DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Rob Maloney
v
John Herrod and Associates Pty Ltd
(U2019/1038)

Application for Unfair Dismissal Remedy - Whether Award covered employee; whether above high income threshold.

[1] Rob Maloney was employed by John Herrod and Associates Pty Ltd, a printing firm in Box Hill, between 27 April 2018 and 22 January 2019. 1 When first employed his position with the company was Operations or Operational Manager.2 When he was dismissed, the termination of employment was characterised as a redundancy.3

[2] Mr Maloney’s application for unfair dismissal remedy was filed in the Fair Work Commission on 1 February 2019. An objection to the continuation of the application was notified by John Herrod and Associates shortly after the substantive application was made, with the objection of the Respondent being indicated both that the dismissal was a case of genuine redundancy and that Mr Maloney earned more than the high income threshold which is currently $145,400 per annum. 4

[3] This decision is concerned with the high income threshold objection.

[4] Garry Dircks of Just Relations appeared for the Applicant, while Andrew Denton of Counsel instructed by COMLAW Barrister and Solicitors appeared for the Respondent. Permission for each party to be represented in these proceedings by a lawyer was granted by me pursuant to s.596 of the Fair Work Act 2009 (Cth) (the Act), with me being satisfied that legal representation would enable the matter to be dealt with more efficiently taking into account the complexity of the matter (s.596(2)(a)).

[5] Because of the way that the matter has been argued this decision considers both whether Mr Maloney’s employment was covered by an award and in the event it was not, whether his total remuneration exceeded the high income threshold. While certain matters are agreed between the parties there is no agreement about whether Mr Maloney’s employment may have been covered by an award or about his earnings.

[6] In relation to the potential award coverage, Mr Maloney argues that changes to his job sometime after commencing employment mean that his job at the time of termination falls within the coverage of the Graphic Arts, Printing and Publishing Award 2010 (the Graphic Arts Award). 5 While award coverage is contended on the part of Mr Maloney, the parties agree that there was no enterprise agreement that may have potentially applied to his employment.

[7] Mr Maloney had worked for the Respondent many years earlier and was reemployed in January 2018 6 when an offer of employment was made to Mr Maloney in the following terms:

“25th January 2018

Dear Rob,

John Herrod & Associates is pleased to offer you a full time position as a Operational Manager, responsible and accountable for the day-to-day running of all aspects of the manufacturing plant.

We trust your knowledge, skills and experience will be of great benefit to John Herrod and Associates.

➢ Listed below is your salary package should you accept this job offer:

•  Annual gross salary of $140,000.00 plus

•  Monthly $300 fuel allowance

•  Mobile phone and laptop

•  Reallocation cost reimbursement of $4,000 payable now and the balance after 2 years with John Herrod.

•  Superannuation 9.5% based on your gross salary

•  Personal Leave – 75 hours (sick, carer’s leave)

•  Annual leave – 144hrs per year of annual leave

•  Long Service leave – after 10 year of service based on hourly rate at that time.

➢ Key duties include, but are not limited to:

•  Provide leadership for the successful day-to-day operation of the John Herrod and Associates plant.

•  Conduct performance appraisals and provide coaching and guidance to all operations managers.

•  Work closely with all managers and supervisors to review product quality consistency and determine the areas of improvement.

•  Being involve in production schedules for all plant & equipment to ensure they are operating at the highest efficiency possible.

•  Overall responsibility for ensuring that staffing and competency levels are achieved/exceeded in all aspects of the manufacturing process.

•  Monitor operation expenses and research ways to reduce costs while maintaining product quality.

•  Analyse workforce requirements and responsible for employment/recruitment.

•  Encourage and promote operations in a continuous improvement environment.

•  Work in collaboration with other managers to ensure all staff members are aware of safety requirements, both legislative and John Herrod & Associates policies/procedures, to provide a safe workplace for all our employees.

I, Rob Maloney, accept the John Herrod & Associates Offer of Employment.” 7

[8] At the time Mr Maloney was living in Queensland and agreed to relocate to Victoria in order to take up the position, with him commencing on 27 April 2018. The essential elements of the foregoing offer did not vary during the time of his employment, although he argues that his duties changed markedly shortly after arriving. 8

[9] Mr Maloney argues that his total annual income for the purposes of this decision is a maximum of $143,600. This is comprised of the annual salary and the maximum amount of the fuel allowance, $3,600 per year; the inclusion of which is not conceded by Mr Maloney. 9

[10] John Herrod and Associates argues that Mr Maloney’s total annual income for the purposes of this decision should be assessed as $146,435.02, achieved in accordance with the following calculation:

“11 . This sum is reached through the addition of the following:

(a) annual salary: $140,000;

(b) leave loading: $1 ,884.62;

(c) car allowance: $3,600;

(d) mobile for personal use: $950.40;

= $146,435.02” 10

[11] In relation to the remunerative elements which may be included in assessment of total earnings, the parties argue several matters.

