[2018] FWC 7305[Note: a correction has been issued to this document]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Andrew Bernadou
v
Sam Technology Engineering Pty Ltd
(U2017/3288)

COMMISSIONER BISSETT

MELBOURNE, 20 NOVEMBER 2018

Application for an unfair dismissal remedy - high income threshold – jurisdictional objection dismissed.

[1] Mr Andrew Bernadou (Applicant) has made an application seeking relief from unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (FW Act). The Applicant was employed by Sam Technology Engineering Pty Ltd (Respondent).

[2] The Respondent has raised a jurisdictional objection to the Fair Work Commission (Commission) dealing with the Applicant’s application as it says that, at the time his employment was terminated, the Applicant earned above the high income threshold. The Applicant’s employment was terminated on 10 March 2017. The high income threshold at that time was $138,900.

[3] The jurisdictional objection was heard by the Commission in June 2017. A decision 1 was issued in which it was found that the Applicant did not earn above the high income threshold at the time his employment was terminated and hence dismissed the Respondent’s objection. The Respondent appealed that decision. On 27 March 2018 a Full Bench of the Commission upheld the appeal2 and the file was remitted to determine the question of “whether, at the time of his dismissal, Mr Bernadou’s annual rate of earnings, and such other sums (if any) worked out in relation to him in accordance with the regulations is less than the high income threshold?” 3

[4] In considering the matter subject to appeal, specifically how the Applicant’s car allowance of $20,000 per year should be treated, the Full Bench said:

[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”.

[5] The Full Bench also said:

[74] The Commissioner was required to determine for himself what the sum of Mr Bernadou’s annual rate of earnings was and whether or not that sum was less than the high income threshold. It is apparent from the submissions made by STE and Mr Bernadou that the purpose of the car allowance is disputed, as are the additional payments made by STE to Mr Bernadou for fuel and road toll expenses. These matters were not dealt with by the Commissioner, despite having been raised before him. They require determination following evidence and submissions.

[6] The jurisdictional objection was subsequently heard by me in October 2018. The Applicant represented himself. The Respondent was represented by Mr James Schmidt, an employee of the Respondent and the Applicant’s Manager at the time of his employment.

LEGISALTIVE FRAMEWORK

[7] Section 382 of the FW Act states that:

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.

[8] It is not claimed that a modern award covered or an enterprise agreement applied to the Applicant’s employment. In this case it is claimed that the Applicant’s annual rate of earnings was higher than the high income threshold and that in such circumstances he is not protected from unfair dismissal and unable to make his claim.

[9] Section 332 of the FW Act defies earnings as follows:

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

(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;

(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.

[10] Regulation 3.05(6) of the Fair Work Regulations 2009 deals with how the value of non-monetary benefits are to be ascertained.

[11] The Full Bench considered all of these matters in reaching its conclusion in relation to the treatment of the car allowance.

MR BERNADOU’S EARNINGS AT THE TIME HIS EMPLOYMENT WAS TERMINATED

Submissions and evidence

[12] At the time his employment was terminated the Applicant was in receipt of:

Salary	$125,000 inclusive of an additional amount the Applicant paid to superannuation
Car allowance	$20,000
Superannuation	SGC amount

[13] The Applicant had a laptop and mobile phone and received reimbursement for expenses for petrol and road tolls although the amount of such reimbursement is in dispute.

[14] Evidence was given in the proceedings by the Applicant (Mr Bernadou); Professor Reginald Coutts and Mr James Schmidt of the Respondent. I set out their evidence below. I have then considered each component of the Applicant’s remuneration:

1. Car allowance.

2. Petrol reimbursement.

3. Toll reimbursement.

4. Employer provided mobile phone.

5. Employer provided laptop.

[15] Following the conclusion of the hearing and, on review of the material before me, I requested each of the parties to provide submissions in relation to:

1. The calculation of some missing/unreadable petrol receipt values;

2. Whether the Commission should use the RACV “reimbursement rate” or “total operating costs” figures and whether I should rely on the 2016 or 2017 rates;

3. How the cost of tolls attributable to private travel should be determined; and

4. If the Respondent had, in fact, provided a mobile phone, laptop and dongle to the Applicant for business purposes.

[16] I have taken these additional submissions from the parties into account in reaching my decision.

The Respondent

[17] Mr James Schmidt for the Respondent said that when you go through the Applicant’s log book “there are no entries that account for any kilometres going from his home…to Dandenong” 4 (where the Respondent’s Melbourne office is located). Mr Schmidt said it was intended that the Applicant work from the Dandenong office and was never given permission to work from home. For this reason it would reasonably be expected that the Applicant attended to the office “at least three days a week”. 5

[18] The Respondent further said that there were too many errors in the Applicants log book as to his actual whereabouts at any particular time for the Commission to be able to rely on this as an accurate record for the purpose of determining business travel. The Respondent said that he took a snapshot of the log book for the week beginning 6 March 2017. In this week there were three days when the log book entries indicate the Applicant travelled to Dandenong/Dandenong South. Mr Schmidt said that the Commission should accept that such trips involved travel to and/or from home and the office.

