Mr Brian Tuohy v Polyfoam (Australia) Pty Ltd
[2010] FWA 9112
•1 DECEMBER 2010
[2010] FWA 9112 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Brian Tuohy
v
Polyfoam (Australia) Pty Ltd
(U2010/6372)
COMMISSIONER CRIBB | MELBOURNE, 1 DECEMBER 2010 |
Application for unfair dismissal remedy - jurisdiction - earnings.
[1] Mr Brian Tuohy (the applicant) made an application, on 25 February 2010, for relief with respect to the termination of his employment with Polyfoam (Australia) Pty Ltd (the respondent). The application was made pursuant to section 394 of the Fair Work Act 2009 (the Act) on the grounds that his dismissal was harsh, unjust or unreasonable.
[2] Polyfoam (Australia) Pty Ltd has filed a Notice of Motion to dismiss the application for want of jurisdiction on the grounds that Mr Tuohy was in receipt of remuneration above the limit specified in section 382 of the Act. The company sought that the jurisdictional objection be determined prior to the application being referred for conciliation.
[3] There was a hearing of the respondent’s jurisdictional objection on 27 May 2010. Mr R Millar, of counsel, represented the applicant and Ms M Crawford of the Australian Industry Group, represented Polyfoam (Australia) Pty Ltd. Mr N Tandy, State Manager with the respondent, gave oral evidence, as did Mr Tuohy.
EVIDENCE
MR TANDY
[4] It was Mr Tandy’s evidence that the purpose of his second witness statement 1 was to clarify the value of the car and the tolls, to rectify some typographical errors and to re-check the numbers with their records.2
Annual Rate of Pay
[5] With respect to the applicant’s annual rate of pay, it was acknowledged that there was a difference between the company’s figure and Mr Tuohy’s figure. Mr Tandy explained that his figure was the figure that had been declared to the Tax Department. 3 It was confirmed that the applicant did not receive a pay rise in the period following 30 June 2009 and that the PAYG Payment Summary (for the year ended 30 June 2009) showed gross payments of $35,319.4
Tolls
[6] It was acknowledged by Mr Tandy that the original figure for the value of the tolls was $2,200 and that it had been amended to $1450. The first figure was explained as having been calculated on an average of 220 work days in a year multiplied by $5 each way which was the capped toll between Vermont South and the Dandenong exit. 5 The revised (second) figure was 145 non work days multiplied by $10 ($5 each way) on the basis that the applicant would not have travelled directly to the office on every work day.6 To establish this, it was Mr Tandy’s evidence that the company had checked which days the applicant had come into the office directly from home as it would have been unfair to include tolls when he had visited a customer on his way to work.7 Mr Tandy conceded during cross examination, that the second figure was actually based on the number of work days that the applicant had driven directly to work and had incurred tolls. The first figure had, therefore, been reduced by the number of days when the applicant did not attend the office directly from home.8 Further, Mr Tandy conceded that the applicant could have come into work a different way which did not incur tolls, and that he would have incurred tolls, as he travelled regularly around the metropolitan area for work and on trips to the airport for business travel.9
[7] It was recounted by Mr Tandy that he had taken a period of time from Mr Tuohy’s diary and had extrapolated it out. He indicated that he had not detailed the methodology nor attached the source documents. 10 It was Mr Tandy’s evidence that the Tribunal should take his word for it that the correct figure was 145 days.11 Mr Tandy did point to the e-TAG records that had accompanied his statement. However, he conceded that there was no scientific basis on which the trips in the records were divided up between personal and work use.12
[8] With respect to the calculation being based on the maximum capped amount of $5 per trip, Mr Tandy stated that this assumption was derived from an analysis of Mr Tuohy’s work diary and was not a guess. He apologised for not having provided the diary. 13 Further, Mr Tandy indicated that the applicant could not have taken the money ascribed to tolls as salary and that there had been no agreement with Mr Tuohy as to value of the tolls.14
Private Use of Motor Vehicle
RACV Rate
[9] Mr Tandy agreed that the Subaru had cost less than $50,000 and stated that he had used the RACV vehicle reimbursement rate for owning and operating a car of that value of 70.1 cents per kilometre. 15
[10] With respect to the RACV rate, 16 it was Mr Tandy’s understanding that the 70.1 cents per kilometre included the servicing costs of that vehicle. He agreed that the servicing costs identified in his witness statements would be double counting17 and that they should be deleted from his second witness statement.18 He thought that it had already been deleted.19 Mr Tandy stated that toll use was not included in the RACV rate and that he had telephoned RACV to find this out.
