Mr Brian Pearson v Winton Motor Raceway Pty Ltd

[2015] FWC 6613

[2015] FWC 6613

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Brian Pearson
v
Winton Motor Raceway Pty Ltd
(U2015/5709)

COMMISSIONER WILSON MELBOURNE, 30 SEPTEMBER 2015

Application for relief from unfair dismissal.

[1] Until 28 May 2015, Brian Pearson was the Chief Executive Officer of the Winton Motor Raceway Pty Ltd, which runs a raceway at Winton, north of Melbourne, near Benalla. At the time of his dismissal Mr Pearson had been in the position for a relatively short time, having been employed since 3 September 2014.

[2] An initial objection by the Respondent that Mr Pearson had not served the minimum employment period has not been proceeded with. The Respondent now concedes Mr Pearson has worked for longer than the minimum required period.

[3] However, Winton Motor Raceway Respondent maintains that Mr Pearson is not otherwise a person protected from for unfair dismissal, for the reason that his annual rate of earnings was greater than the high income threshold and he was also not being covered by an award for enterprise agreement. Mr Pearson contends both that his annual rate of earnings is lower than the high income threshold and that his employment is covered by an award.

[4] The parties agree that Mr Pearson salary at the time of dismissal was $117,000 per year, including superannuation and that in addition to his salary he was provided with the private use of a motor vehicle that he also used for business purposes. He was also provided with a mobile phone, laptop and home internet facilities, 1 however the Respondent does not press for these to be quantified and included in the calculation of Mr Pearson’s overall income.

Award covered?

[5] The first question to be determined is whether Mr Pearson’s employment was covered by a modern award or enterprise agreement. If it was, then, for reason of s.382, it is unnecessary to consider whether his annual rate of earnings was higher or lower than the high income threshold.

[6] While it was not argued that an enterprise agreement was applicable to Mr Pearson's employment, it was argued by him that a modern award applied to his employment, being the Amusement, Events and Recreation Award 2010 (the Award). 2

[7] While it is not in contest on the part of the Respondent that its business is within the amusement, events and recreation industry 3 the application of the Award to Mr Pearson is in contest.

[8] The matter in question is therefore whether Mr Pearson's employment fits within the Award’s coverage, the details of which are set out in clause 4. In essence, the clause provides that the Award covers employees in the amusement, events and recreation industry, as defined, “and the employees in the classifications set out” in the Award to the exclusion of any other award. 4 Clause 4.3 sets out a number of exclusions from coverage of the Award. Neither party submitted that those exclusions were relevant to this matter.

[9] The Full Bench has laid out the criteria for determination of whether a particular award applies to employment, holding the following in Carpenter v Corona Manufacturing;

“... 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”. 5

[10] The Full Bench in Brand v APIR Systems Ltd 6 elaborated on this test with the following;

“[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.”  7 (references omitted)

[11] It is argued by Mr Pearson that his employment was covered by Grade 9 of the Award’s classification structure, which is the highest grade. The Grade had, at the time, a minimum weekly pay rate of $947.30 for an adult employee, 8 and the duties of the classification are defined in the following way, in the Award’s Schedule B—Classification Structure;

“B.10 Grade 9

B.10.1 An employee appointed to this level undertakes three or more of the following duties:

(a) Responsible for implementation of all major turf projects for the facility according to the course architects design.

(b) Responsible for the development of an annual work program for all outdoor staff that incorporates both further development and continued maintenance.

(c) Responsible for supervision of all outdoor staff.

(d) Responsible for the operation and maintenance of all turf equipment.

(e) Responsible for all occupational health and safety management in outdoor areas.

(f) Responsible for purchasing within the limits imposed by policy and the budget.

(g) Responsible for ensuring that all administrative systems are complied with by the staff under their direction.”

[12] It was submitted that Mr Pearson's duties include the elements referred to in Sch. B, cl. B.10.1 (b), (e), (f) and (g). 9

[13] The evidence received from Mr Pearson is that, from time to time he was involved with each of those elements. His evidence in that regard was not contradicted by the employer's witness, Ms Campbell, who did not having detailed knowledge of the duties Mr Pearson actually performed.

[14] However Mr Pearson’s evidence indicated that his involvement with these elements was because the company did not, for some time at least, have other managers in place who could manage the work. For example, there was not an operations manager reporting to him until one started at the end of January after being recruited by Mr Pearson. 10 In addition, Mr Pearson employed Ms Campbell on a 6 month contract, in a role that appears to have combined activities as a project manager and what would ordinarily be expected of a finance manager.11

[15] Ms Campbell’s perspective about the duties referred to in the Grade 9 descriptor was to separate out the requirement for implementation of decisions from functional responsibility;

“Is the CEO responsible for implementation of all major turf projects for the facility according to the course architect's design? Probably not the implementation. Possibly involved in the design stages or the negotiation stages with contractors, but implementing would be the operations manager.