[19] The Respondent suggested that a review of the Applicant’s work provided mobile phone locations (as indicated on the mobile phone bill) showed that the Applicant was not in the locations suggested by his log book entries.

[20] Mr Schmidt also said that the distances detailed in the log book are inaccurate and overestimate the actual distance travelled.

[21] In summary, the Respondent said that the log book is not reliable as:

• it does not show travel to and from the office as private travel but rather included it as business travel;

• that it, along with mobile phone data, showed that the Applicant travelled to locations where there were no clients; and

• it showed extraordinary low weekend private use of the vehicle and had inaccurate distances recorded.

[22] For these reasons Mr Schmidt suggested that the log book was so inaccurate that the Commission should consider an alternative method of determining how many kilometres travelled by the Applicant were for work.

[23] The Respondent put forward a number of alternative means by which the calculation should be done. These alternatives vary through the various submissions filed and at times are not easy to follow but appear to be: 6

Alternative A

(a) Calculate the value of the car allowance plus petrol and tolls (the Respondent in its submissions says this is $23,380.00 but the amounts it provides total $23,355).

(b) Determine that the Applicant works 46.5 7 weeks per year.

(c) If the Applicant travelled to and from the office each day this would amount to 300km per week or 13,950km per year (300 x 46.5). This represents 63% of the total 22,000 kilometres claimed as travel for work purposes.

Apply 63% to $23,380 and add this to the Applicant’s salary, private phone and private computer use to determine annual earnings.

Alternative B

(a) Value of car allowance plus petrol plus tolls is $23,355.00

(b) From the 22,000km business travel claimed in the log book deduct 13,950km for travel to and from office each day (see above calculation)

(c) Of the 8,050km business travel remaining, estimate only 40% of this travel is business which equals 3,220km or 15% of 22,000km claimed.

(d) 15% of $23,380 = $3,503 attributable to business travel

85% of $23,380 = $19,852 in private benefit. Add this to salary etc.

Alternative C (1)

(a) By the method set out in Alternative A above the Applicant only travelled 8,345km per year for business purposes. This is 37% of the total business travel claimed by the Applicant.

(b) If you apply 37% to $23,380 (sic) then the remaining 63% (or $14,729 out of the $23,380) is personal.

Add this to salary etc. for the purpose of determining annual earnings.

Alternative C (2)

(a) The total number of available working days (taking into account weekends, annual leave and public holidays) is 212.

(b) The Applicant claimed petrol on average 3 times per month. The car held 44 litres of fuel so used (3 x 44) 132 litres per month.

(d) The weekly commute to and from the office is 300km. This is 72% or 412.5km calculated at (c).

72% of the $20,000 car allowance is therefore for private use and should be added to salary etc. to determine the annual earnings.

Alternative C(3)

(a) The RACV says the weekly cost to run a 320 BMW (medium car) is $196.64. Based on 7 days per week the daily cost is therefore $28.09.

(b) The car is available for business use 212 days per year (see above) so total cost to run the car for business purposes is ($28.09 x 212) $5,955.38.

(c) Deduct this amount from the value of the allowance plus petrol of $23,380 (sic) leaving $17,424.62 which is the private value.

Add this amount to salary etc. to determine annual earnings.

[24] The Respondent says that, regardless of which of its alternatives above are chosen, all show the private benefit to the Applicant from the car allowance such that his remuneration exceeds the high income threshold.

[25] The Respondent relies on a reimbursement rate of 68.2 cents/km 8 as provided by the RACV for the 2016 year as the cost of running the Applicant’s car. Further the Respondent provided to the Commission correspondence from the RACV which indicated that the BMW in question is a “medium class sedan” and not a “luxury” car.

[26] The Respondent did not address me on why I should use the reimbursement rate and not the total operating costs as provided by the RACV. The Respondent also says that, as most of the work performed by the Applicant (presumably in the last 12 months) was in 2016, I should use the 2016 reimbursement rate of 68.2 cents/km in determining the private value of the motor vehicle. In its submissions of 19 November 2018 the Respondent says the reimbursement rate of 66 cents/km for 2018 should be used.

[27] The Respondent further submits that, based on the information the Respondent could locate, the cost of fuel used by the Applicant was $56 per week. The Respondent has however based its calculations on a cost of $47 per week ($2,444 per annum) which it says is reasonable given the expenditure on fuel in earlier years.

