Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - jurisdictional objection - high income threshold - annual rate of earnings below the high income threshold of $153,600 - jurisdictional objection dismissed.

[1] On 12 February 2021 Mr Heath Morrison applied to the Fair Work Commission under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy, having been dismissed from his employment with Mabey Hire on 22 January 2021.

[2] On 19 February 2021, a Form F4 - Objection to application for unfair dismissal remedy (Form F4) was filed in response. In it, Mabey Hire raised the jurisdictional objection that Mr Morrison's annual rate of earnings was more than the high income threshold of $153,600 and therefore he is not a person protected from unfair dismissal, as required by s.382 of the Act. On 23 February 2021 Mabey Hire filed a Form F3 - Employer Response to application for an Unfair Dismissal Remedy (Form F3) in which it repeated its jurisdictional objection.

[3] Following the filing of material, I conducted a Determinative Conference on 12 April 2021 in relation the jurisdictional objection. Mr Morrison appeared on his own behalf and Mr Gary Pepper (Human Resources Manager) appeared on behalf of Mabey Hire.

[4] Section 382 of the Act prescribes in what circumstances a person is protected from unfair dismissal:

"382 When a person is protected from unfair dismissal

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

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

(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."

Did Mr Morrison complete the minimum employment period? (s.382(a))

[5] It is not in dispute that Mr Morrison commenced employment with Mabey Hire on 20 October 2016 and that the termination of his employment took effect on 22 January 2021. I am satisfied that the requirements of s.382(a) are met.

Was Mr Morrison covered by a modern award or an enterprise agreement? (s.382(b)(i) and (ii))?

[6] Neither Mr Morrison nor Mabey Hire contend that Mr Morrison was covered by a modern award or an enterprise agreement at the time of dismissal and I am satisfied this was the case.

Were Mr Morrison's annual earnings over the $153,600 high income threshold? (s.382(b)(iii))

[7] If an employee is neither covered by a modern award nor an enterprise agreement (as is the case with Mr Morrison) but their annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is more than the high income threshold, then they are not a person protected from unfair dismissal and are not eligible to make an application for an unfair dismissal remedy.

[8] Section 333 of the Act provides that the high income threshold is the amount prescribed by, or worked out in the manner prescribed in the regulations. Regulation 2.13 of the Fair Work Regulations 2009 provides that as of 1 July 2020 the figure was $153,600.

[9] Section 332 of the Act defines 'earnings' as follows:

(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;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

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."

[10] Regulation 3.05 explains how to work out amounts for the purposes of assessing whether the high income threshold applies in relation to a dismissal, and includes Reg 3.05(6) that provides for circumstances where a non-monetary benefit that has not been for an agreed amount may be included for the purposes of the unfair dismissal jurisdiction.

[11] Regulation 3.05(6) reads as follows:

"REGULATION 3.05 When a person is protected from unfair dismissal--high income threshold

(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."

[12] The parties agree that Mr Morrison's employment was subject to an employment contract dated 16 October 2016.[1] The parties agree and I am satisfied that Mr Morrison's base salary as at the date of termination was $125,000. This amount is to be included in Mr Morrison's earnings in accordance with s.332(1)(a) of the Act.

[13] Clause 10 of Mr Morrison's employment contract states:

10.1 You will be provided with a fully maintained job-related vehicle in accordance with the relevant Company Policy. You are required to read the Tool of Trade Vehicle Policy and Fuel Card Policy prior to being issued with a vehicle.

10.2 Excessive personal use will not be condoned, and the Company may seek reimbursement from you (via deductions from your wages) for excessive personal fuel costs.

10.3 During periods of leave (paid or unpaid), the vehicle may be required to remain on site for use by other personnel conducting company business".

[14] Having regard to the matters in Clause 10 of the employment contract:

• It outlines that Mr Morrison would be provided with a tool of trade and 'fully maintained job-related' vehicle;

• Neither the Tool of Trade Vehicle or Fuel Card policies referred to were put before me; and

• It was not submitted that Mr Morrison's personal use was so excessive that Mabey Hire had sought reimbursement from him for excessive personal fuel costs.