The next one, responsible for the development of an annual work program for all outdoor staff that incorporates both further development and continued maintenance. Who would be responsible for that duty? The maintenance staff that we have at Winton, so the track staff, ground staff, etc, currently report to the operations manager and as far as I'm aware, always have. When we didn't have an operations manager, they reported to the CEO, but since January we've had an operations manager. The operations manager would oversee their work and would supervise their work.

Then the next one is: responsible for supervision of all outdoor staff. Who is responsible for that duty? As I just stated, the operations manager would supervise those staff.

The next one, responsible for the operation and maintenance of all turf equipment. Again, if you took the wide view of what's being referred to by turf equipment, who would be responsible for the operation and maintenance of equipment dealing with track surfaces? If it was track equipment, it would be the maintenance staff that we have at the raceway.

Is the CEO responsible for the operation and maintenance of track equipment? No. Only in an oversight role, in terms of the payments or entering into larger contracts.” 12

[16] Mr Pearson saw things differently, arguing that he had overall functional responsibility for the subject matter. While he conceded the operations manager would supervise outdoor staff, or implement certain decisions, Mr Pearson’s perspective was that responsibility for those functions remained with him;

“And you were not responsible for developing the annual work program, that was done by others. You might have been aware of it? No, that's not correct at all.

Well, which part do you say is incorrect? I was responsible for developing it because I had no other staff until the end of January and I started work in September.

But as at the date that the employment came to an end this was no longer your responsibility even if you were once doing it. You'd agree with that? No.

You did see the employment of other senior managerial staff whilst you were the CEO. You'd agree with that? Yes, I recruited an operations manager.

Yes, and once you had recruited an operations manager, even if you had originally had anything to do with developing an annual work program, that was then part of his job? No, implementation might have been but not responsibility for.

Developing the annual work program was part of his job? No.

And the continued maintenance, that's a classic example of something that was his job rather than your job as CEO? Scheduling maintenance in agreeance with the plan we put together ,yes. That's his role to make it happen.

And similarly supervision of outdoor staff, you'd agree that that was something that was within his role rather than yours? No, till - as I said till the end of January they were direct reports to me.

And then after that, no longer? Not direct reports, no.

No, after that the responsibility for the supervision of outdoor staff was somebody else? For the day to day operations, yes.

For all outdoor staff you had an operations manager who was responsible for overseeing their supervision. That was his job? For day to day, yes.” 13

[17] The job advertisement Mr Pearson responded to was for a “CEO Interim” to be engaged jointly by the Winton Motor Raceway Pty Ltd and the Wakefield Park Motorsport Pty Ltd. The advertisement emphasised what would ordinarily be considered a leadership role, rather than one working to the direction of others. It called for people with the following qualities;

“Leading a small dynamic team of staff, and an extensive number of volunteers you will be expected to develop a range of plans and procedures to maximise the financial return and the expansion of the Raceways.”

“Specifically the Raceways wish to appoint a person who will overview senior staff while they undertake day to day operations of both facilities, allowing you to develop a series of Strategic corporate plans, including but not limited to Business, Financial, and Operational policies. It is expected that you will have extensive experience in business planning at a senior level, with sound financial skills and a thorough understanding of corporate law and business structures.

Working with the senior managers and the Directors of Winton Motor Raceway and Wakefield Motor Sport you will be expected to develop and strengthen the marketing plans for both facilities while looking to enhance tho existing arrangements with major clients.” 14

[18] Mr Pearson applied for the position and was interviewed and subsequently offered the role of the CEO at the Winton Motor Raceway.

[19] While, on Mr Pearson’s evidence, the business employed 41 employees, 15 its management team was very small, according to Ms Campbell, comprising only herself, Mr Pearson and the Operations Manager.16 I take from this that the duties of any managerial employee of the Respondent would necessarily require the undertaking of duties that may not strictly be regarded as “management” or, in the case of Mr Pearson, “chief executive”.

[20] The evidence about Mr Pearson’s engagement and subsequent duties comes wholly from him in relation to his engagement as CEO, and substantially from him in relation to the duties he performed. The differences between his evidence and that of Ms Campbell in relation to the work he performed were slight, and once it is taken into account that Ms Campbell did not see too much of the actual duties he performed, 17 such differences as exist resolve in Mr Pearson’s favour.