[28] The Respondent provided no further information on the cost of tolls beyond its earlier submissions that the cost was $4.23 per trip. 9

[29] The Respondent says that the unreliability of the log book information is such that the Commission has no choice but to utilise one of the Respondent’s alternative methods to determine the private value of the total car allowance.

[30] Mr Schmidt said that, for the entire period the Applicant was employed, the office location was Dandenong. He did not dispute that the Applicant was, at times, required to use his car for work but said he would expect that the Applicant would contact clients and potential clients by phone spending less time on the road actually visiting them. Mr Schmidt said that the Applicant was required to carry out his duties in a “proactive manner in the sense of being efficient.” 10

[31] The Respondent agrees that it provided the Applicant with a mobile phone, a laptop and a dongle.

The Applicant

[32] At the time his employment was terminated the vehicle the Applicant used for work purposes was a 2014 model BMW 320D.

[33] The Applicant said that he did not use the car he used for work for weekend travel and that weekend travel was done in his wife’s car.

[34] The Applicant said that he worked from home most days with very few visits to the office. Typically he would start work at 6.00am and work until late in the evening. He would make calls from home and from his car while driving.

[35] The Applicant said that the $20,000 per annum car allowance was an agreed amount. The car was his mobile office and he also had a mobile phone and laptop with a dongle for internet access provided by the Respondent.

[36] The Applicant said he was reimbursed petrol costs on production of receipts. He paid for road tolls on his personal account with CityLink. He deducted tolls for personal use (his wife’s car used the same account) and the remainder was reimbursed on production of receipts.

[37] The Applicant said his visits to the office were very rare. If he visited a client or potential client in the broader Dandenong area he might drop in to the office.

[38] The Applicant agreed that the distance between his home and the office is approximately 30km.

[39] In his written submissions the Applicant said:

• He continues to rely on the accuracy of the log book with respect to vehicle usage;

• Mobile phone data relied on by the Respondent does not prove the Applicant was in particular location as claimed by the Respondent;

• The car allowance is subject to an ATO withholding tax based on a forecast usage of 86% business and 14% private usage;

• He does not agree to the mobile phone or laptop breakdown between private and business usage as determined by Commissioner Ryan (50/50 split). He said he had a private mobile phone and laptop and his own private internet access for the period of his employment. When using the employer provided laptop he used the dongle supplied by the Respondent.

[40] In these circumstances the Applicant said that the following is the correct calculation of personal benefits:

Car allowance	$20,000
Distance travelled in 12 months prior to dismissal	23,448km
Total business travel	22,201km (94%)
Total private travel	1,247km (6%)
% business travel x total distance travelled	23,448km x 94% = 22,041km business use
RACV cost per kilometre for BMW 318i sedan 96.17c/km less 7.17c fuel component	22,041km x 88.64c/km = $19,537
Private benefit to Applicant	$20,000 - $19,537 = $463.00
Percentage of fuel costs attributable to private usage (6% of $1,713 fuel reimbursement)	$102

[41] The Applicant therefore submits that his annual earnings at the time his employment was terminated were:

Annual earnings	$125,000
+ private benefit of car allowance	$463
+ private benefit of fuel costs reimbursed	$102
TOTAL	$125,565.00

[42] The Applicant said, in response to the further submissions sought by the Commission:

• The total fuel reimbursement he received in the last 12 months of his employment was $1713.58, an average of $55.28 per claim. On this basis the $56.90 considered by the Commission would not be unreasonable;

• The RACV reimbursement rate was not appropriate in circumstances where the expectation is that an employee will use their own vehicle to perform the duties for which they are employed. He suggested that the reimbursement rate is appropriate for an employee who uses their vehicle from time to time and where there is no predetermined expectation that they would do so.

Further, the Applicant says that the total operating cost covers all aspects of operating a car and is, in circumstances where his vehicle was a necessary “tool of trade”, the appropriate figure;

• He paid all toll fees himself and deducted, prior to any claim, any private related costs. For this reason he said that no further deductions should be made.

[43] The Applicant therefore said he earned less than the high income threshold and the Respondent’s jurisdictional objection should be rejected.

Professor Reginald Coutts

[44] Professor Reginald Coutts is an expert in the area of interpreting call charge records and what can be inferred from this as to a person’s actual location. He regularly gives evidence as a recognised expert in this field in criminal, including drug, cases.

[45] Having reviewed the qualifications and experience of Professor Coutts I have decided that I should accept his opinion in relation to the mobile phone issues raised by the Respondent which are before me.