[15] In Rofin Australia Pty Ltd v Newton[2] the Full Bench of the Australian Industrial Relations Commission stated:

"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. Where, however, the vehicle is provided for business purposes and the employee's entitlement to private use is purely incidental, the provision of the motor vehicle should be treated no differently to the provision by the employer of any other tool or piece of equipment essential to the performance of the job."[3]

[16] In the circumstances of this case, even if Mabey Hire had not sought reimbursement from Mr Morrison for excessive personal fuel costs, it appears his private use was more than incidental. I will therefore have regard to the value of Mr Morrison's private use of the motor vehicle provided to him by Mabey Hire.

[17] In H.W. Fewings v Kunbarllanjnja Community Government Council[4] the Full Bench of the Australian Industrial Relations Commission held that the most appropriate method of calculating the monetary value of the benefit of the private use of a motor vehicle was to apply the following formula:

1. Determine the annual distance travelled by the vehicle in question.

2. Determine the percentage of that distance that was for private use.

3. Multiply the above two figures to obtain the annual distance travelled for private purposes.

4. Estimate the cost per kilometre for a vehicle of that type (may be obtained from RACV, NRMA or other similar motoring association).

5. Multiply the annual distance travelled for private purpose (obtained at step 3) by the estimated cost per kilometre.

[18] Both parties put material before me regarding the private use by Mr Morrison during the period 1 July 2020-31 December 2020.

[19] Prior to hearing Mabey Hire submitted that virtually all of Mr Morrison's travel in the vehicle provided to him was personal. It submitted that from the date the vehicle was provided (1 September 2018) until the date of termination (22 January 2021) the vehicle's odometer indicated that 96,941.67 km had been travelled. Mabey Hire divided these by the period of time Mr Morrison had use of the vehicle (27.71 months) to produce a monthly rate of travel of 3,498.43km. It then said this equated to annual travel of 41,981.24 km, of which just 74 km was business related in 2020. Mabey Hire submits that by multiplying the balance (41,907.24) by the RACV weekly running cost for a "large SUV" ($0.89c per km),[5] the benefit to Mr Morrison of the private use of the vehicle it provided to him was $37,297.44. The Mabey Hire position is that 99.82% of the total usage was private use by Mr Morrison.

[20] At hearing, Mr Pepper said a review of the GPS system for the vehicle for the period 1 July 2020 - 31 December 2020 indicates 4,055 km of travel after 5pm on Mondays-Fridays and 3,619 km of travel on weekends, producing a total of 7,674 km of private use during that period.

[21] Mr Morrison submitted that during the period 1 July 2020 - 31 December 2020, his private use totalled 7,733.4 km. He said this figure was derived from:

1. 111 working days, travel from Craigieburn to Bundoora (return trip) = 53.4 km round trip x 111 trips = 5,927.4 km;

2. 10 working days, travel from Clonbinane to Bundoora (return trip) = 125.6 km round trip x 10 trips = 1,256 km;

3. 2 public holidays = 50 km per day (estimated) = 100 km; and

4. 9 days annual leave = 50 km per day (estimated) = 450 km.

[22] There was no dispute that Mr Morrison had been provided with a new vehicle (Registration: 1NU 6CD) on or about 1 September 2018 or that 96,941.67 km had been recorded as having been driven from that time the date of his termination on 22 January 2021. Nor were the following odometer readings for the vehicle in dispute:

• On 8 May 2020 - 74,332km;[6] and

• On 9 October 2020 - 87,813km.[7]

[23] If the reading on 8 May 2020 (74,332 km) is subtracted from the 96,941.67 km reading on the date of Mr Morrison's termination on 22 January 2021, it is evident that a total of 22,609.67 km was travelled in that 37-week period. This equates to an average of 611.072 km per week and I consider this to be the most accurate and fair basis for calculating Mr Morrison's private use of the vehicle. Converting this 611.072 km per week into an annual figure produces the total of 31,775.75 km (611.072 x 52 weeks).

[24] In order to assess the private use, I have analysed figures for annual private use from two methods of calculation.

