DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ryan Welk
v
SG Mining Pty Ltd T/A SG Mining
(U2020/1853)

Application for an unfair dismissal remedy – jurisdictional objection – s 382 high income threshold – private value of vehicle – applicant’s total earnings exceeded high income threshold – application dismissed.

[1] Mr Ryan Welk made an application under s 394 of the Fair Work Act 2009 (Cth) (Act) for an unfair dismissal remedy. He was employed by SG Mining Pty Ltd T/A SG Mining (Respondent) as a production supervisor at Talison Lithium’s Greenbushes Project, Western Australia (Talison), where the Respondent has a contract to provide mining services.

[2] The Respondent has raised a jurisdictional objection to the application, arguing that Mr Welk is not a person protected from unfair dismissal within the terms of s 382 of the Act. The Respondent argues that Mr Welk enjoyed annual earnings above the high income threshold and so is excluded from making this application by virtue of s 382(b)(iii). It is uncontentious that Mr Welk was not covered by a modern award and an enterprise agreement did not apply to him in his employment. Therefore, the inclusions of s 382(b)(i) or (ii) are not triggered. However, for the sake of fulsomeness s 382(b)(i) is further considered.

[3] In response to the objection, Mr Welk has argued he was paid below the high income threshold. If this condition can be established the Respondent’s objection will be dismissed. Therefore, the primary question to be determined is whether Mr Welk’s annual rate of earnings exceeded the high income threshold.

Background

[4] Mr Welk was employed on a full-time basis from 4 August 2014 until his employment was terminated on 28 January 2020. 1 His duties were purportedly predominately supervisory in nature and included the following:

a) assessing the works required to be completed. Allocating tasks, equipment and work areas to employees. Monitoring progress, supervising, assessing and reassigning tasks, equipment and work in order to achieve production targets;

b) supervising employees’ compliance with health and safety regulations, performing safety assessments and implementing risk reduction processes;

c) directly supervising and mentoring the step-up supervisors; and

d) liaising with other supervisors, safety officers and the mining foreman. 2

[5] At the time Mr Welk’s employment with the Respondent was terminated, his base salary was $148,000; having increased from $145,000 to $148,000 as of 1 January 2020. Mr Welk worked a permanent roster of seven days on and seven days off (R&R). 3

[6] In addition to the base salary of $148,000 per annum, Mr Welk was provided with a fully serviced Hilux SR 2014 (Vehicle) as a tool of the trade during work hours, and for personal use outside of work hours and during R&R. The Respondent submitted that the value of this benefit was significantly above the $700 per year needed for Mr Welk to have earned above the high income threshold.

[7] The Vehicle was provided to Mr Welk as a term of his Employment Contract. Clause 11 of the Employment Contract relevantly provided:

You will be provided with a fully maintained vehicle. The Company will decide at its entire discretion the type and model of vehicle provided. You acknowledge the vehicle belongs to the Company and you undertake to do all things reasonably necessary to preserve the vehicle in the best possible working condition. You undertake to use the vehicle in accordance with the Company’s rules, regulations and policies and understand that only individuals authorised by the Company may drive the vehicle.

[8] It appears from the evidence given by the parties, there was no value agreed between them for Mr Welk’s private use of the Vehicle. 4

[9] Mr Brittain, the Mine Foreman with the Respondent, gave evidence that supervisors were permitted to refuel their company vehicle on site without restriction, including during their days off work. Each company vehicle has, according to Mr Brittain, a unique identifier (Vehicle ID) and each supervisor with a company vehicle is provided with an electronic device which is registered with their Vehicle ID (Key). Each employee is given a unique identifier (Employee ID). Mr Brittain gave evidence that in order for a fuel pump to be used by an employee, the employee must swipe the Key on an electronic reader and enter their Employee ID and the current odometer reading of the company vehicle. This process then allowed Talison to record fuel use against the company vehicle and the distance travelled by vehicles.  5

Legislative framework

[10] It was not disputed, and I am satisfied, that Mr Welk had served the minimum employment period. Therefore, the issues that fall for determination are whether I am satisfied Mr Welk’s annual rate of earnings was less than the high income threshold of $148,700, 6 and whether he was covered by a modern award. Both parties agreed that an enterprise agreement did not apply to Mr Welk in relation to his employment. These questions of jurisdiction are required to be decided before the merits of the Application can be considered.7 Sections 396 and 382 relevantly provide:

396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

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.

[11] The phrase ‘protected from unfair dismissal at a time if, at that time…’ in s 382 of the Act means that an employee must show that, at the time of their termination, their employment circumstances (i.e. coverage by a modern award, applicability of an enterprise agreement or amount of rate of earnings) met the criteria in s 382 of the Act. 8

Was Mr Welk’s annual rate of earnings and other amounts less than the high income threshold?