[46] Professor Coutts firstly said that a distinction needs to be made between a “call charge record” and the call “data” included in the billing record for the mobile phone. Professor Coutts said that, in his opinion “a billing record is not generally useful to infer location…” 11 Further he said that he “would highly recommend caution in the interpretation of any of the origin destination information that is provided in a [telephone] bill to infer location.”12

[47] Professor Coutts said that each mobile phone base station will have three “sectors”. Each sector has a cell ID. A call charge record will show the specific sector a call originated from while the billing record will have “a very general identification of location and can be inclusive of several base stations.” 13

[48] Professor Coutts said that the billing record will identify broadly where a caller was when they commenced a call but will not show if the caller is on the move during the call or where the caller might be at the end of the call.

[49] Professor Coutts said that if the billing record shows a call made at Ringwood, “Ringwood” could be an origin name inclusive of three to five base stations. While the origin name would give you an approximation of the actual location it could, from a naming perspective, represent an area of 30 or 50km.

Findings

[50] I have carefully considered the submissions and evidence of both parties. I am satisfied, having heard those submissions and considered the contents of the log book, that the evidence does not support a finding that the log book is not accurate.

[51] The evidence before me does not support a finding that the Applicant did not undertake the travel for work as set out in his log book. I accept the evidence and opinion of Professor Coutts that the reliance placed on “location” in the mobile phone billing records is not a reliable indicator of the Applicant’s whereabouts. The Respondent’s attempts to correlate the location information from the billing records with the log book locations and suggest therefore that the Applicant was not where he said he was is not supported by the available evidence taking into account the opinions expressed by Professor Coutts. In any event I would note that the car log book is an indicator of where the Applicant travelled on any day as opposed to when he travelled to that location.

[52] I am satisfied that in filling in his log book the Applicant has not indicated the place where he commenced or ended the day (i.e. Ringwood (home) or Dandenong (office)). The Applicant agreed as much in the initial hearing of the application when he said that he only included the first and last appointment location in the log book and not the start and/or end point of his home location. I am therefore satisfied that the distances recorded in the log book are an accurate reflection of the distances actually travelled by the Applicant.

[53] I am not satisfied that I should deduct from the Applicant’s travel a distance of 60km a day for travel to and from the Respondent’s Dandenong office in circumstances where the Applicant did not undertake that travel. The Respondent wavered between this submission and a submission that I should accept the Applicant should have travelled to the office at least three times a week and accounted for such, to accounting for such travel every time the Applicant began or ended the day at Dandenong and/or Dandenong South. I do accept however that where the Applicant began or ended the day at Dandenong the distance from his home to Dandenong (30kms and associated tolls) should be considered as a private benefit and the value of such added to his annual earnings. I have dealt with this below.

[54] The evidence before the Commission does not support the claim of the Respondent that the log book and/or mobile phone data showed the Applicant travelled to areas where the Respondent had no clients. I have dealt with the mobile phone matter above. The Respondent otherwise put no evidence before the Commission that would allow me to conclude that the Applicant was travelling to locations where there were no clients or potential clients.

[55] For these reasons I see no reason to depart from the methodology set out by the Full Bench in determining the private component of the car allowance. The Full Bench considered all of the possibilities as to how the allowance should be treated and reached a concluded view. That view was reached having regard to the circumstances of this case. There is no justifiable reason to depart from that approach. I have therefore not adopted any of the alternative methodologies put forward by the Respondent.

[56] I have based my discussion and findings below on this basis.

THE APPLICANT’S ANNUAL INCOME

1. Car allowance

[57] It is not in dispute that the Applicant used his car for work purposes. It is therefore necessary to determine, in accordance with the guidance given by the Full Bench, how much of the value of the car allowance was attributable to work and how much to private benefit. The value of this private benefit forms part of the Applicant’s annual earnings.

a. What was the annual distance travelled?

[58] The Applicant maintained a log book.

[59] As at the end of the day before his dismissal (10 March 2017), his last full day of employment, the Applicant recorded an odometer reading of 49,998km.

[60] Twelve months earlier (11 March 2016) the odometer reading at the beginning of the day was 27,948km.

[61] Over the 12 month period prior to the termination of his employment the Applicant therefore travelled a total of (49,998km – 27,948km) 22,050km.

[62] This travel was made up of business and private usage.

b. What percentage was for business purposes?

[63] In the 12 month period prior to the termination of his employment the Applicant’s log book indicates he used the car for personal reasons only on weekends and holidays.

[64] At 11 March 2016 the log book progressive total shows the Applicant had travelled 1,351km in private travel to that date. At 10 March 2017 the log book progressive total shows he had travelled 2,087km in private travel, a total of (2,087km-1,351km) 736km for private travel in the 12 month period.