[21] The totality of Mr Pearson’s evidence leads to a finding that the principal purpose of his employment was as a Chief Executive Officer, being someone who put proposals for adoption to a Board, took their directions and implemented those directions through the actions of others. Whether described as his principal purpose, or the major and substantial part of his employment, he was there to perform the tasks described in the advertisement to which he responded – to overview senior staff while they undertake the day to day operations of raceway’s facilities, allowing him to develop a series of strategic corporate plans, in order to maximise the financial return and the expansion of the business.

[22] It would be counter-intuitive to see these high level functions, that would ordinarily be expected of a chief executive, as being simultaneously coextensive with the tasks set out in the highlighted parts of the Award’s Grade 9 descriptors; namely, developing the outdoor staff work plan, over sighing front-line OHS management in outdoor areas, undertaking purchasing and ensuring all administrative systems are followed by more junior staff.

[23] As a result, I am unable to agree with Mr Pearson that his employment was covered by the Award. However looked at, he was not employed within in a position that falls within the duties set out in Grade 9 of the Award.

[24] It therefore becomes necessary to consider whether Mr Pearson annual rate of earnings exceeded the high income threshold.

High income threshold

[25] Relevant to this matter is the high income threshold declared in July 2014, which was $133,000. 18

[26] The parties agree that Mr Pearson’s salary at the time of dismissal was $117,000, and that it is necessary to add to that amount the value of the private use of motor vehicle made available to Mr Pearson.

[27] The vehicle in question is a Jeep Grand Cherokee Laredo wagon, originally purchased by the Respondent in December 2013. The vehicle is a 3.0 L diesel turbo, for which the RACV lists a per-kilometre running cost of 102.78 cents.

[28] The Full Bench has considered, and eschewed, the use of the tax office “statutory formula” estimations as a means to assess the value of a provided motor vehicle, noting that such approach merely provides “a simple formula to be used for calculating FBT instead of a calculation based on data reflecting actual operating costs and private usage reflected in log books”. 19 In the absence of agreement between the parties to use the statutory formula approach, the Full Bench, instead preferred the more robust consideration of the distances actually travelled by an employee’s vehicle, holding the following;

“In our view the most appropriate method of calculating the value of the motor vehicle component of an applicant's remuneration is as follows:

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

2. Determine the percentage of the annual distance travelled which was for the applicant's private purposes.

3. Multiply the figures from 1. and 2. This provides the annual distance travelled for private purposes.

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

5. Multiply the annual distance travelled for private purposes by the estimated cost per kilometre.

The result is the value of the motor vehicle component of the applicant's remuneration.” 20

[29] The question of how many private kilometres per week would be travelled by Mr Pearson is a matter of contention between the parties.

[30] There are at least two methodologies for the assessment of the value of his private use component.

[31] The first refers to an assessment derived from logbook records, and the second refers to evidence given by Mr Pearson about his estimated minimum private use. Because of the uncertainties that arise from either methodology, I have tested both for their implications for assessment of Mr Pearson’s annual rate of earnings.

Private use percentage – derived from FBT logbook

[32] This methodology applies a private use percentage recorded in a Fringe Benefits Tax logbook to the estimated overall kilometres travelled between two dates for which the Respondent considers it has reliable odometer readings. That arithmetic establishes a number of kilometres travelled for private purposes for the defined period, which can then be extrapolated across the entire year.

[33] Mr Pearson kept a logbook of his use of the vehicle for 12 weeks for tax purposes. While the log book itself was not tabled in the proceedings, the evidence about the logbook is that it records usage of the vehicle not only by Mr Pearson but also his predecessor. In all, the records derived from the logbook show that business usage, across the two employees, was running at a rate of about 64%. 21

[34] While I accept that is the case, there is a dispute between the parties about the odometer readings of the vehicle at the start and end of Mr Pearson's employment.

[35] The Respondent’s witness, Yvette Campbell, says the odometer reading at the start of Mr Pearson's employment was 22,000 km and 68,000 at the end. 22 In contrast, Mr Pearson's evidence is that the reading at the start of his employment was, “from memory”, 27,000 or 28,000 km, and he disagrees with it being 68,000 at the end of his employment, pointing out that the reading referred to by Ms Campbell was taken at a date well after his dismissal.23

[36] Ms Campbell supplementary witness statement records odometer readings taken from tax invoices relating to the vehicle’s servicing. She refers to two invoices within Mr Pearson's employment period, recording odometer readings of 31,538 kilometres on 28 October 2014 and 63,046 km on 25 May 2014, a difference of 31,508 km.

[37] If 34% of that amount was for private usage, and if Mr Pearson’s private use travel was not dissimilar to his predecessor’s, he would have travelled 10,712 km privately, within the period between the two dates, which is a total of 209 days. Extrapolation of that amount over a full 12 month period would suggest private usage of around 18,707 km.