Annual Leave Loading

[12] While the payment of annual leave loading is not referred to in the letter of offer, John Herrod and Associates took the view that Mr Maloney would be entitled to annual leave loading which is calculated as an extra 17.5% leave loading on all annual leave, 11 Mr Maloney argues that there was no entitlement annual leave loading provided in the letter of offer and it was not included in the list of what constitutes the salary package.12 He also argues that “Leave Loading is referred to as a ‘bonus’ (Leave Loading Bonus) on the payslip of 3 January 2019 ... Bonuses, as a category, cannot be determined in advance and so fall into the excluded category at s332(2)(a) in any event”.13 Further, the “addition of an amount, whether for leave loading or any other reason, at termination that is not an agreed amount, or an obligation of some sort, cannot be counted to push an employee over the high-income threshold”.14

Fuel Allowance

[13] The submission is made by the Applicant that “no break up of car allowance is possible”, and given that the car was used for dual purposes of work and personal that “no full value [of the allowance] can be argued for”. 15 While it is agreed that a payment of $300 per month for the purposes of a fuel allowance was made to Mr Maloney and would have continued into the future should the employment relationship have continued, he submits that the work-related travel undertaken by him in his own vehicle should be discounted from the allowance, with it being said that such a discount is impossible to assess:

“38. If it were not excluded entirely, the respondent would need to lead evidence on how car allowance was arrived at and how much was business travel and private travel. We submit that this is an impossible task and no assumptions can be made that business related travel that did not fully expend the car allowance.

39. The car was used, obviously, for both business and private usage. However no break up of car allowance is possible.” 16

Mobile Phone

[14] It is also submitted in relation to the assessed value of the mobile phone provided to Mr Maloney by his employer, that there was a significant business use of the phone, 17 meaning that it should not be included as earnings, or in the alternative if an amount were to be included, it should be a relatively small amount.

Whether Award covered

[15] A person is protected from unfair dismissal if an enterprise agreement or modern award applies to that person. 18 In Mr Maloney’s case, it is accepted by the parties that there is no applicable enterprise agreement and that consideration of his contention about employment coverage turns to a consideration of whether the Graphic Arts Award applied to his employment at the time of his termination.

[16] Mr Maloney contends that because of a change of circumstance in his employment which took place around October 2018 19 when the work of the former Factory Manager, John Hayes was distributed to him, that that change brought him back under the coverage clause of the Graphic Arts Award.20 Mr Maloney’s evidence is that after he apprehended concerns about Mr Hayes well-being, he discussed the situation with the three owners of the business who agreed that Mr Hayes should return to “printing hands-on” and that consequently John Herrod and Associates needed to appoint a new Factory Manager.21 After advertising failed to appoint a Factory Manager, one of the owners, Justin Bennett, discussed the situation with Mr Maloney in which there was the following exchange between the two:

“16. There were separate meetings where the owners said they wanted me to do the factory manager duties. Justin Bennett said, “As of Monday you are now the Running the Factory Floor.” (sic)

17. I asked, “Am I being demoted to Factory Manager?”

18. Justin said, “Call it what you will; we all have to play our part.”

19. …

20. From then on I was doing effectively the factory manager job, looking after the 40 odd staff, from October 2018 until termination.” 22

[17] The coverage clause of the Graphic Arts Award, clause 4, provides, so far as is relevant:

“4.1 This industry and occupational award covers employers throughout Australia in the graphic arts, printing, publishing and associated industries and occupations and their employees in the classifications listed in clause 17—Wage rates and classification structure and Schedule B—Classification Definitions to the exclusion of any other modern award.”

[18] Clauses 4.2, 4.3 and 4.4 provide for exclusions from the Award which are not relevant for consideration in this matter. Clauses 4.5 and 4.6 deal with the supply of on-hire employees and are also not relevant to this decision. Clause 4.7 deals with the provision of group training services which is also not relevant to this decision; clause 4.8 deals with the circumstance in which more than one award applies to an employee, which also does not require consideration in this decision.

[19] Clause 4.9 provides a definition of “graphic arts, printing, publishing and associated industries and occupations”. I do not understand from the submissions of the parties that there is any contest that any part of clause 4.9 would cause the Graphic Arts Award to not apply to Mr Maloney circumstances if there were a classification applying to him.

[20] It is argued on behalf of Mr Maloney that, for reason of clause 4.1 and its application to employees in the classifications listed within the Graphics Arts Award that the applicable classification is within Schedule B –Classification Definitions, Level 8. The descriptor for the classification is in the following terms:

“B.8 Level 8

Employees at this level perform work above the skills of an employee at level 7 to the level of their competence, skill and training. An employee at this level may have completed a trade certificate, AQF Certificate Level IV or equivalent training.

An employee at this level will be capable of:

•  having a thorough knowledge of production processes and procedures in own area and general knowledge of downline processes;

•  working under minimal supervision and demonstrating a high level of proficiency;

•  undertaking routine production scheduling and materials handling within the scope of their area of work to maintain planned production requirements;

•  monitoring, evaluating and reporting quality variations within a broad work area;

•  having a knowledge of process, problem solving techniques and procedures and exercising initiative and judgment in solving day-to-day operational problems;

•  exercising considerable discretion; work is guided by company precedents and policies; work procedures may be adopted to meet production requirements;

•  operating a computer-controlled system as an integral aspect of routine work to their level of training and accredited skill;

•  undertaking routine and preventative maintenance to the level of their training and accredited skill;

•  removing and replacing assemblies/subassemblies to carry out cleaning and inspection of parts;

•  participating in, developing and implementing appropriate occupational health and safety practices in the area of work; encouraging staff under their supervision to accept and enforce safety requirements;

•  providing technical guidance and assistance to work, groups and teams;

•  providing on-the-job training in conjunction with supervisors and/or trainers; and

•  being responsible for the work of others under their supervision and has undertaken supervisory training.