[65] I have examined the log book and identified all weekend travel and travel on annual leave. I note that there is the occasional weekend where the Applicant indicated that he travelled for work. No issue was taken with these travel claims (beyond the broad issues raised) by the Respondent so I have regarded them as business travel except for travel on the weekend of 14-15 January 2017 where the Applicant indicates in his log book that he travelled 7km for work. The distance travelled is more akin to the distances he travelled in private use on weekends so I have considered this private use. There are also a couple of arithmetic errors which I have corrected.

[66] I have calculated that the private weekend, annual leave and public holiday travel shown in the log book for the 12 months prior to dismissal is 748km.

[67] I am satisfied that there are times the Applicant travelled between his residence and the office location of the Respondent. I am satisfied that this distance (one way) is 30km (this was not in dispute).

[68] In circumstances where the Applicant has commenced and/or concluded his day at Dandenong, the Respondent’s office, it is necessary to exclude a distance of 30km for each such trip from his business travel.

[69] It is therefore necessary to determine from the log book the number of trips the Applicant took where Dandenong was his first stop and where Dandenong was his last stop.

[70] I have reviewed the log book and have identified 23 such journeys totalling (23 x 30km) 690km which has been included in business travel but should, in fact, be included in private travel.

[71] I have not excluded from business travel those parts of trips which start or end at Dandenong South. The Applicant said he had a client in Dandenong South. This was not disputed by the Respondent. Further, Dandenong South is accounted for quite separately in the log book from Dandenong. I am therefore satisfied such travel was business related.

[72] As I found above, in the 12 months prior to the termination of his employment the odometer readings on the Applicant’s car indicated that he travelled 22,050km. If I deduct from that the 748km the Applicant travelled on weekends and the 690km I have calculated was travel to or from work (and hence not business related) I am satisfied that, in the 12 months prior to his dismissal, the Applicant travelled 20,612km attributable to his work.

[73] I am therefore satisfied that 20,612km (or 93.5% of the total distance travelled over the 12 month period) of the travel undertaken by the Applicant in the 12months prior to the termination of his employment was work related travel.

c. Cost per kilometre to operate the vehicle

[74] Unsurprisingly the Applicant and Respondent gave conflicting evidence as to the cost per kilometre of running the vehicle.

[75] It is agreed and I accept that the vehicle driven by the Applicant was a BMW 320D.

[76] The Applicant produced material from the RACV with respect to a BMW318i Sport Line which suggests an operating cost of 95.81cents/km (including 7.17cents per kilometre in fuel). The Applicant submits that his car is the “diesel fuel variant” of the BMW 318i Sport Line and this vehicle is therefore closest to the BMW 320D that he drove.

[77] The Respondent submitted that the Applicant has used the costings for a luxury car where the BMW 320D is not a luxury vehicle. Mr Schmidt produced an email he received from the RACV confirming that the RACV does not consider the BMW 320D to be a luxury vehicle. The Respondent submitted that the reimbursement rate for such a vehicle, as provided by the RACV, is 68.2 cents per kilometre (2016 rate) although later submits that the rate is 66.0 cents per kilometre (2018 rate).

[78] The Applicant, on the other hand, looked at the total car running costs for a medium sized car as provided by the RACV and selected the car closest to his own. This is where he found the figure of 95.81 cents/km (2017 rate).

[79] The RACV, on its website, 14 provides information on “How are operating costs calculated” for specified vehicles and the “reimbursement rate” for non-specified vehicles (but grouped under general categories such as small car, medium car, medium (luxury) car, etc.). In its decision the Full Bench did not indicate which of the figures should be used but rather referred to the “cost per kilometre for a car of the type used”.15

[80] It is apparent from the RACV website that the “operating cost” is a comprehensive measure of the cost of owning and operating a motor vehicle. The figure is calculated by considering the on-road cost of the new vehicle, the trade in value after five years, “standing costs” (e.g. depreciation, interest, registration, insurance) and running costs (fuel, tyres and servicing). In this case and in circumstances where it was agreed that, in exchange for the allowance, the Applicant would use his own vehicle for work purposes, this would appear to be the most comprehensive evaluation of the actual cost to the Applicant of owning and operating his own car for work purposes.

[81] It is not clear from the RACV website how the “reimbursement rate” is calculated and what is specifically excluded from it. The submissions of the Applicant that the reimbursement rate is more appropriate when an employee uses their vehicle intermittently for work purposes has some appeal although I make no finding on this.

[82] Little practical guidance is to be found in decisions of the Commission. Both measures have been used but the use of operating costs or reimbursement rates has not been a disputed matter requiring some determination. 16

[83] In circumstances where all of the costs of operating the vehicle are met by the Applicant (setting aside petrol costs which the Applicant has acknowledged and factored into his calculation) and where the vehicle was substantially used for work and was required for work I am satisfied that the appropriate cost per kilometre is the “operating cost” from the RACV website.