[11] In terms of the Mitsubishi car, Mr Tandy agreed that it was initially purchased for $50,000 and that $3000 had been returned to the applicant because the GPS was not working. It was also common ground that the end cost of the vehicle was $47,000. However, Mr Tandy stated that the RACV’s running costs were based on the valuation and size of the vehicle. It was his view that the vehicle size did not change when the price was reduced to $47,000. 20
[12] Mr Tandy confirmed the proposal from Mitsubishi for the car ($51,753.50) 21 and indicated that he had not been provided with the tax invoice. He stated that, after five years, the car had been sold to Mr Tuohy for $9000. It was said to be his understanding that the value of the car for lease purposes was the amount that the company had paid.22
Fuel Costs
[13] It was the respondent’s contention that, based on the Fleetcar records, Mr Tuohy’s private use of the vehicle was approximately 35.11% of the total annual kilometres travelled. 23 Mr Tandy explained that the methodology for the calculation of private usage was the number of kilometres travelled in between refuelling times and when refuelling occurred, taking account of weekends and annual leave. Mr Tandy disagreed that the methodology was flawed because the extrapolations were based on the refuelling dates. He said that a lot of the refuelling dates and locations were far in excess of being between work and home.24 Mr Tandy stated that he could not agree that every kilometre of a tank that was filled up on a Sunday would have been for either work or for private use. He indicated that a percentage of the fuel would have been deemed private.25
[14] It was explained further by Mr Tandy that the kilometres driven since the last time the car was filled, the location of the refuelling and the number of litres used were all taken into account. 26 Extensive additional details regarding the methodology used were provided by Mr Tandy.27 It appears that, in part, the kilometres driven between refuelling were allocated to either personal or business, guided by when and where the car was refuelled. Public holidays, annual leave and weekends also seem to have been taken into account in determining which kilometres were work or personal.28
Mobile Phone
[15] Mr Tandy stated that, in his first witness statement, private phone usage had been calculated on the basis of two-sevenths (7 day week and the phone was used on the weekends). However, it was his evidence that, subsequently, the company had gone through all of the applicant’s telephone calls over the previous 12 months and had identified the private calls. The method for determining these calls was to isolate the non work related calls that had occurred outside of 8.25 am and 5.00 pm Monday to Friday, on weekends, public holidays and annual leave. 29 Mr Tandy stated that none of Mr Tuohy’s work related calls during these times had been included in the $549. It was explained that the company had a database with all of the customer’s phone numbers in it. The numbers in Mr Tuohy’s phone records were individually checked against the customer database. Mr Tandy indicated that calls made to Mr Tuohy’s home, even if he was away for work, were counted as personal calls.30
[16] Finally, Mr Tandy confirmed that the personal tolls and private use of the motor vehicle and mobile phone were not able to be taken as cash by Mr Tuohy. He also stated that there had been no agreement between the company and Mr Tuohy regarding the value of the private use of the car and mobile phone. 31
MR TUOHY
[17] It was Mr Tuohy’s evidence that the $267 claimed for mobile telephone calls was the result of his going through his phone records and noting which ones were personal calls. 32
[18] Mr Tuohy did not recall using his work car to travel interstate when he was on holidays and thought that it was more likely to have been to rural Victoria (Wonthaggi). He indicated that the work car was the primary car that he used when he was on annual leave. 33 Mr Tuohy said that he did have two cars.34 He recounted that his wife sometimes used his work vehicle as his disabled daughter refused to get into any other car than his work car. His wife used his work car when she needed to take their daughter for medical/professional appointments. He stated that it was not extensive.35 Mr Tuohy recalled that his work vehicle was used, but rarely, during the week for personal purposes.36
[19] The PAYG Payment Summary (to 30 June 2009) was confirmed by the applicant 37 which showed his earnings for that financial year as $95,319. He had not received a pay increase since that time.38 Mr Tuohy also stated that the provision and use of a motor vehicle (including e-tag) and a mobile phone by the respondent was not based on a salary sacrifice arrangement.39
[20] With respect to the Mitsubishi car, Mr Tuohy stated that he had negotiated its purchase at $50,000 which was reduced to $47,000 when the respondent was repaid $3000 because the GPS was not operational. 40
