Superannuation Guarantee (Administration) Act 1992 has extended compulsory superannuation coverage to employees not employed under award conditions.

I agree with the analysis of Wilcox CJ in May at 11-12 where his Honour said'

'That Parliament intended "remuneration" in s.170EE(3) to cover more than salary and wages is suggested by the Act itself The amending legislation that inserted the present s. 1 70EE (Act no. 97 of 1994) also inserted s. 1 70CD. That section excludes fi'om Subdivisions B, C, D, E and F of Division 3 employees whose 'relevant wages' exceed particular amounts. Plainly, the 'word "remuneration" was chosen, for s. 170EE(3), in order to denote a concept wider than wages. Non-monetary benefits are not wages: see Ardino v Count Financial Group Ply Limited (1994) IRCR 221 at 228-229. But they fall within the concept of remuneration."

Similarly, Beazley J included superannuation within remuneration in Izdes v LG Binhen CO Pty Ltd (t/as Alba Industries) lzdes) (unreported decision of Beazley J, Industrial Relations Court of Australia, 483/95).

In my view the superannuation contributions of $3450 forms part of the remuneration of the applicant for the purpose of s.170CC(3) and (4).

Turning to the issue of the motor vehicle, it is my view that the private benefit derived by an employee through the provision to them of a fully maintained motor vehicle will constitute remuneration for the purpose of s.170CC(3) and (4). This is consistent with the approach of Wilcox CJ in May and of Beazley J in Izdes., who included the value of a car provided and superannuation within remuneration.

DECISION - ALLEGED UNLAWFUL TERMINATION

However I think the applicant is correct in suggesting that for the purposes of determining remuneration, the focus should be upon the private benefit derived by an employee and that the provision of a motor vehicle for business purposes would not form part of remuneration.

The distinction between the provision of a motor vehicle for business use and private benefit is reflected in a decision of Millane JR in Magagna and another v FAI Workers Compensation VIC Pw Ltd (unreported decision of Millane JR Industrial Relations Court of Australia 516/95). Millane JR said:

"One of the issues between the First Applicant and the Respondent is the question of whether the benefit of a motor vehicle should be included for the purpose of calculating any entitlement to compensation. The unsubstantiated claim of the First Applicant is that in reality she was in receipt of a salary package of $60, 000 per annum inclusive of the motor vehicle.

The evidence of the Respondent demonstrates that apart form the letter dated 15 August ]99'4 referred to above where it specifically excluded the motor vehicle from any salary component, it has a system of remuneration whereby some employees do receive motor vehicles as part of a salary package but others, such as the First Applicant are paid as non-package employees (see Exhibit R3).

I am satisfied on the above mentioned evidence of the Respondent that the motor vehicle was clearly excluded form the salary paid and there was no identifiable salary sacrifice attributable to the motor vehicle. The motor vehicle and the mobile phone used by the First Applicant were provided for use in the marketing division because employees needed these items of equipment to attend on clients and prospective clients. In the case of the motor vehicle if it was not borrowed during the day or needed overnight the employee was at liberty to take it home and use it for personal use. So far as the value of any benefit derived from the use of the motor vehicle is concerned the First Applicant did not provide any explanation to the Court of how she arrived at the figure of some 18,000 per annum for the use of a 1994 Ford Falcon.

Because of my finding on liability it has not been necessary for me to consider whether I should allow any sum for the loss of the use of the vehicle however if I had been required to do so on these facts I am inclined to treat the motor vehicle as a piece of equipment provided by the employer, essential to the performance of the task the employee was engaged to do, which gave the employee some incidental use and benefit but was not given to her in lieu of salary or remuneration that might otherwise have been paid to her and any benefit derived by her should be treated as a nominal one where there is no evidence of actual loss."

DECISION - ALLEGED UNLAWFUL TERMINATION

There is considerable dispute between the paxties as to the level of remuneration arising from the provision of the motor vehicle to the applicant in this case. The respondent advanced an annual value of $12644, with no attempt to distinguish between the business and private usage. The applicant suggested a value of $3749.70 attributed to the private usage of the vehicle for the purpose of travel to and from work. His approach is supported by the declaration by the application that the vehicle was used only for business purposes and travel to and from work (which the respondent asserts was completed in error an assertion challenged by the applicant). I am satisfied on the material before me that the approach and estimate of the applicant is the more appropriate of the two estimates of the value of the motor vehicle advanced and should be adopted. Were it necessary to do so, I would have sought further information and evidence as to the extent of private usage of the vehicle but given the effect of my decision, even adopting the applicant's estimate of the value of the vehicle it is not necessary to do so in order to decide the matter.

In my view the remuneration to the applicant for purpose of s.170CC(3) and (4) does include the benefit derived from the private usage of the motor vehicle supplied which the applicant put as $3,749.70.

I find that the remuneration of the applicant, immediately before his termination was:

$

Salary	57,500.00
Telephone	221.40 or 405.96
Superarnnuation	3,450.00
Private usage of motor vehicle	3,749.70
Remuneration	64,921.10 or 65105.66

Whichever value is attached to the provision of the telephone, the remuneration exceeds the specified rate within s. 170CC(3) which is presently $64,000.

Accordingly, the applicant is an employee excluded by s.170CC. The application is

dismissed.

BY THE COMMISSION:

DEPUTY PRESIDENT

Appearances:

A Condon - Applicant

A. McDonaId - McDonald Murholme - appearing on behalf of Applicant

S Keune - G. James Australia Pty Ltd

Hearings:

1997

Melboume

March 4.

Termination of employment - unfair dismissal - unlawful termination - whether excluded category of employee - Regulation 30BB - whether remuneration in excess of $64,000 per annum - whether remuneration includes superannuation and provision of motor vehicle - Ardino v Count Financial Group P/L (1994) 1 RCR 221, May v Lilyvale Hotel P/L, Wilcox CJ, Dec 628/95, Brown v Listaglen P/L, Murphhy JR Dec 157/94, Rigby v Technisearch, Marshall J Dec 156/96 considered - Commission held "remuneration' a broader concept than "relevant wages' - held superannuation forms part of remuneration - held private benefit derived by employee through provision of fully maintained motor vehicle will constitute remuneration for purpose of s170CC(3) and (4) - Magagna v FAI Workers Compensation Vic P/L, Millane JR Dec 516/95 considered - held remuneration exceeds specified rate - application dismissed

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