[84] The Applicant said that the BMW 320D is the diesel variant of the BMW 318i, a matter not disputed by the Respondent. The RACV provide the operating cost for the BMW 318i. Whether the vehicle is a “luxury” vehicle is not relevant as the operating cost relates to that particular vehicle (with the slight variant).

[85] I am also satisfied that I should look at the 2017 figures (not the 2016 figures as put by the Respondent). It was in 2017 that the Applicant’s employment was terminated and it is his annual earnings at this time that is relevant to my decision. The 2017 total operating cost has therefore been used in the determination of this matter.

[86] I am therefore satisfied that the operating costs for the Applicant’s vehicle is as submitted by the Applicant at 96.17cents/km. I see no reason to use a lesser costs when the totality of the operation of the vehicle was on the Applicant (excluding petrol and tolls). The Respondent did not pay for servicing, was not engaged in any leasing or purchasing arrangement and was not affected by the disposal of the vehicle. That is, any gain or loss from the ownership of the vehicle was borne by the Applicant.

[87] I agree with the submission of the Applicant that, in this case and because his petrol costs were reimbursed, the petrol component should be removed from the operating cost such that, given the particularities of this case, the cost per kilometre should be taken as 88.64cents/km.

Conclusions as to the car allowance

[88] The Applicant drove his car 20,612km in the 12 months prior to his dismissal for work purposes (see [72] above). The cost of operating the vehicle (excluding petrol which is dealt with below) is therefore (20,612km x 88.64 cents) $18,270.48.

[89] The Applicant received a $20,000 per annum car allowance. I am therefore satisfied that, of this amount, $1,729.52 is the value of the private benefit derived by the Applicant from the allowance. This amount should therefore be added to his annual salary and any other amounts determined to come within annual earnings.

2. Petrol

[90] The Applicant was reimbursed for the cost of petrol on presentation of receipts to the Respondent. The Applicant provided a copy of these receipts to the Commission at first instance.

[91] The Respondent claims that it reimbursed the Applicant $3,355 for “petrol/toll” and this amount was paid on average per annum 17 although in its submissions of 15 May 2017 the Respondent said that petrol reimbursement was $3,380 per annum. The variation in the Respondent’s submissions is not explained. It is to be expected that the Respondent would have within its control details as to the amounts reimbursed but has not provided these to the Commission.

[92] I am satisfied that the best evidence I have available to me to determine how much the Applicant claimed in reimbursement for petrol in the 12 months prior to his dismissal is the receipts provided.

[93] Unfortunately not all of the receipts are clear:

• The Applicant claimed a petrol reimbursement 29 times over the 12 month period prior to the termination of his employment.

• 22 receipts are readable and total $1,251.73.

• The average petrol cost across those 22 receipts is $56.90.

[94] I do not accept the submissions of the Respondent as to how I should determine the value of the missing receipts. Out of an abundance of caution I have decided to use the higher figure of $56.90 and not the average as calculated by the Applicant (noting that the Applicant does not object to use of the higher figure).

[95] This results in a total petrol reimbursement of (56.90 x 7 + 1,251.73) $1,650.03.

[96] I have found above that the Applicant used his car for work purposes 93.5% of the time. It is reasonable to conclude that 93.5% of the petrol usage was attributable to work and a private benefit was derived from the remainder.

[97] I am therefore satisfied that an amount of (6.5% of 1,650.03) $107.25 should be added to the Applicant’s earnings as the private benefit he derived from the petrol reimbursements he received from the Respondent.

3. Tolls

[98] The Applicant received reimbursement for the cost of road tolls incurred by him. These were directly billed to him and reimbursement claims submitted to the Respondent.

[99] The Applicant said that both his and his wife’s car charged tolls to the same credit card. In seeking reimbursement for tolls the Applicant says he deducted the private use (which I take to be his wife’s use and any weekend charges) from the toll amount prior to making his claim on the Respondent. For this reason he says no further deduction should be made. Whilst the Applicant provided a copy of a statement for tolls this does not indicate the actual toll cost of each trip.

[100] In its submissions of 15 May 2017 the Respondent said that the value of toll reimbursements was $1,200 although provided no substantive evidence of this.

[101] In its submissions of 23 April 2018 the Respondent suggested that the cost of tolls was $4.23 each way although in August 2018 suggested the amount was $4.81. I have no toll costs for any earlier period.

[102] Given the time over which the Applicant’s annual rate of earnings is to be calculated is the 12 month period prior to his dismissal and it is likely toll costs will have risen, I will use the figure of $4.23 as provided in the Respondent’s April 2018 submission as the relevant cost of tolls the Applicant would be required to pay if he had not been reimbursed for tolls when he travelled between his home and the Dandenong office and reimbursement of them therefore a private benefit.