[21] In terms of his use of the mobile phone, Mr Tuohy explained that there was some personal use of the phone because, as he was generally on the road or interstate, a fixed land line was not available. Therefore, the mobile was the only option. 41
[22] Mr Tuohy’s evidence was that work related travel overwhelmingly accounted for the tolls he incurred. This was due to the location of his home and the nature of the personal journeys which largely obviated the need to use his e-tag for personal purposes. 42
SUBMISSIONS
RESPONDENT
[23] On behalf of the company, Ms Crawford submitted that the monetary and non monetary benefits accorded to Mr Tuohy placed his income above the “high income threshold” of $108,300. 43
[24] It was submitted that the applicant’s package was made up as follows 44:
$ | |
Wages | 96,222 |
Tolls | 1,450 |
Mobile | 549.37 |
Vehicles | 12,413.79 |
TOTAL | 110,635.16 |
[25] The respondent contended that the value of the motor vehicle was agreed with the applicant by virtue of clause 3(d) of his contract which set out the value as $45,000. 45 This was said to be notwithstanding the fact that the purchase price of the vehicle was $51,753.46
[26] The cost of the calls made outside Monday to Friday 8.25 am and 5.00 pm, excluding weekends, public holidays and annual leave, which were non work related were totalled and came to $549.37. 47
[27] With respect to whether or not both of the work provided vehicles the applicant drove should be taken into account, the respondent argued that they both should be. Ms Crawford stated that, as account had to be taken of what the applicant earned over the year, the same should be applied to the vehicles used. In addition, it was argued that it would be unfair to only take account of the Subaru which was only used by the applicant for three weeks. 48
[28] It was also submitted that the respondent had undervalued the applicant’s personal use of the motor vehicle as there were times when it was used for private use during the week. Ms Crawford highlighted the mobile telephone costs issue and reiterated Mr Tandy’s evidence that he had not undertaken the analysis himself. Another person had gone through all of the records and highlighted calls that were made after hours and which were not calls to customers. 49
[29] With respect to the “annual rate of earnings” concept, the respondent argued that, if it was only the rate of earnings at the date of termination, the word “annual” would be redundant. In this context, “annual” was said to mean the rate of earnings over the year, otherwise the word would not have been included. 50
[30] Further, Ms Crawford contended that there was agreement about the tolls and mobile phone in the sense that they represented a benefit, subject to a variation of the contract. 51
[31] Finally, it was indicated that, for the calculation of the motor vehicle component, the respondent had relied on the formula set out in the decision in H.W Fewings v Kunbarllanjnja Community Government Council 52(Fewings case).
APPLICANT
[32] It was Mr Millar’s submission that the respondent’s jurisdictional objection failed on the law and on the facts. The reason for the former was said to be that the exclusion in section 382 of the Act, refers to the person’s “annual rate of earnings”. It was contended that it was no longer the person’s actual earnings over the previous 12 months. Instead, Mr Millar submitted that it is the rate at which the person is paid as at the date of termination. Therefore, applying the same principle, the Subaru would be included in the calculations but not the Mitsubishi. 53
[33] With respect to section 332(1)(b) of the Act, Mr Millar submitted that none of the benefits provided by the employer fitted into this category, namely, salary sacrifice arrangements. This was because none of the benefits were cashable in that the applicant was able to take them as salary instead. 54
[34] In terms of section 332(1)(c), it was contended that there had been no agreement about the value of non-monetary benefits. Mr Millar argued that there was no evidence before the Tribunal of an agreement regarding private use of the mobile phone. Further, Mr Tandy’s evidence was that tolls were not contemplated when the original agreement was reached between the parties. 55 Accordingly, it was argued that the telephone and tolls could not be included pursuant to Regulation 3.05(6) of the Fair Work Regulations 2009 (Regulations). Mr Millar acknowledged that the motor vehicle was included in the agreement between the parties and stated that the provision of the motor vehicle may be taken into account on the basis of an estimate of the money value of the benefit by the Tribunal.56
[35] However, it was submitted on behalf of the applicant that, even though Regulation 3.05(6)(c)(iii) provided the Tribunal with the power to estimate a real or notional money value of the benefit of private use of the motor vehicle, Mr Millar argued that, as the respondent’s evidence was inadequate on this issue, the Tribunal was not in a position to estimate the monetary value of this benefit.
