Alan Ferguson v Macmahon Contractors Pty Ltd

[2015] FWC 1294

[2015] FWC 1294

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Alan Ferguson
v
Macmahon Contractors Pty Ltd
(U2014/15725)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 26 FEBRUARY 2015

Application for relief from unfair dismissal.

[1] Mr Alan Ferguson was employed by Macmahon Contractors Pty Ltd until his employment was terminated on 24 November 2014. Mr Ferguson lodged an unfair dismissal application. Macmahon Contractors objected to Mr Ferguson’s application because it said Mr Ferguson earned more than the high income threshold.

[2] It was not contested that neither a modern award nor an enterprise agreement applied to Mr Ferguson. Nor was it disputed that Mr Ferguson’s remuneration package consisted of:

$126,170.00 base salary

$12,617.00 site allowance

Plus superannuation

[3] The issue to be determined is whether the site allowance should be included as part of Mr Ferguson’s annual rate of earnings.

[4] Earnings are defined in section 332 of the Fair Work Act 2009 as follows:

“(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.”

[5] Mr Ferguson’s contract of employment provided as follows:

“You are eligible for a 10% site allowance. This allowance is paid in addition to your salary and is to compensate you for the factors associated with being located on site, including but not limited to, any disability, location or climatic conditions. This allowance is only payable whilst you are on site and assigned to this site/project and you will be paid the appropriate allowance in accordance with your assigned site.”

[6] The site allowance was included for the purpose of calculating Mr Ferguson’s superannuation entitlement. It was paid whilst he was on annual leave or personal leave (except for extended absences) but not long service leave. Mr Ferguson’s job as a site trainer only existed at mine sites. 1

[7] It was submitted by Mr Ferguson that the site allowance should not be included because it is paid as compensation. Mr Ferguson submitted that he incurred additional expenses such as mobile phone bills and he also suffered other disadvantages such as separation from his family due to his offsite work.

[8] It was also submitted that because Macmahon Contractors could relocate Mr Ferguson at its sole discretion to a site where Mr Ferguson was not entitled to a site allowance, the amount could not be determined in advance.

[9] I do not accept these submissions. While a site allowance may be paid to compensate the employee for the disabilities associated with working away from home, it is not a living away from home allowance. 2 Nor is it a discretionary bonus.3 I accept that Mr Ferguson would not have been entitled to the allowance if he were transferred to Perth for example however that does not mean the amount should not be included in his annual earnings. There are many circumstances where an amount which is included in an employee’s wages will cease being paid because of changed circumstances. For example, an employee who receives a night shift penalty will have that amount included, but that penalty will not be paid if the employee ceases to work night shift. The site allowance is not discretionary. It is paid if certain agreed conditions are met.

[10] Deputy President Smith in Venning v McConnell Dowell Constructions (Aust) Pty Ltd 4found that a site allowance was not included in the annual earnings. In that case the site allowance was not payable if “there is no longer a requirement for the Employee to work at the site or where he or she is no longer subject to the conditions that warrant the payment of the Site Allowance.”5 The site allowance was not payable when the employee was on annual leave or long service leave.6 Superannuation was not paid on the site allowance.7

[11] In that case the employer had greater discretion to remove the site allowance and it was not part of the employee’s ordinary time earnings for superannuation purposes nor was it payable on annual leave. That is not the case here.

[12] I therefore find that the site allowance is a part of Mr Ferguson’s wages and is included in Mr Ferguson’s annual earnings. As such, he earned more than the high income threshold and therefore is not protected from unfair dismissal. Mr Ferguson’s application is therefore dismissed.

DEPUTY PRESIDENT

Appearances:

G Pinchen for the Applicant.

T Noonan for the Respondent.

Hearing details:

2015.

Melbourne and Perth (video hearing):

February 5.

 1 Exhibit R1 at [5].

 2   Mr Lee C v CLS Pty Ltd [2009] FWA 779.

 3   Jenny Craig Weight Loss Centres Pty Ltd v I Margolina [2011] FWAFB 9137.

 4   [2013] FWC 7838.

 5 Ibid at [7].

 6   Ibid.

 7 Ibid at [6].

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