High income threshold

[12] The Respondent submitted that Mr Welk’s base salary was $148,000 at the time of his dismissal, the value of the Vehicle amounted, conservatively, to $7,390.44, and therefore his total earnings were $155,390.44.

[13] The word ‘Earnings’ is described at s 332 of the Act, as:

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 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.

Annual rate of earnings

[14] The term ‘annual rate of earnings’ in s 382(b)(iii) of the Act, refers to the annual rate of earnings at that time, and not the annual earnings to that time (that is the amount earned in the 12 months to that time). 9

[15] Mr Welk submitted that I should consider his actual earnings, particularly in circumstances where he received an increase to his base rate of pay only two weeks before his dismissal. The law is clear that the annual rate of earnings is to be assessed as at the time of dismissal. It is not an assessment of the actual earnings in the 12 months immediately prior to dismissal. 10

[16] It was perhaps implicit in the submissions of Mr Welk that there appeared to be something convenient in the provision of an increase to his base salary two weeks before his dismissal. However, the Respondent submitted that it had only become aware of the transgression that ultimately led to Mr Welk’s dismissal after the salary increase – the transgression having occurred toward the latter part of 2019. There was no evidence to suggest that Respondent’s account was erroneous.

Vehicle

Legislative framework and legal principles / approach

[17] Section 332(1)(c) provides that earnings include the agreed money value of any non-monetary benefits. Regulation 3.05(6) of the Fair Work Regulations 2009 (Cth) provides that, where there is no agreed amount for a non-monetary benefit, the Commission may estimate the value of the benefit.

[18] As observed, there was no value agreed between the parties for the Applicant’s private use of the Vehicle. As observed, regulation 3.05(6) allows the Commission to make a determination as to the value of the benefit of the Vehicle. It relevantly provides:

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) the FWC 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) 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.

[19] It has been accepted that, where an employee is provided with a fully maintained vehicle for use in the course of her or his employment and the employee also uses that vehicle for private use, the value of that private use can be included in the employee’s annualised earnings. 11

[20] In the absence of an agreed sum, the process generally used to determine the value of the use of a company vehicle is that described in Kunbarllanjnja Community Government Council v Fewings (Fewings). 12 The ‘Fewings approach’ is as follows:

a) determine the annual distance travelled by the vehicle in question;

b) determine the percentage of that distance that was for private use;

c) multiply the above two figures to obtain the annual distance travelled for private purposes;

d) estimate the cost per kilometre for a vehicle of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations; and

e) multiply the annual distance travelled for private purpose by the estimated cost per kilometre. The result is the value of the motor vehicle component of the remuneration.

[21] The Full Bench in Fewings further observed that the party advancing the proposition that an applicant is excluded from the relevant provisions of the Act (protection from unfair dismissal) carries the burden of establishing the evidentiary basis upon which such a determination can be made. 13

[22] In Sam Technology Engineers Pty Ltd v Bernadou, 14 the Full Bench observed that it did not take issue with the method of apportionment adopted by the Full Bench in Fewings and considered it entirely appropriate for circumstances in which an employee had a company-supplied vehicle (from which she or he derives a benefit) and a reasonable monetary value had not been agreed for its private use. It continued, that the Fewings method of apportionment was appropriate to enable the Commission to estimate the real or notional value of the benefit, in the manner contemplated by regulation 3.05(6) of the Regulations, which deals with benefits other than the payment of money.

Respondent’s submissions

[23] The Respondent submitted that the running cost of the Vehicle was 21.97 cents per kilometre according to the RACV published running costs. 15 The submission was uncontested with regard to the use of RACV as the source.

[24] Applying the apportionment method, the Respondent had arrived at a value of $7,390.44 for the Vehicle.

[25] To arrive at the value of the Vehicle, the Respondent examined the refuelling system data on site. The Respondent submitted that a system was used on site, such that every time the Vehicle was refuelled, an electronic record was made of the date and time, the Employee ID of the person refuelling, and the odometer reading of the vehicle. 16 The electronic records were, according to the Respondent, kept by Talison, and a copy was obtained for the period 1 April 2019 to 28 January 2020 (the relevant period). The Respondent observed that the relevant period was two months shy of the 12-month period referred to in the decision of Fewings.

[26] The records show that the odometer reading of the Vehicle was 147,382 kilometres on 1 April 2019 and was 194,122 kilometres on 28 January 2020. Accordingly, submitted the Respondent, the Vehicle travelled 46,740 kilometres within the relevant period. 17

[27] The Respondent undertook an analysis of the 21 swings that Mr Welk completed during the relevant period (each swing being two weeks – one week of work and one week of R&R). The analysis showed, according to the Respondent, that:

a) Mr Welk refuelled the Vehicle on his first shift of the swing 15 of the 21 swings, on the second day of the swing five of the 21 swings and on the third day of the swing one time;

b) Mr Welk refuelled the Vehicle on the last day of his swing 20 of the 21 swings, and on the second last day of the swing one time.