[25] Dealing firstly with the figures for private use submitted by the parties for the period 1 July 2020 - 31 December 2020 yields the following:

• Mabey Hire: 7,674km x $0.89 x 2 = $13,659.72

• Mr Morrison: 7733.4km x $0.89 x 2 = $13,765.45

[26] I consider neither total is an entirely accurate reflection of the private usage because Mabey Hire's GPS figures would not appear to pick up any travel from Mr Morrison's home to his place of work each day, while Mr Morrison's figures do not include any weekend travel. However, even if the two totals were added together, the total annual sum for private usage would be $27,425.17. Mabey Hire also claimed there would have been additional personal usage by Mr Morrison on holidays but produced no GPS data at the hearing to support this assertion.

[27] The second method of calculation, and the one I will apply, is to accept Mabey Hire's case at its highest and assume that virtually all of Mr Morrison's use of the vehicle was private usage. Multiplying the 31,775.75 km for annual usage calculated in [23] above by the Mabey Hire position that 99.82% of the total usage was private use by Mr Morrison, produces the annual distance of 31,718.56 km travelled for private purposes. Multiplying this total by the RACV weekly running cost for a "large SUV" ($0.89c per km) produces the sum of $28,229.52.

[28] Clause 9 of Mr Morrison's employment contract states:

9.1 In this position you will be provided with the use of a mobile telephone. This tool of trade is to be utilised for business purposes unless written permission is obtained from the Company beforehand. Please ensure that you familiarise yourself with the relevant policies and conditions of use prior to your appointment.

9.2 Excessive personal use will not be condoned, and the Company may seek reimbursement from you (via deductions from your wages) for excessive personal voice and/or data costs".

[29] Mabey Hire submitted material that indicates that during the period 2 July 2020 - 1 January 2021, Mr Morrison had the benefit of $91.26 in personal calls on the company supplied mobile phone.[8] Mabey Hire calculated this sum by calculating what percentage personal calls comprised of total calls each month and then multiplying that percentage by the monthly charge for the mobile phone provided to Mr Morrison. These figures were not challenged by Mr Morrison. Although Mabey Hire also provided a figure for January 2021, I do not consider it reasonable to include this as part of the calculation because I observe from payslips provided to the Commission that Mr Morrison was on annual leave for almost all of this period and his contract of employment contemplated personal use that was not excessive. Calculating the personal usage as an annual figure ($91.26 x 2) produces the sum of $182.52.

[30] The parties agree that in the period 1 July 2020 - 31 December 2020, Mr Morrison had the benefit of $20.76 in road toll charges.[9] Calculating this as an annual figure ($20.76 x 2) produces the sum of $41.52.

[31] Putting Mabey Hire's Case at its highest, I consider that Mr Morrison's annual rate of earnings at the date of his termination is to be calculated by totalling the following:

• Annual Base Salary - $125,000 (see [12] above);

• Private usage of company provided vehicle - $28,229.52 (see [27] above);

• Personal usage of company provided mobile telephone - $182.52 (see [29] above); and

• Out of hours road tolls - $41.52 (see [30] above).

[32] The total calculated is $153,453.56 and since this is below the high income threshold of $153,600 and Mr Morrison completed a period of employment of at least the minimum employment period immediately before his summary dismissal on 22 January 2021, Mr Morrison is a person protected from unfair dismissal within the meaning of s.382 of the Act.

[33] Mabey Hire's jurisdictional objection that Mr Morrison's annual rate of earnings was more than the high income threshold of $153,600 is dismissed and an Order to that effect will be issued with this Decision.

[34] Issued concurrently with this Decision are Directions for the filing and service of further material to address the question of the merits of Mr Morrison's unfair dismissal application. I also encourage the parties to engage in discussions to see whether a settlement agreement might be reached and thereby negating the necessity for any further hearing, which will require further time, effort and expense on the part of the parties. I note in this regard that the matter has yet to have been conciliated and will facilitate making available a Member of the Commission to assist the parties if the parties so request. Such arrangements can be made by contacting my Chambers.

[2] (1997) 78 IR 78.

[4] Print Q0675 (AIRCFB, Ross VP, Watson SDP, Bacon C, 7 May 1998).

[5] See - https://www.racv.com.au/on-the-road/buying-a-car/car-running-costs.html#carculator (SUV Large - Toyota Kluger).

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