Indicative tasks at this level may include:

•  exercising high precision trade skills;

•  exercising intermediate Computer-aided Design and Computer-aided manufacturing (CAD/CAM) skills in the performance of routine modifications to programs;

•  creating or producing original design roughs or finished artwork from employer or clients’ instructions, either manually or by computer;

•  liaising and advising internal customers and employees outside the work team;

•  operating and/or co-ordinating a group of computers such as a small multi-user system or a large group of personal computers which may include operating a help desk; and

•  participating in problem solving techniques and procedures and exercising initiative and judgment in solving day-to-day operational problems.”

[21] Clause 17.3 of the Graphic Arts Award provides for a minimum weekly wage rate of $913.70 per week, equivalent to $47,512 per year.

[22] Mr Maloney did not illustrate in great detail in his evidence, either that he met the requisite duties of the level 8 classification nor how his duties after October 2018 compared with those before his change in position. The evidence he gave relating to the duties he performed included that he undertook the duties set out within the letter of offer provided to him in January 2018 and that award coverage is not limited to junior level employees but all employees covered by the categories within an Award. 23 He also gave evidence generally that he believed the Level 8 descriptors and tasks under the Graphic Arts Award generally aligned to the roles that he had with John Herrod and Associates.24

[23] Alternatively, the Respondent submits that “The principal purpose of this role, the day-to-day running of all aspects of the manufacturing plant, is a big job. It entails him being directly responsible for about 50 different employees, each of which - or many of which are doing different tasks divided up into different areas of the plant in the manufacturing which Mr Maloney said was effectively a 24/7 responsibility.” Mr Maloney’s key duties were “conducting performance appraisals for these 50 staff members, reviewing product quality, ensuring competency levels are achieved for all 50 staff and monitoring not just the operation but also the expenses of the respondent's plant.” This being a position of “high autonomy, reporting only to three directors of the company”. The Respondent pressed that such a role was not traditionally covered by modern awards and relies upon s.143(7) of the Act, which prevents modern awards being expressed to cover such work. 25

[24] Consideration of whether a person is covered by an award requires consideration of the work undertaken by the person concerned against the particular classification sought. Where mixed functions are involved “the approach has been to examine the “major and substantial employment” of the employee or the “principal purpose” or “primary function” of the employee”. 26

[25] I am satisfied that Mr Maloney’s employment was not covered by the modern award he argues for, the Graphic Arts Award. In forming this view I have had regard to the evidence and submissions before me about the duties actually performed by Mr Maloney and have had regard to the criteria set out by the Full Bench for determining whether or not a particular award applies to employment. In Carpenter v Corona Manufacturing, (Corona) 27 the Full Bench held that:

“... more is required than a mere quantitative assessment of the time spent in carrying out various duties. An examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work with a view to ascertaining the principal purpose for which the employee is employed”. 28

[26] While Corona cautioned there should not be “a mere quantitative assessment” of time spent on various duties, the Federal Circuit Court of Australia accepted in Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd 29 that some consideration to time allocation should nonetheless be given:

“The task of the Court or Tribunal is to examine the major, substantial or principal aspect of the work performed by the employee. That will include consideration of the amount of time spent performing particular tasks, but also the circumstances of the employment and what the employee was employed to do. The question is one of fact to be determined by reference to the duties actually attaching to the position, rather than its title.” 30

[27] The Full Bench in Brand v APIR Systems Ltd (Brand) 31 considered there may be alternative tests:

“[13] We note that the Commissioner adopted and applied a test based on the principal purpose for which the applicant was employed. She relied upon the Full Bench decision in Carpenter v Corona Manufacturing Pty Ltd in that respect. An analysis of the authorities referred to in that case shows that industrial courts and tribunals have at different times adopted different formulations of the test to be applied in determining whether the work of an employee or group of employees is within a particular occupation or classification. One formulation requires that the question should be decided by reference to the major and substantial employment of the employee. Another formulation requires that the principal purpose or purposes of the employment be identified. In some cases the formulations have both been referred to. In one case a Full Bench of the Commission held that the principal purpose formulation was a refinement of the major and substantial employment formulation. A Full Court of the Federal Court of Australia, without reference to other authorities, adopted a test based on whether the employees were “engaged substantially” in the duties of the relevant occupation. 32” (references omitted)

[28] As with the interpretation of all parts of a modern award, the meaning of the coverage clause of a modern award “begins with a consideration of the natural and ordinary meaning of its words”, however, that “is not to say the words must be interpreted in a vacuum divorced from industry realities”. 33