Estimated minimum private use

[38] The alternative methodology is to consider the evidence about Mr Pearson’s minimum private use of the vehicle. This methodology also relies on data captured for an FBT logbook, however focuses on how many kilometres were travelled in the period, rather than relying on an estimate of the percentage of private use.

[39] Mr Pearson agreed in giving evidence that he had travelled about 6,300 or 6,000 personal km in 12 weeks, which is about 500 km per week. 24 The Respondent suggested that such estimate could form the base for a calculation of private use for the whole period of employment, and thereby in calculation of the annual rate of earnings.25 Given that Mr Pearson was employed for slightly more than 38 weeks, such estimation of his minimum private use equates to a total private use throughout his employment of 17,500 kilometres, or 26,000km when referenced to a whole year, in consideration of his annual rate of earnings.

[40] The periods referred to for the above methodologies are slightly different, and in any event are both not for the full year.

[41] When assessing an employee’s income for the purposes of the high income threshold the amounts to be used need, of course, to refer to the persons annual rate of earnings. (s.382 (b))

[42] Use of the first methodology, in which 10,712 kilometres private use was derived for a period of 209 days, would indicate an annual private vehicle use component of 18,707 km.

[43] Use of the second methodology, in which Mr Pearson is estimated to have travelled 500 kilometres private use per week would impute an annual private vehicle use component of 26,000 km. The context of the evidence given suggests that the second methodology is more likely to align to Mr Pearson’s patterns of private usage, for the reason that it takes into account what he agrees was travelled by him.

[44] The absence of more precise data about the annual distance travelled by the Mr Pearson’s vehicle creates some difficulties in calculating the contribution the vehicle would make to his annual rate of earnings. In all though, the range referred to above, of between 18,700 on the low side and 26,000 on the upper side, appears broadly consistent with the evidence given by the parties about how the vehicle was used. There is plausibility about both ends of the range, because Mr Pearson not only appears to have actively arranged business related visits on the way to and from his home and work, but he also lived some distance from work, a distance of between 70 and 75 km. 26 Travelling just that distance, with no business related purpose and no other private usage, would in itself lead to an annual private use component above the upper end of the range mentioned.

[45] As referred to above, the cost of running the vehicle in question is 102.78 cents per kilometre, according to data published by the RACV in its 2015 Motoring Cost Report. 27

[46] Application of this rate to the private use percentage methodology results in an annual private use value of $19,227 and application to the estimated minimum private use leads to a value of $26,772.

[47] When added to Mr Pearson's annual salary of $117,000, this takes his annual rate of earnings to either $136,227 or $143,772 respectively. Each methodology results in an annual rate of earnings which is greater than the applicable high income threshold of $133,000.

[48] As a result, and having found that Mr Pearson’s employment was not covered by an award, and his annual rate of earnings was greater than the high income threshold, I must find that Mr Pearson was not, at the time of his dismissal, a person protected from unfair dismissal.

[49] An order dismissing his application for unfair dismissal is issued at the same time as this decision.

COMMISSIONER

Appearances:

Ms K Dougherty and Mr AJ Macken , for the Applicant

Mr R Millar of Counselwith Ms S Sharp of Kalus Kenny Intelex Lawyers, for the Respondent.

Hearing details:

2015.

Melbourne.

3 September.

Final Written Submissions:

Applicant, 11 September 2015

Respondent, 18 September 2015

 1   Exhibit A3 para 2

 2   MA000080

 3   PN 482

 4   See cl. 4.1

 5 (2002) 122 IR 387, see print ref PR925731; followed by McMenemy v Thomas Duryea Consulting, [2012] FWAFB 7184, at [37]

 6   (2003) unreported, AIRCFB, PR938031

 7   Ibid., at [13]

 8   See PR551668, cl. 14.1

 9   Transcript, PN 370

 10   Transcript, PN 255

 11   Transcript, PN 415

 12   Transcript, PN 36 - 40

 13   Transcript, PN 376 - 386

 14   Exhibit P4

 15   Exhibit, P1, para 12

 16   Transcript, PN 33

 17   Transcript, PN 134 - 139

 18   Exhibit A3, para 1

 19   Kunbarllanjnja Community Government Council v Fewings, (1998) AIRCFB (unreported), Print Q0675

 20   Ibid

 21   Exhibit P2, para 8

 22   Exhibit A1, para 4

 23   Exhibit P1, para 18

 24   Transcript PN 344 - 350

 25   Transcript, PN 506

 26   Transcript, PN 289

 27   Exhibit A1

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