[36] In terms of the applicant’s annual rate of pay, the respondent contended that the best evidence of this was the PAYG Payment Summary 57 as it was agreed that there had been no change in the rate of pay in that year. It was submitted that the annual figure that the applicant was being paid at the date of his dismissal was the same figure as contained in the PAYG Payment Summary (as at 30 June 2009).58 Accordingly, the applicant’s annual rate of pay was $95,319.59
[37] In regard to the issue of tolls, the applicant argued that the material supplied by the respondent/evidence was unsatisfactory and did not put the Tribunal in a position whereby an estimate of the actual value of the benefit could be made. 60 In the applicant’s outline of submissions, it was submitted that the appropriate figure was $1350 based on 135 non work days which excluded four weeks of annual leave and two weeks of public holidays.61
[38] The figure put forward by the respondent regarding the benefit of the private usage of the mobile phone was also said to be unreliable. This was due to work calls outside the spread of hours being included together with calls which were incidental to the performance of work. The applicant stated that the Tribunal was therefore not in a position to estimate the value of this benefit. 62 In the applicant’s outline of submissions, the respondent’s figure was disputed and $267 was proposed for the purposes of the calculations.63
[39] With respect to the motor vehicle usage, it was the applicant’s primary submission that, because it was not a cashable benefit, none of it should be included. In the alternative, it was argued that the proper vehicle to be included was the Subaru because that was the “rate of pay” at the date of termination. 64 The Tribunal was reminded that Mr Tuohy had admitted to personal use of the car which he estimated to be 15%. It was said that there was no basis on which to prefer the respondent’s figure of 35% as the methodology was “impossible to follow and was difficult for him [Mr Tandy] to explain.”65
[40] The appropriate RACV rate of reimbursement was said to be 70.1 cents per kilometre. Even if the respondent’s contention that the Mitsubishi should be included, Mr Millar stated that 70.1 cents was still the correct figure as the Mitsubishi had been purchased for $47,000. The applicant submitted that the appropriate value of personal use of the vehicle was $3,869.52 based on 15% personal use. 66
[41] In the applicant’s outline of submissions, the calculations were set out as 67:
$ | |
Salary | 95,319 |
Motor Vehicle | 3,869 |
Tolls | 1,350 |
Mobile Telephone | 267 |
TOTAL | 100,805 |
[42] In any event, it was the applicant’s submission that the applicant’s annual rate of earnings did not exceed the high income threshold of $108,300. 68
CONCLUSIONS
Statutory Framework
[43] Section 394(1) of the Act enables an employee who has been dismissed from their employment to apply to Fair Work Australia for an order, under Division 4 of Part 3-2 of the Act, granting a remedy for unfair dismissal.
[44] Prior to determining the merits of such an application, s.396 of the Act requires the Tribunal to decide whether a person is protected from unfair dismissal.
[45] Section 382 of the Act provides:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(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.”
[46] For the purposes of s.382 of the Act, it was uncontested that the applicant had fulfilled the minimum employment period (s.382(a)). However, for Mr Tuohy to be protected from unfair dismissal, he needs to meet one or more of the criteria set out in s.382(b). There was no evidence before me that either s.382(b)(i) or (ii) apply to Mr Tuohy. The issue in contention between the parties relates to s.382(b)(iii) - whether Mr Tuohy’s annual rate of earnings exceeded the high income threshold.
[47] Therefore, the matter to be determined is whether Mr Tuohy’s annual rate of earnings exceeded the high income threshold. At the relevant time, the high income threshold is $108,300.
[48] What is meant by “earnings” is set out in s.332 of the Act, which provides:
“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.
(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.
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 292-175 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.”
[49] The relevant regulation, referred to in s.332(1)(d), is Regulation 3.05(6) which provides:
“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) FWA 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) FWA can estimate a real or notional money value of the benefit;
the real or notional money value of the benefit estimated by FWA is an amount for subparagraph 382(b)(iii) of the Act.”