[29] If anything, the evidence establishes that Mr Maloney came into John Herrod and Associates’ workplace in April 2018 as its Operational Manager, the title described in the letter of offer on 25 January 2018, and that he was engaged on at least those duties for the duration of his employment. There is no evidence that the contention Mr Maloney advanced in October 2018 to Mr Bennett, of “am I being demoted to Factory Manager?” 34 was ever given any effect. The contentions and evidence put forward on behalf of Mr Maloney were to the effect largely that the duties he performed from October 2018 absorbed those of the Factory Manager with the product of the absorption being that his employment was absorbed into coverage under the Graphic Arts Award. He agreed that the “key duties” of his job were those contained in the letter dated 25 January 2018; that he was not working hands-on in printing work as a press-operator; but that the nature of his position required him to stay at the factory supervising around 50 staff.35 There is little doubt that the principal purpose of Mr Maloney’s employment, in the sense of being its foremost, but not exclusive purpose, was for him to be John Herrod and Associates’ Operational Manager. There is insufficient evidence that the principal purpose of Mr Maloney’s employment diminished or otherwise changed at the point Mr Maloney’s duties absorbed some or all of those duties once performed by Mr Hayes. There could have been evidence drawn on the comparisons between the duties Mr Maloney performed in November or December 2018 with those performed before October; but there was not. As a result, there is insufficient evidence to establish that the principal purpose was no longer what it was.

[30] Examining for a moment the alternative posed within Brand that consideration should be given to the major and substantial employment of the employee, there also is insufficient evidence to find in favour of Mr Maloney. Notwithstanding the possibility that the Commission is able to take into account the proportion of time a person may spend in ostensibly award cover duties, that evidence is not before the Commission.

[31] As a result, I find that Mr Maloney’s employment was not covered by an award at the time his employment was terminated.

High income threshold

[32] The high income threshold, established by s.333 and given effect to for the purposes of an unfair dismissal application by s.382 is presently $145,400 per year. Section 382 provides that a person is protected from unfair dismissal at a time if they have completed the minimum employment period and if they are not covered by modern award or enterprise agreement it must be the case that:

“the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.” 36

[33] Section 332 provides a non-exhaustive definition of an employee’s 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

(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.

[34] The parties’ contentions in respect of Mr Maloney’s “earnings” are set out above.

[35] On Mr Maloney’s analysis, his earnings are less than $143,600 per year, with it being accepted by him that the salary should be included and with him then contesting whether any or all of the fuel allowance should be included, with it being put forward that the only parts of the car allowance which can be included are for any private element of the modest monthly fuel/car allowance. 37 Mr Maloney’s argument is that none of the annual leave loading should be included since John Herrod and Associates was not contractually obliged to make the payment. Mr Maloney further argues that none of the cost attributed to the mobile phone should be included in his earnings since it was principally used for business purposes.

[36] John Herrod and Associates argue that Mr Maloney’s earnings for the purposes of the high income threshold were $146,435.02 calculated as set out above and comprising not only of the annual salary, but the annual leave loading, the fuel allowance and the private use of a company provided mobile phone. It is necessary to consider each of these elements in some detail and to make findings about the amounts, if any, to be included in Mr Maloney’s total earnings for the purposes of the high income threshold.

Annual leave loading

[37] After consideration of the competing claims in the evidence before the Commission I am satisfied that all of the annual leave loading should be included within the computation of Mr Maloney’s earnings. The proposition that these amounts should not be included for the reason that there was no direct contractual entitlement would run contradictorily to the definition within the Act of “earnings” referred to above. The amount was received by Mr Maloney and has not been paid back or sought to be retrieved by the employer; it relates to his employment with John Herrod and Associates.

[38] The Federal Court has previously held, with regard to earlier legislation, that negotiations about terms and conditions of employment may often precede the commencement of employment but need not do so, and that “wages” includes salary, must be used in its accepted sense of regular payments made by an employer to a worker  for labour provided, but is not the same as "remuneration" or "emoluments:

“Both counsel submitted that the applicable statement of law as to what constitutes "relevant wages" for the purposes of s 170CD of the Act was to be found in the judgment of Wilcox CJ in Ardino v Count Financial Group Pty Limited 1 IRCR 221, 228-229. At that part of his judgment his Honour said:

"I agree with counsel that the definition of `relevant wages' is concerned only with payments that are wages, strictly so-called. I do not think it 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 particular moneys to a superannuation fund, as distinct from making it available to the employee, the payment cannot properly be described as `wages'.

Counsel for the respondent drew attention to a decision of the United Kingdom Court of Appeal, Adams v Liverpool Corporation (1927) 137 LT 396, containing discussion of the meaning of the term `full salary or wages' in a council resolution designed to encourage council employees to join the armed services during the First World War. Bankes LJ, with whom Scrutton LJ and Romer J agreed, said at 397 `where the word used is "salary" or "pay" or "wages", you are entitled to interpret that language as meaning something to which a person is contractually entitled'. A payment made by the employer, that the employee was never contractually entitled to receive, cannot be regarded as `wages'. It is not sufficient that the payment arose out of the contract of employment.

I appreciate, of course, that an employer's obligation to make a payment that the employee was never contractually entitled to receive may have arisen out of negotiations between the employer and the employee as to the terms and conditions of employment. Ordinarily, I suppose, these negotiations will have preceded the commencement of the employment; but sometimes terms and conditions of employment are renegotiated during the course of the employment. The parties may agree that the employer will provide non-pecuniary benefits, such as use of a car or overseas travel, or make payments to someone else, such as for superannuation or school fees. The effect of that agreement may be to diminish the periodical payments made directly to the employee. Part of what might have been available to the employee as salary is diverted elsewhere. I do not think any of this matters. The question is not the genesis of the obligation but its nature.