[103] The Respondent put in the hearing of the matter that the Applicant is required to travel by toll road when he travels to and from work. This was not disputed by the Applicant. It is axiomatic that when the Applicant was driving between his home and the Dandenong office that any tolls incurred are a private cost to him.

[104] For the reasons outlined above in relation to the motor vehicle allowance I am satisfied that the Applicant received reimbursement for tolls for 23 journeys where he was travelling between his home and work. An amount of (23 x $4.23) $97.29 received in reimbursement for tolls is therefore a private benefit and should be added to the Applicant’s income.

4. Employer provided mobile phone

[105] In a witness statement filed in the proceedings at first instance the Respondent said that the Applicant received “Telephone reimbursement of $1560, (including an estimated sum of $780 for private use)”. 18 This amount is apparently based on the estimate of the Respondent’s accountant (based on his 28 years’ experience as an accountant) who was not called to give evidence. In its submissions of 23 April 2018 the Respondent says that the Applicant had “telephone private usage of $720 of $1420 per annum”.

[106] The Respondent therefore said that the amount of $720 should be added to the Applicant’s earnings.

[107] The Respondent also said that the determination of the allocation of mobile (and laptop) costs was not questioned by the Applicant in the first hearing. For this reason it presses that I accept its submissions on the amounts and the determination in the first instance and accept this allocation (based on a 50/50 business/private split) of a private benefit to the Applicant arising from use of the mobile phone.

[108] The Applicant said that he was provided with a mobile phone by the Respondent. However, he said that he had his own private mobile phone which he used for personal matters such that he derived no private benefit from the work provided mobile phone.

[109] I am satisfied that the Respondent provided a mobile phone to the Applicant. The evidence before me does not support a finding that the Respondent reimbursed any amount to the Applicant in relation to mobile phone use. It cannot be that the Applicant was provided with a mobile phone by the Respondent and reimbursed for mobile phone bills as well. This makes no logical sense and, in any event, there is no documentation to support this.

[110] I am not satisfied that I should rely on the unsworn statement of the Respondent’s accountant as to the amount of “reimbursement” of a mobile phone or an allocation to private use “based on 28 years’ experience”. I have been provided with no documentary support for the amount of “reimbursement” of $1,560 or $1,420 as put by the Respondent. Further, the Respondent has otherwise provided no submissions or evidence of the private use the Applicant may have derived from the company provided phone.

[111] The evidence of the Applicant supports a conclusion that the Applicant had his own mobile phone (04xx xxx x85). The Applicant produced the billing record for the phone which indicates it is in his name. The number is different to that number used for work purposes (as put forward by the Respondent). I am therefore satisfied that the Applicant did have, and use, his own private mobile phone whilst he was employed by the Respondent.

[112] In making my decision I have been mindful of the decision of the Full Bench set out above. It is necessary that I determine myself all issues relevant to the determination of whether the Applicant’s annual rate of earnings exceeded the high income threshold at the time of his dismissal.

[113] The Applicant had his own private mobile phone. The evidence does not support a conclusion that the Applicant used the mobile phone provided by the Respondent for personal purposes. There is therefore no basis on which I could accept that an amount of $720 should be attributed to the Applicant’s earnings. For these reasons I have determined not to attribute any amount from the cost of the work provided mobile phone as a private benefit to the Applicant.

5. Laptop

[114] I am satisfied that the Respondent provided the Applicant with a laptop and a dongle. The evidence does not support a conclusion that the Applicant received an annual payment of “Laptop reimbursement of $1500 (including an estimated sum of $750 for private use).” 19 Again, the Respondent has provided no evidence of the cost of the laptop and dongle or that it reimbursed any amount to the Applicant in relation to a laptop.

[115] The Applicant says that he was provided with a laptop and dongle by the Respondent. Further, he says that he maintained his own personal internet account at home which he used for private matters. To support this the Applicant provided to the Commission a copy of his home telephone account which showed payment for a fixed line and for the provision of Bigpond services (which I understand to be internet services).

[116] Again I prefer the evidence and statements of the Applicant to those made for the Respondent. The Respondent’s submissions are made with no supporting evidence, all of which could reasonably be assumed to be in control of the Respondent as they would be business records. The Applicant has provided support in the form of documentary evidence for the arrangements he said were in place.

[117] For this reason I do not intend to include any additional amount of private benefit derived from the provisions of a laptop.

[118] I would observe that even if I am wrong and there is some private benefit derived by the Applicant from the laptop and the mobile phone this would not alter my findings as to the high income threshold.