Issues for determination
[50] There was no agreement between the parties about any aspect of this matter except that the servicing costs of the motor vehicle should not be included in assessing Mr Tuohy’s total annual rate of earnings together with any amounts as per Regulation 3.05(6).
[51] The starting point for determining whether the applicant’s earnings were less than $108,300 is s.332(1) which defines earnings as:
“(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.”
[52] I will deal with each of these in turn.
Employee’s wages - s.332(1)(a)
[53] There was no agreement regarding the quantum of Mr Tuohy’s wages. Both parties did agree that he had not received a wage increase since 30 June 2009. Mr Tuohy submitted his PAYG Payment Summary for the financial year ending 30 June 2009 which showed earnings for that period of $95,319. 69 It was his evidence that he had received no other income other than his salary from the company.
[54] On the other hand, Mr Tandy relied on the applicant’s final payslip which showed his monthly rate of pay as $8018.50. Multiplied by 12, this amounts to an annual salary of $96,222 which is the figure the company relied on. It was stated that this was the figure that had been forwarded to the Australian Taxation Office.
[55] One would have expected that establishing the applicant’s gross salary (without any add-ons) would have been a straight forward matter. However, the Tribunal is confronted with two “official” documents, the veracity of both was not challenged by either party. At this point in time, I will find that the applicant’s salary was in the range of $95,319 to $96,222. If, later on in this decision, it is necessary to determine a single figure, that will be done.
Amounts applied or dealt with on the employee’s behalf or as the employee directs -s.332(1)(b)
[56] As Cloghan C pointed out in his decision in Batley v Cocos Islands Co-operative Society Limited 70 the Explanatory Memorandum to the Fair Work Bill 2008, is not particularly helpful as to the meaning of s.332(1)(b). However, it would appear that this section is referring to any salary sacrifice arrangements. In this matter, it was common ground, that there were no salary sacrifice arrangements in place.
[57] Therefore, s.332(1)(b) is not applicable in this matter.
Agreed money value of non- monetary benefits - s.332(1)(c)
[58] The employment agreement that was signed by both parties provided, at clause 3(d) that Mr Tuohy would be provided with a fully maintained motor vehicle up to a value of $45,000. 71 However, there had been no agreement as to the value of the non-monetary benefit of private usage of the motor vehicle. With respect to the provision of a mobile phone to Mr Tuohy and the payment of tolls, there is no reference to either of these in the employment agreement. However, it is clear from the evidence that there was agreement between the parties that these two benefits would be provided to the applicant.
[59] Section 332(3) defines the non-monetary benefits contained in s.332(1)(c). Section 332(3) requires that the non-monetary benefits are benefits to which the employee is entitled and for which a reasonable money value has been agreed.
[60] However, there is no evidence before me that, with regard to private usage of the motor vehicle and mobile phone and the tolls, the “reasonable money value” of these non-monetary benefits had been agreed between the parties, as required by s.332(3)(b). Accordingly, as these matters do not meet all of the definitional requirements of s.332(3), they are not able to be described as non-monetary benefits under the Act. Accordingly, accounting for each of these benefits is not possible under s.332(1)(c) as they do not meet all of the requirements of s.332(3).
Amounts or benefits prescribed by the regulations - s.332(1)(d)
[61] Section 332(1)(d) includes as part of an employee’s earnings, amounts or benefits prescribed by the regulations. The relevant regulation is Regulation 3.05(6).
Regulation 3.05(6)
[62] Regulation 3.05(6) provides that, where a person is entitled or has received a benefit which is not money nor a non-monetary benefit and the parties have not agreed a reasonable money value, the Tribunal, if satisfied, is able to estimate a real or notional estimate of the value of the benefit. This is then included in the calculation of the person’s earnings. In this matter, therefore, it falls to Regulation 3.05(6), rather than s.332(1)(c), to determine the money value benefit of the private usage of the vehicle and mobile phone and the tolls. I will deal with each of these in turn.
Private usage of motor vehicle
[63] The parties could not agree the percentage of private use of the vehicle and, therefore, the amount to be included in a calculation of the applicant’s earnings. Neither could the company and Mr Tuohy agree as to which one or whether both of the two vehicles that he was provided during the last year of employment, should be the basis for determining the value of the benefit. There was also no meeting of minds about what was the applicable RACV rate.