[28] The Respondent submitted that the information available permitted an approximate calculation of the kilometres Mr Welk travelled during his R&R. A comparison was conducted between the odometer readings on each occasion Mr Welk filled up the Vehicle at the end of his swing and those when the Vehicle was refuelled when Mr Welk first returned to work. From that process, stated the Respondent, it was known that Mr Welk drove the Vehicle approximately 17,931 km during his R&R in the relevant period.

[29] However, the Respondent acknowledged that because Mr Welk did not always refuel on the last day of his swing and the first day of his return to work, it was reasonable to assume that some of the 17,931 km travelled included at least some distance travelled for work. According to the Respondent, it was reasonable to assume that no more than 15 days of work travel was included in the 17,931 km. Based on the evidence of Mr Brittain, the Respondent advanced that it was usual for a production supervisor to travel approximately 60 to 100 km each day of work, as part of her or his duties. 18 The Respondent submitted that, on this basis, a conservative approach would be to reduce the personal kilometres travelled in Mr Welk’s R&R to 16,000 km travelled in the relevant period.

[30] It was, according to the Respondent, accepted that travel between an employee’s home and their usual place of work was not considered business travel for present purposes. 19 Mr Welk resided in Manjimup and travelled from his residence to site and back again each shift.20 That was a round trip, said the Respondent, of at least 120 km, that Mr Welk completed each day of the seven working day swing across the 21 swings worked in the relevant period. That totalled a further 17,640 km of personal use, for a total of 33,640 km over the relevant period.

[31] Using the methodology derived from Fewings (applied to the relevant period [10 months rather than a 12-month period]), the value of the benefit was, according to the Respondent, as follows:

[32] Based on the above analysis, the Respondent’s view was that the sum of Mr Welk’s annual rate of earnings was $155,390.44 ($148,000.00 base salary and $7,390.44 value of Vehicle). It followed, said the Respondent, that Mr Welk was precluded from making his application by the operation of s 382(b)(iii).

Mr Welk’s submissions

[33] Mr Welk contended that the value of the Vehicle was premised on ‘approximates’, which did not reflect that colleagues drove the Vehicle whilst at work, and did not cater for the times when he was on leave and did not have use of the Vehicle.

[34] Mr Welk highlighted that the Respondent had admitted that there were no written policies in relation to the use of the Vehicle.

[35] During any of his leave periods, Mr Welk stated that the Vehicle was allocated to the Leading Hand/Step Up, Mr Andrew Brotherton. In this respect, Mr Welk noted that he did not have possession of the Vehicle for a period of not less than six weeks due to illness from 9 March 2019; yet, the Respondent had failed to take this into account when arriving at its calculations. This was despite the fact, said Mr Welk, that Mr Brittain was aware that he was not at work for this period in March 2019. Further, during this period, the records demonstrated that Mr Welk’s fuel number 11120 was being used by another employee.

[36] According to Mr Welk, Mr Brotherton relied on and continuously used Mr Welk’s fuel number to fuel the Vehicle notwithstanding efforts by Mr Welk to request that Mr Brittain rectify the situation. Furthermore, Mr Welk stated that 50% of the distance he travelled in the Vehicle to and from work should be classified as business use. Mr Welk submitted that he regularly provided mentoring and training to Mr Brotherton in the time taken to drive to and from work. It followed that the Vehicle was used effectively as per Mr Welk’s employment contract which required Mr Welk ‘to work whatever hours are necessary to complete the duties’.

[37] The figures relied upon by the Respondent were, said Mr Welk, far from correct and could not be relied upon. Mr Welk submitted that they did not take into account any type of leave taken by Mr Welk whether sick leave, annual leave or carer’s leave, and should therefore be overlooked, as any calculation was thereby false and misleading. Furthermore, there was no evidence that he was subject to fringe benefit tax records relating to the Vehicle usage.

[38] Mr Welk submitted that because the Respondent was supplied all fuel for vehicles by Talison, the estimated cost per kilometre, according to the RACV published running costs – should be reduced by 12.81 cents, therefore reducing the running cost of the Vehicle to 9.16 cents per kilometre. It followed that using the Respondent’s figure of 33,638.778 kms and multiplying that with 0.0916, the value of the Vehicle amounted to $3081.31. Further, given that Mr Welk’s salary was $145,000 for almost the entirety of the relevant period the total annual earnings would have been $148,081.31.

Consideration

[39] I accept that the appropriate approach to adopt in this matter is the method of apportionment adopted by the Full Bench in Fewings. Clearly, Mr Welk had a company-supplied vehicle (from which he derived a benefit) and a reasonable monetary value had not been agreed for its private use.