In relation to non-pecuniary benefits, I cannot see how they can ever be regarded as `wages' for the purpose of the definition. The word `wages' is not defined by the Industrial Relations Act, so in s 170CD it bears its ordinary meaning. The Shorter Oxford Dictionary defines `wage' as:

`A payment to a person for service rendered; no esp the amount paid periodically for the labour or service of a workman or servant. Freq pl.'

The Macquarie Dictionary gives the primary meaning of `wage', noting that it is often plural, as `that which is paid for work or services, as by the day or week; hire; pay'. I think these definitions' emphasis on payment makes it difficult to argue that benefits that do not take the form of money payments are `wages'."

Mr Ginnane submitted that "the central rationale" of Ardino "is whether there existed the freedom within the employment to take the monetary value of benefits otherwise paid to third parties". I do not accept that submission. On the contrary, in Ardino at 228, Wilcox CJ listed a series of non-pecuniary benefits, being "use of a car or overseas travel, or ... payments to someone else, such as superannuation or school fees" (emphasis supplied). His Honour went on to say that he could not see how such non-pecuniary benefits "can ever be regarded as `wages' for the purposes of the definition". In any event, I do not accept the fundamental premise behind Mr Ginnane's submission. The Council had an obligation under the contract to pay the education expenses of Mr Hargreaves' children. Mr Hargreaves was not entitled under the contract to have paid to himself, instead of the relevant schools, money equivalent to such education expenses. It is not to the point that the amount of money which would be directed from the salary package to education expenses would vary from year to year depending on the age of the children. Any ability in Mr Hargreaves to redesign his salary package would necessarily be affected by the level of education expenses which were required to be met in any one year. In any event, during the year to 7 December 1994, education expenses were paid directly to the relevant schools by the Council in respect of expenses actually incurred. These expenses were agreed as between the parties to be $22880.35 plus $11039.77 by way of fringe benefits tax, thereby totalling $33920.12. When that amount is deducted from the amount of $86888 referred to earlier in these reasons, it is seen that Mr Hargreaves' relevant wages did not exceed $60000. It is not necessary, therefore, to explore whether other parts of Mr Hargreaves' salary package were not within the concept of "relevant wages".

I am fortified in my conclusion on this issue by the observations of Lee J in Gurran v Tarbook Pty Ltd (IRCA, 13 September 1996, unreported). I agree with the following salient points made by his Honour:

* The removal by s 170CD of the Act of the right previously given by the Legislature to employees to seek redress under the Act irrespective of the amount of their wages must be effected by clear words: Esber v Commonwealth[1992] HCA 20; (1992) 174 CLR 430.

* "wages" must be used in its accepted sense, i.e.: regular payments made by an employer to a worker (emphasis supplied) for labour provided.

* "wages" includes salary.

* "wages" is not the same as "remuneration" or "emoluments". 38

[39] The product of the foregoing consideration is to accept that while not explicitly bargained for before employment commenced, the annual leave loading was something that arose at a later time, with it being paid as a payment for labour provided, or in lieu of labour, being referable to the accrual of annual leave. I am satisfied that the payment of the annual leave loading was a payment of wages, and therefore to be included within Mr Mahoney’s earnings.

Fuel Allowance

[40] The payment of a $300 per month fuel allowance, or $69.23 per week, was characterised by Mr Gajdosik, a Director of the company, as being something negotiated at the start of the relationship:

“In addition to his salary, Rob received a monthly payment of $300 described in his contract as a "fuel allowance" and described in his payslip as a "car allowance." As above, there was no requirement for Rob to use a vehicle to discharge his duties as an employee. The reason why Rob was paid the extra $300 per month was because, in the course of negotiating his contract, Rob requested that we pay him this amount to match his previous employment. It is for this reason that I agreed to the request” 39

[41] Mr Maloney contests this characterisation saying both that it would have been insufficient to be competitive, as well as that the weekly car allowance “was for use of my own car for work purposes”. 40 The evidence on the subject of the utility of the fuel allowance is somewhat slight. Neither party kept a record of the amount of travel that was being done for work purposes. Mr Maloney lived relatively close-by to the John Herrod and Associates premises, within a few kilometres,41 and was able to point to a number of journeys that he undertook for work-related purposes. Nonetheless the overall evidence would suggest that it would be somewhat of a challenge to find either that all of the fuel allowance was for work-related purposes or that none was for private use.

