George Bechara v Ashford Homes Pty Ltd T/A Ashford Homes

[2015] FWC 8858

[2015] FWC 8858

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

George Bechara
v
Ashford Homes Pty Ltd T/A Ashford Homes
(U2015/13525)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 23 DECEMBER 2015

Application for relief from unfair dismissal.

[1] Mr George Bechara was employed by Ashford Homes Pty Ltd until his employment was terminated on 9 October 2015. Ashford objected to his application because it said he earned more than the high income threshold.

[2] At the hearing I granted Mr Pinchen, a paid agent and Mr Nick Wareham, a legal practitioner permission to appear.

[3] Mr Bechara was employed as construction manager and there was no submission that he was covered by a modern award or an enterprise agreement.

[4] The question then to be determined is whether Mr Bechara earned more than the high income threshold of $136,700.

[5] Section 332 of the Fair Work Act 2009 defines employee earnings and excludes certain things. Where relevant it reads:

"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.

………………………..

(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.”

[6] Regulation 3.05 of the Fair Work Regulations 2009 provides as follows:

“Benefits other than payment of money

(6) If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”

Facts not in dispute

[7] It is not in dispute that Mr Bechara’s base salary is $125,000 and he was entitled to a fully maintained vehicle. It is not in dispute that Mr Bechara is able to use the vehicle for personal use including driving to and from work. It is also not in dispute that Mr Bechara may commence work at Ashford’s office or on site and may leave from work to go home from either Ashford’s office or from site.

Facts in dispute

[8] The parties are in dispute about the proportion of the costs of the vehicle that should be allocated to personal use.

[9] Mr Bechara submitted that from 5 January 2015 to the termination of his employment he travelled 26,051 kilometres, of which 10,426.1 kilometres were for personal use. Mr Bechara kept a diary in which he said he recorded his activities. He used Google maps to calculate the distances travelled. 10,426.1 kilometres was his calculation of the distances travelled between work and home. It was his estimate that his personal use of the vehicle was 40.02% of the total kilometres travelled. This was calculated to be worth $7,923.84.

[10] Mr Johan Wiggett advised that the distance travelled by the vehicle in the period 25 September 2014 to 21 October 2015 was 40,701 kilometres, of which 16,480 kilometres was for personal use. Mr Wiggett relied upon the odometer reading to calculate the distance travelled. He estimated the personal use component. He included the distance Mr Bechara drove to and from work at 52 kilometres per day for 240 days per year. In addition, he added a further 4,000 kilometres for other private use.

[11] Ashford has calculated this private use of the vehicle as being worth $12,526 per annum relying on a total running cost of the vehicle being 76.01 cents per kilometre.

[12] It was Mr Wiggett’s evidence that when Mr Bechara was ill between 18 September and 22 October he filled the vehicle with petrol 13 times at a cost of $885 which represented 8000 kilometres for private use during one month. Mr Bechara did not dispute these figures.

[13] Mr Bechara also accepted that he used his fuel card to put petrol into his private vehicle when on holidays over the Christmas/New Year break. He relied upon an email from his employer to justify this usage. That email advised employees that company vehicles could be driven up to 50 kilometres only over the Victoria border. There was nothing in that email which authorised the use of the fuel card to buy petrol for an employee’s own car.

Value of the personal use of the vehicle

[14] Mr Bechara’s calculation of the personal use of the vehicle was for the period 5 January 2015 to 16 September 2015, which was 255 days, which is 70% of the year. On that basis, the annual value of the private use of the vehicle on Mr Bechara’s calculations would be $11,319.77. Added to his income of $125,000 Mr Bechara’s earnings would have had been $136,319.77 which is under the high income threshold.

[15] Attachment 2 to Mr Wiggett’s statement disclosed that at 25 September 2015 the vehicle odometer reading was 227,032. When Mr Bechara returned the vehicle on 21 October 2015 its odometer reading was 267,733. This was a difference of 40,701 kilometres.

[16] Accepting Mr Bechara’s figures that his personal use was normally 40.02% of the distance travelled, this would mean that the value of the vehicle for personal use would be $12,380.92, which would put Mr Bechara’s income over the high income threshold. However, this amount is for 13 months, not 12 months, so adjusting for that would make the value $11,428.54 which if added to his income of $125,000 would mean Mr Bechara’s earnings would be $136,428.54 which is under the high income threshold.

[17] Ashford calculated Mr Bechara’s personal use at 16,480 kilometres per year based on him travelling to and from work each day (26 kilometres each way) and allowing for 4,000 kilometres additional personal use. Using this figure the value of the car was $9486.05 which would mean his earnings were $134,486.05 which is below the high income threshold.