DETERMINATION OF ANNUAL RATE OF EARNINGS

[119] For the reasons given above I am satisfied that the Applicant’s annual rate of earnings for the 12 month period prior to his dismissal was:

Item	$
Salary	125,000.00
Private benefit of car allowance	1,729.52
Private benefit of petrol reimbursement	107.25
Private benefit of toll reimbursement	97.29
Private benefit of mobile phone	0.00
Private benefit of laptop/dongle	0.00
TOTAL ANNUAL EARNINGS	$126,934.06

[120] There are no other amounts claimed to be earnings of the Applicant that should be included.

[121] The high income threshold at the time the Applicant was dismissed was $138,900. The Applicant had an annual rate of earnings well below this amount. I am therefore satisfied that the Applicant is protected from unfair dismissal.

An alternative calculation

[122] Whilst I do not consider it the correct rate to use, for completeness I have undertaken the above calculations on the basis of the 2016 motor vehicle reimbursement rate provided by the RACV and submitted by the Respondent. The figure put forward by the Respondent for this purpose is 68.2 cents per kilometre (I see no reason to use the 2018 rate as suggested by the Respondent).

[123] The figure of 68.2 cents per kilometre, it can be assumed, includes a petrol component. I am satisfied that the value of petrol as reimbursed to the Applicant for the 12 month period should be added to the car allowance for the purpose of this calculation.

[124] On the Respondent’s figures the cost of operating the vehicle, including petrol, is (20,612km x 68.2 cents per kilometre) $14,057.38.

[125] The Applicant received $20,000 car allowance plus $1,650.03 petrol reimbursement. The difference of ($21,650.03 – 14,057.38) $7,592.65 is therefore the value of the private benefit to the Applicant.

[126] Adding this amount to the annual earnings of the Applicant in the previous 12 months gives ($125,000 + $7,592.65 + $97.29) $132,689.94. This amount is still well below the high income threshold of $138,900.

CONCLUSION

[127] The determination of this matter has had some complexity to it. Some of the data supplied by each of the parties has not been complete or not date specific (such that it could be related to the Applicant’s annual rate of earnings at the time of his dismissal). I am satisfied however that there has been no underestimation of the Applicant’s earnings and have, where dates are not clear, erred on the side of caution in making my determination. Further, attempts to manipulate the data to achieve a pre-determined outcome have not been of assistance in deciding this matter within the guidance provided by the Full Bench.

[128] For the reasons given above I am satisfied that the Applicant’s annual rate of earnings was less than the high income threshold. The jurisdictional objection of the Respondent is therefore dismissed. An order 20 to this effect will be issued with this decision.

[129] For this reason I am satisfied that, pursuant to s.382 of the FW Act, the Applicant is protected from unfair dismissal.

[130] The file will be referred for programming and allocated for arbitration. The parties will receive directions in relation to that arbitration in due course

COMMISSIONER

Appearances:

A. Bernadou on his own behalf.

J. Schmidt for Sam Technology Engineering Pty Ltd

Hearing details:

2018.

Melbourne via videolink to Sydney:

October 17.

Final written submissions:

Applicant: 19 October 2018 and 14 November 2018.

Respondent: 19 October 2018 and 19 November 2018.

Printed by authority of the Commonwealth Government Printer

1 [2017] FWC 3228.

2 [2018] FWCFB 1767.

3 Ibid at [75].

4 Transcript PN290.

5 Transcript PN292.

6 See submissions of Respondent dated 23 April 2018.

7 The assumptions on which this figure is based are not disclosed in the Respondent’s material.

8 Respondent submissions of 22 August 2018 and 24 September 2018.

9 Respondent’s submissions of 23 April 2018.

10 Transcript PN363.

11 Transcript PN406.

12 Transcript PN407.

13 Transcript PN405.

14 accessed 19 November 2018.

15 [2018] FWCFB 1767 at [72](b)(4).

16 See, for example, Brian Hallam v Davbridge Properties Pty Ltd T/A Davbridge Constructions ([2014] FWC 1467); Colin Smith v Scientific Pest Management (Australia Pacific) Pty Ltd[2013] FWC 4767; Leanne Lawson v Novetec Building Products[2013] FWC 300; Brian Tuohy v Polyfoam (Australia) Pty Ltd[2010] FWA 9112; and Gibbs v Brobo Waldown Pty LtdPrint S4513.

17 Respondent submissions of 23 April 2018.

18 Statement of James Schmidt date 15 May 2018, paragraph 18.

19 Ibid.

20 PR703349.

Andrew Bernadou v Sam Technology Engineering Pty Ltd

[2018] FWC 7305

20 NOVEMBER 2018

DECISION

LEGISALTIVE FRAMEWORK

MR BERNADOU’S EARNINGS AT THE TIME HIS EMPLOYMENT WAS TERMINATED

Findings

CONCLUSION