[42] The Respondent puts forward that all of the fuel allowance should be assessed as private use. It argued that there was no requirement or expectation for Mr Maloney to use his car for work purposes and that the whole of the $300 monthly payment is, in reality, part of his earnings. 42 Its submissions in this regard relied upon the Full Bench decision within Sam Technology Engineers Pty Ltd v Mr Andrew Bernadou (Sam Technology).43 For reasons set out within the decision, the Full Bench considered it was necessary to give further consideration to the question of whether an employee’s “annual rate of earnings” included “a gross car allowance paid to the employee or the saved or private benefit of that allowance”.44 In relation to the high income threshold and determination of the person’s “annual rate of earnings” the Full Bench considered the following matters:

[67] Consistent with the purpose to which we refer in the previous paragraph, it has long been held, for the purpose of determining whether an employee is above the high income threshold for protection against unfair dismissal, that the focus is on the private benefit derived by an employee from the provision of a fully maintained motor vehicle. The provision of the vehicle for business purposes is not included in determining whether the employee has exceeded the high income threshold. A Full Bench of the Australian Industrial Relations Commission in Rofin Australia Pty Ltd v Newton  endorsed the following approach taken by Senior Deputy President Watson in determining whether any part of the provision of a fully maintained motor vehicle to an employee should be included as part of the employee’s remuneration:

“1. The private benefit derived by an employee through the provision to such an employee of a fully maintained motor vehicle will constitute remuneration for the purpose of s 170 CC(3) and (4), and

2. For the purposes of determining remuneration, the focus should be upon the private benefit derived by the employee and the provision of a motor vehicle for business purposes would not form part of the remuneration.

…Where a motor vehicle is provided to an employee in lieu of salary that might otherwise have been paid, it is appropriate that the private benefit derived by the employee from the provision of the motor-vehicle be counted as part of the employee’s remuneration.” 

[68] It must be recognised that previous legislation used the term “remuneration” to work out whether an employee exceeded the high income threshold.  “Remuneration” was held to mean “the reward payable by an employer to an employee for the work done by that employee in the course of his or her employment with that employer”. However, “remuneration” ordinarily involves the same considerations as “earnings”. We do not discern any intention on the part of the legislature to alter the point at which an employee exceeds the high income threshold by replacing “remuneration” with “earnings” as the relevant means by which the threshold is assessed.

[69] It would be somewhat incongruous to adopt an approach whereby:

(a) an employee who was provided with a fully maintained motor vehicle where the employee was required to use their vehicle for work purposes (but derived a private benefit because he or she did not use the vehicle solely for business purposes) had only the private benefit (but not the proportion attributable to the use of the vehicle for business purposes) included as part of their “annual rate of earnings” for the purpose of determining whether they exceeded the high income threshold, but

(b) an employee who was paid a car allowance in circumstances where the employee was required to use his or her car for work purposes (but derived a private benefit because they did not use the whole of the car allowance for business purposes) had the whole of the car allowance included as part of their “annual rate of earnings” for the purpose of determining whether they exceeded the high income threshold.

[70] Many of the cases in which it has been held that "earnings" means gross earnings have been decided, in part, on the basis that there would be “endless difficulties” if the court had to find out the figure which results after deducting expenses from gross earnings.  No such problem arises in the context of a car allowance provided to an employee. As has been the case for at least 20 years in relation to the provision of a fully maintained car to an employee, there is no significant barrier to the determination and calculation of the private benefit component of either the provision of a fully maintained car or the payment of a car allowance to an employee.

[71] We are fortified in our view that a car allowance should be treated in the manner we propose when regard is had to the exclusionary provisions in s.332(2), for example the exclusion of reimbursements from earnings in s.332(2)(b). It seems to us that if an employee uses his or her motor vehicle for work purposes and makes a claim for a motor vehicle mileage payment, this would properly be described as a reimbursement. Yet, if that same employee has been paid a vehicle allowance in anticipation of some work related use of the employee’s vehicle, should the proportion of the allowance paid in advance which can be attributed to work related private vehicle use be treated as “earnings”? We think not.

[72] For the reasons set out above and having regard to the relevant statutory context, we are of the view that a car allowance should be treated in the following way for the purpose of calculating an employee’s "annual rate of earnings" within the meaning of ss.332 and 382(b)(iii) of the Act:

(a) If a car allowance is paid to an employee in circumstances in which there is no requirement or expectation that the employee will have to use his or her car for work purposes, then the whole of the car allowance is, in reality, part of the employee’s wages and is therefore included in their “earnings”; or

(b) If a car allowance is paid to an employee at the time of their dismissal in circumstances in which there is a requirement or expectation that the employee will have to use his or her car for work purposes, then it will be necessary to determine and calculate the private benefit, if any, derived by the employee from the car allowance. To that end, we suggest the following methodology, which is based on the approach taken in Fewings:

1. Determine the annual distance travelled by the car in question. The amount of the annual distance will be as follows:

a. if the car allowance has been paid for at least 12 months prior to the dismissal - the distance travelled by the car over the 12 months immediately prior to the dismissal; or

b. if the car allowance has been paid for a period of less than 12 months prior to the dismissal, determine the distance travelled by the car in the period during which the car allowance has been paid and then extrapolate that distance over a period of 12 months to calculate an annual distance. For example, if an employee moved into a new position with his or her employer 6 months prior to his or her dismissal, received a car allowance during that 6 month period, and drove his or her car for 10,000 km in that 6 month period, the assumed annual distance travelled by the car for the purpose of calculating the employee’s “annual rate of earnings” would be 20,000 km.

2. Determine the percentage of the annual distance travelled which was for business use, which would not include travel between the employee’s home and usual place of work. If the car allowance has been paid for a period of less than 12 months prior to the dismissal, determine the business use percentage of the distance travelled in the period during which the car allowance was paid.

3. Multiply the annual distance calculated in accordance with paragraph 1 above by the business use percentage calculated in accordance with paragraph 2 above. This provides the annual distance travelled for business purposes.