[40] Further, in the absence of argument to the contrary, I consider that the vehicle running cost information produced by the RACV represents the best information before me of the running costs of the Vehicle.

[41] I accept the Respondent’s submissions regarding the application of the apportionment method, observing that two months were not included due to a lack of records. Those two absent months appear to cover the period of March 2019, in which Mr Welk states he was absent on leave. During the course of the hearing, Mr Welk gave evidence of further absences, including a period of two weeks from approximately 2 April to 22 April 2019. However, given that the calculations conducted by the Respondent were premised on ten months rather than the twelve, I am of the view that the leave taken by Mr Welk has been accommodated.

[42] While Mr Welk submitted that he performed work while travelling to and from his residence to site, by mentoring Mr Brotherton, I am unpersuaded that such dialogue formed part of his duties. There was no evidence before me to suggest that Mr Welk was obliged, or for that matter had been instructed, to undertake this role whilst driving to and from work.

[43] Mr Welk pointed to the unreliability of data concerning refuelling. According to Mr Welk, others had access to his Employee ID for refuelling purposes. However, having heard the evidence regarding the use of the Key and the Employee ID, and having little evidence before me to show that others had assumed use of the Vehicle in periods where Mr Welk was on R&R or driving to and from work, I consider that data is not so affected that it cannot be relied upon to arrive upon the conclusion drawn in this matter.

[44] On Mr Welk’s best-case scenario, if the Commission were to accept this, he derived the value of $3,081.31 for the Vehicle, then this would still place his earnings above the high income threshold.

Did the Mining Award cover Mr Welk?

[45] The requirement that the modern award cover the applicant in s 382(b)(i) of the Act necessitates the application of s 48 of the Act. Accordingly, in this case, the Mining Industry Award 2010 (Mining Award) will have covered Mr Welk if it is expressed to do so. The intended coverage of a modern award is to be assessed by reference to its actual terms.

[46] It is readily apparent that Mr Welk was employed by an employer in the mining industry. However, having considered the coverage clause in the Mining Award and the classifications at clause 15 and their descriptors at Schedule A, I am satisfied that Mr Welk was not so covered – a point conceded by Mr Welk himself.

Conclusion

[47] Based on my findings in relation to s 332(1)(c) and regulation 3.05(6) of the Act, I am satisfied that the total value of $7,390.44 (value of Vehicle) should be included in Mr Welk’s earnings for the purposes of s 332 of the Act. It should be added to the base salary, calculated at $148,000.00 gross per annum. Consequently, I find that Mr Welk had earnings amounting to $155,390.44 per annum.

[48] As Mr Welk’s earnings exceeded the high income threshold of $148,700.00 at the relevant time, he is not a person protected from unfair dismissal by s 382 of the Act.

[49] An Order 21 will be issued dismissing the Application.

DEPUTY PRESIDENT

Appearances:

R Welk, Applicant.
R Dawson of Herbert Smith Freehills for the Respondent.

Hearing details:

2020;
Perth (by telephone):
May 22.

Printed by authority of the Commonwealth Government Printer

<PR719349>

 1   Witness statement of Michael Brittain dated 20 April 2020 (Statement of Brittain), [9], [10], [11] and [14], and Annexure MB-1.

 2   Ibid [15], [18] and [20].

 3   Ibid [17], and Annexure MB-1.

 4   Ibid [22].

 5   Ibid [27].

 6   Variation of awards on the initiative of the Commission [2020] FWCFB 1837, [127].

 7   Fair Work Act 2009 (Cth) s 396(b).

 8   Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia [2012] FWAFB 6108, [9].

 9   Ibid.

 10   Darling v Bechtel Australia Pty Ltd [2015] FWC 1242.

 11   Monteiro v Valco Group Australia Pty Ltd T/A Valco Group Australia [2019] FWC 2410, [17]; Rofin Australia Pty Ltd v Newton (1997) 78 IR 78, [82].

 12   Kunbarllanjnja Community Government Council v Fewings, AIRCFB, Ross VP, Watson SDP, Bacon C, 7 May 1998, Print Q0675.

 13   Ibid.

 14   [2018] FWCFB 1767.

 15   The Total Running Cost for the for the Toyota Hilux SR (4x4) is published by the RACV in ‘Driving Your Dollars 2019’. See: https://www.racv.com.au/content/dam/racv/documents/on-the-road/buying-a-car/4wd-ute-car-running-costs-2019.pdf.

 16   Brittain Statement [25]-[27].

 17   Ibid [37], and Annexure ‘MB-6’.

 18   Brittain Statement [40].

 19   Sam Technology Engineers Pty Ltd [2018] FWCFB 1767, [72]; Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia [2012] FWCFB 6108,[11].

 20   Brittain Statement [29]-[33].

 21   PR720012.