[18] It was accepted that Mr Bechara did not always attend work at the office or return home from the office and no adjustment was made for that. Further the figure of 4000 kilometres was based on an assumption that Mr Bechara used the car on weekends, over the holidays and to take his child to school. Mr Bechara gave evidence that he did not use the work car on weekends or on holidays. He accepted that he filled the car up on weekends but that was not personal use. He accepted that he picked his child up but this only took him out of his way by one kilometre. While Mr Bechara did not use the car on holidays he charged the cost of petrol to Ashford. In addition, in the last month he had the car he filled up with $855.52 worth of petrol.

[19] Ashford submitted that Mr Bechara must have been filling up another vehicle as the odometer reading showed that in the period 13 August 2015 to 22 October 2015 the vehicle travelled 5,295 kilometres yet from 18 September 2015 to 22 October 2015 he must have travelled approximately 8,000 kilometres to use that amount of petrol. No challenge was made to this calculation. As a consequence it was submitted that I should not accept Mr Bechara’s evidence about the personal use of the vehicle as despite his denial he clearly used his fuel card to purchase petrol for vehicles other than his work provided vehicle.

[20] I accept this submission by Ashford. Mr Bechara gave evidence that the only matter I should have regard to was the kilometres travelled when he drove to and from work. He did this knowing that he had used the fuel card whilst on annual leave to put petrol into his own vehicle. Further, he did this knowing that he had not included in his calculation any use of the vehicle whilst on sick leave or the amount of petrol he purchased whilst on leave.

[21] However, Mr Bechara was not entitled to use the fuel card to fill up his vehicle or any other vehicle other than his work car. I am therefore not able to have regard to those amounts as it could not be said that Mr Bechara was entitled to receive this benefit in accordance with an agreement between Mr Bechara and Ashford.

Fringe Benefit Tax

[22] Ashford submitted that the fringe benefit paid by them for the personal use of the vehicle should be added to the amount earned by Mr Bechara. It was submitted that Mr Bechara had entered into a salary packaging agreement whereby he exchanged a $10,000 vehicle allowance for a fully maintained vehicle. In his initial letter of offer, Mr Bechara was paid a salary of $125,000 plus a $10,000 allowance as he supplied his vehicle. All costs apart from fuel were paid by Mr Bechara. Within a month, Mr Bechara and Ashford agreed that in lieu of the allowance he would be provided with a fully maintained vehicle.

[23] The Full Bench in Rofin Australia Pty Ltd v Newton¹said:

“There are, of course, employment arrangements whereby the employer pays, on behalf of the employee or at the employee's direction, specified amounts out of the salary payable to the employee to a person other than the employee. Examples of such payments would be the payment of union and health fund subscriptions. "Salary packaging" may also include the payment of education expenses for the employee or the employee's children. In such cases, generally those payments, although not paid directly to the employee, would be considered to form part of the employee's remuneration.

Fringe benefits tax is, however, a tax imposed upon an employer and is payable by an employer, not by the employee. It is imposed upon a fringe benefit provided by an employer to an employee. The employer is free to choose whether or not to provide a particular fringe benefit to an employee. If it does so, it incurs the tax liability. Such liability is to pay an amount other than to the employee. Generally, where an amount is paid by an employer other than to an employee and other than on behalf of or at the direction of the employee, such an amount would not fall within the ordinary meaning of the word "remuneration".

In a genuine "salary sacrifice" situation, the payment of fringe benefits tax would still nominally be a payment by the employer of a tax imposed upon the employer. However, it might possibly be viewed as the payment by an employer, at the direction of and by arrangement with the employee, to a person other than the employee of an amount that would otherwise be part of the employee's total salary package. If that were the case, then such a payment may arguably be included in calculating the "remuneration" for the purposes of s.170CC(3).”

[24] I do not accept that Mr Bechara negotiated a salary packaging arrangement with Ashford when he agreed to forgo the allowance for a fully maintained vehicle. Further there was no evidence that there was any agreement that he would meet the costs of any fringe benefit payable by the employer from his salary. I therefore find that the value of the fringe benefit tax should not be included in Mr Bechara’s earnings.

Conclusion

[25] Irrespective of the method used to calculate the value to be assigned to the personal use of the vehicle, that amount does not, when added to his salary, cause Mr Bechara’s earnings to exceed he high income threshold and therefore the objection raised by Ashford is dismissed and the application is referred to arbitration on the merits of Mr Bechara’s claim that he was unfairly dismissed.

DEPUTY PRESIDENT

Appearances:

G. Pinchen for the Applicant.

N. Wareham for the Respondent.

Hearing details:

2015.

Melbourne:

16 December.

1 (1997) 78 IR 78 at p. 81-82

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