4. Estimate the cost per kilometre for a car of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations.

5. Multiply the annual distance travelled for business purposes by the estimated cost per kilometre. The result is the annual cost of using the car for work purposes. Compare that annual cost with the amount of the annual car allowance. The amount of the annual car allowance will be as follows:

a. if the car allowance was paid for at least 12 months prior to the dismissal - the amount of the car allowance paid to the employee in the 12 months immediately prior to the dismissal; or

b. if the car allowance has been paid for a period of less than 12 months prior to the dismissal, determine the amount of the car allowance paid in that period and then extrapolate that payment over a period of 12 months to calculate an annual amount of the car allowance. For example, if an employee in a business other than a small business was employed in that business for a period of 9 months prior to his or her dismissal, and received a car allowance of $2,000 each month in that 9 month period, the assumed annual car allowance for the purpose of calculating the employee’s “annual rate of earnings” would be $24,000 ($2,000/month x 12 months = $24,000).

6. If the amount of the annual car allowance exceeds the annual cost of using the car for work purposes, the difference is the private benefit to the employee of the car allowance, which forms part of their "annual rate of earnings". 45

[43] The foregoing passage refers to a calculation approach originally expressed in “Fewings”, being the matter of Kunbarllanjnja Community Government Council v Fewings. After establishing the formula referred to, the Full Bench in Fewings considered which party carried the onus where the value of a vehicle is disputed:

“The party advancing the proposition that an applicant is excluded from the relevant provisions of the Act because regulation 30B(1)(f) carries the burden of establishing the evidentiary basis upon which such a determination can be made. That obligation has not been met in this case. Indeed on the material before us it is impossible to be precise about the value of the applicant's private use of the vehicle supplied by his employer. …” 46

[44] The rationality of the formula espoused in both Fewings and Sam Technology is of course clear. However, in this instance none of the above information is before the Commission and it becomes impossible to apply the approach that would otherwise be used.

[45] Mr Maloney argued John Herrod and Associates had not discharged the onus to establish the evidentiary base for its contention that there was no business component to be attributed for the Fuel Allowance. While a submission is understandable, it ultimately does not assist the resolution of Mr Maloney’s case for the reason that there is little firm evidence that would allow the Commission to proceed under either of the methodologies set out above in Sam Technology. Mr Maloney argues there was some business use for the vehicle which potentially means that the first of the methodologies advanced in Sam Technology cannot be applied. Application of the second rule is problematic, since neither party has submitted any logbooks or other information about the vehicle used by Mr Maloney that would enable the Commission to proceed under the second of the two methodologies. All that the Commission does have for it is the generalities that each have set forth in their evidence.

[46] As a result, it is most unfortunately necessary to proceed on the basis of those generalities. On Mr Maloney’s side, he suggests that there was an incidental business use, perhaps even regular business use, but did not go so far as to say that such involved a large number of trips made over a considerable distance. On the Respondent’s side, it put forward that Mr Maloney lived somewhat close to the work premises; that they did not require him to use the vehicle for business purposes; and that, notwithstanding that concession, Mr Bennett recollects only one occasion on which Mr Maloney used his car for work purposes and attended on a client based in Moorabbin. 47

[47] After considering all that each has to say on the subject, I am neither satisfied that the Fuel Allowance was entirely for private purposes or that none of it was. The Respondent concedes that there was at least one occasion within its knowledge where Mr Maloney used the vehicle for business use. There were likely others instances of business use that the Directors simply did not know about. Such would be both entirely plausible in a busy workplace as well as it being entirely reasonable on the part of Mr Maloney to use his own vehicle for errands that needed to be completed, if for no other reason than the fact that he was being paid an allowance to recompense him for fuel. On the other hand, there is no compelling evidence that would lead me to the conclusion that there was a substantial or majority use of the Fuel Allowance for business purposes. What Mr Maloney puts forward about his business use of the vehicle does not disclose a business use above that of an incidental purpose, or for the use of local errands. Plainly there was a significant, if not total, private use component for the allowance.

[48] After consideration of all of the factors, I consider it appropriate to apportion the Fuel Allowance on the basis that 80% was for private use and 20% for business use. Such implies that perhaps as much as 1 in 5 kilometres of travel funded by the fuel allowance were for business purposes. Both the evidence of Mr Maloney and of the Respondent would not reasonably lead to the proposition that business use of the fuel allowance was any greater than 1 in 5. An apportionment on the basis of 20% business use may even be overly generous to Mr Maloney given the much muted examples that were given by him of his business use of the Fuel Allowance.

Mobile phone

[49] There is a similarly incomplete state of evidence before the Commission in relation to the use of the mobile phone. The evidence shows conclusively that there was a phone provided and that it cost the Respondent $99 a month to service. The same evidence shows that at least some of the calls made on the phone were for personal purposes.

[50] Cross examination of Mr Maloney elicited both that a substantial number of minutes of the overall call base were from Mr Maloney to his partner, as well as that a number of other calls were made by him on weekends or from the airport when he may well have been travelling to his home in Brisbane. Mr Maloney contests the essential argument of the Respondent that the largest proportion of the phones costs are attributable to his private use and instead puts forward that he was always taking calls after hours and that the purpose of the phone was largely for that requirement.

[51] Neither party provided a detailed analysis of the costs or how split could rationally be made of the costs. Neither grappled with the fact that the cost of the phone plan is fixed, within reason, with the cost not varying irrespective of whether there was one call made or hundreds of thousands, with hours and hours of call-time. The actual phone plan is shown on the invoice provided to the Commission as being a Telstra “Business Mobile Plan $99”, but there are no details before the Commission as to what that plan allowed in the way of calls and data, which could be a little or a lot. Instead of providing a detailed attribution, each contended, without much supporting material, that an arbitrary amount should be determined by the Commission. In the case of Mr Maloney that amount was submitted to be 0%. In the case of John Herrod and Associates the amount they say is attributable to personal use is 80%. 48

[52] In the course of cross examination the Respondent pointed to four calls with a combined duration of 1:35:65 which included three calls to a number identified as Mr Maloney’s partner. There are other calls to the same number on the invoices provided to the Commission, which deals with the range between 11 November and 10 December 2018 and 11 December 2018 to 10 January 2019.

[53] I am satisfied from a perusal of the invoices before the Commission that a preponderance of the calls made by Mr Maloney were to the phone number he identified as his partner’s. There are 16 pages of invoices before the Commission relating to Mr Maloney’s phone number. Six of those pages relate to packet data or internet charges. There is no evidence before the Commission about the purpose of that utilisation. As a result, no account is taken of the use of the phone for internet purposes. Essentially eight of the invoice pages relate to the making of calls. For five of those pages, the calls placed by Mr Maloney to his partner represented the largest number of calls placed, as well as being the longest aggregate duration.

[54] After consideration of all of the telephone data before the Commission I am satisfied that it is reasonable to give an apportionment to total earnings of 80% of the costs incurred by John Herrod and Associates, which is the proportion argued for the Respondent.

[55] As a result of these considerations, Mr Maloney’s total earnings are assessed as follows:

[56] Since the foregoing amount is greater than the high income threshold of $145,400 per year, Mr Maloney was not at the time of his termination a person protected from unfair dismissal and I must therefore dismiss his application. An order to that effect is issued at the same time as this decision.

COMMISSIONER

Appearances:

Mr G. Dircks, of Just Relations on behalf of the Applicant.

Mr A. Denton Counsel instructed by COMLAW Barristers and Solicitors for the Respondent.

Hearing details:

2019.

Melbourne:

18 April.

Printed by authority of the Commonwealth Government Printer

<PR707975>

 1   Exhibit ASOF, Statement of Agreed Facts, dated 17 April 2019, [1].

 2   Ibid, [2].

 3   Exhibit A2, Amended Witness Statement of Rob Maloney, dated 22 March 2019, Attachment RM-5.

 4   See https://www.fwc.gov.au/unfair-dismissals-benchbook/coverage-unfair-dismissal/high-income-threshold

 5   MA000026.

 6   Exhibit ASOF, [6].

 7   Exhibit A2, Attachment RM-1.

 8   Ibid, [11] – [20].

 9   Exhibit A3, Applicant Outline of Submissions, dated 22 March 2019, [19].

 10   Exhibit R1, Witness Statement Stefan Gajdosik, dated 18 March 2019.

 11   Ibid, [7].

 12   Exhibit A3, [26].

 13   Ibid.

 14   Ibid, [33].

 15   Ibid, [39] – [40].

 16   Ibid.

 17   Ibid, 22.

 18   Fair Work Act 2009 (Cth), s.382(b)(i).

 19   Exhibit A3, [1].

 20   Ibid, [11] – [12].

 21   Exhibit A2, [12] – [14].

 22   Ibid.

 23   Transcript, PN 213 – 214.

 24   Exhibit A2, [61] – [77].

 25   Transcript, PN 159 - 163.

 26   McCullagh v Acciona Infrastructure Australia Pty Ltd [2018] FWC 2997, [58] – [62].

 27   (2002) 122 IR 387; followed in McMenemy v Thomas Duryea Consulting, [2012] FWAFB 7184, at [37].

 28   Ibid, at [9].

 29   [2014] FCCA 4.

 30   Ibid, [133].

 31   (2003) (unreported, AIRC (FB)), PR938031.

 32   Ibid, at [13].

 33   Re City of Wanneroo v Holmes [1989] FCA 369; 30 IR 362, at [43].

 34   Exhibit A2, [17].

 35   Transcript, PN 71; 82; 96.

 36   Fair Work Act 2009 (Cth), s.382(b)(iii).

 37   Exhibit A3, [19].

 38   Hargreaves v National Safety Council of Australia Ltd [1997] FCA 763, (1997) 75 IR 19, pp.22 – 24.

 39   Exhibit R1, [6].

 40   Exhibit A2, [6].

 41   Transcript PN 99 - 100.

 42   Exhibit R5, Respondent Submissions Jurisdictional Objection, dated 18 March 2019, [17].

 43   [2018] FWCFB 1767.

 44   Ibid, [60].

 45   [2018] FWCFB 1767.

 46   AIRC, (1998) Unreported, Print Q0675, pp.5.

 47   Exhibit R4, Witness Statement of Justin Bennet, dated 18 March 2019, [4].

 48   Exhibit R1, [9].