[64] Regulation 3.05(6)(c) provides Fair Work Australia with the discretion to estimate a real or notional money value of the benefit. There are a number of pre-conditions that have to be met before making such an estimation. On the basis of the material before me, I find that Mr Tuohy was entitled to a benefit in accordance with his employment contract with the company (Regulation 3.05(6)(a)). I also find that the benefit is not a monetary payment and is not a non-monetary benefit as described in s.332(3) of the Act (Regulation 3.05(6)(b)).
[65] Further, Fair Work Australia has to be satisfied that it should consider the benefit for the purpose of assessing whether the high income threshold applied to Mr Tuohy at the time of his dismissal (Regulation 3.05(6)(c)(i)). The description of “earnings” in the Fair Work Act 2009 is different to the predecessor clause in the Workplace Relations Act 1996 which referred to remuneration. However, there is a line of authorities that have established that private use of a motor vehicle is to be taken into account in establishing an employee’s remuneration. Although the provisions for determining an employee’s earnings are different in the current Act, there is nothing in the provisions which would point to the non-inclusion of the benefit of private use of a motor vehicle in the assessment with the high income threshold (Regulation 3.05(6)(c)(i)).
[66] With respect to the requirements of Regulation 3.05(6)(c)(iii), it is my view that it is possible for Fair Work Australia to estimate a real or notional money value of this benefit. The standard formula for calculating the motor vehicle component of an individual’s remuneration is set out in Fewings Case.
[67] The first steps in the formula involve estimating the percentage and number of kilometres travelled for personal purposes. It was estimated by the company that 35.11% of the total kilometres travelled by the applicant in the previous 12 months was for private purposes. On the other hand, the applicant stated that 15% of the kilometres related to private use of the vehicle. It was agreed by the parties that the applicant had travelled 36,800 kms in the previous 12 months. In reaching the figure of 35.11% of private usage, Mr Tandy gave extensive and detailed evidence as to the methodology used. On the other hand, Mr Tuohy did not explain the specific basis for his estimation of 15% but he did outline his pattern of motor vehicle usage, both work and personal, and his family circumstances.
[68] It was accepted by the company that the applicant travelled extensively for work. Without excluding annual leave, the total number of kilometres travelled per week by Mr Tuohy were 707 (36,800 kms divided by 52 weeks). 15% of that figure equates to 106km per week of private travel whilst 35.11% means 248km of private travel per week. The methodology used by the employer to determine 35.11% was very involved and, in the end, unclear. Balancing both perspectives on this issue, I find that it is more probable that the private usage of the vehicle was 15%. Therefore, it is estimated that the number of kilometres of private travel was 5520.
[69] The next step in the formula for assessing the value of private usage of a vehicle is multiplying the private kilometres by the appropriate RACV cents/kilometre rate. The parties could not agree as to whether the Mitsubishi (which was driven by Mr Tuohy for 49 weeks of the previous year) or the Subaru (driven for the last three weeks of employment), or both, was to be utilised in determining the RACV rate.
[70] It was the respondent’s view that both vehicles should be taken into consideration as the Act referred to the “annual rate of earnings” and not to the rate of earnings as at the date of termination. For the latter to be the situation was said to render the word “annual” redundant. The applicant contended that the “annual rate of earnings” did not mean the actual earnings over the previous 12 months. Rather, it was the rate paid as at the date of dismissal.
[71] The “annual rate of earnings” contained in section 382(b)(iii) of the Act does not, in my view, simply refer to the person’s annual rate of pay as at the date of dismissal. It would be unfair if this was the case in situations where a person was not paid the same rate of pay for all of the previous 12 months. If, for example, an employee was paid $85,000 for 49 weeks of the previous year and $100,000 for the last three weeks of employment, it would be logical to calculate the annual rate of earnings on the basis of the first annual rate of earnings ($85,000) for 49 weeks and then on the basis of the second annual rate of earnings ($100,000) for three weeks. It would be unfair for the annual rate of earnings to be set at the rate of pay at termination - $100,000. In the example given, there were two different annual rates of earnings during the 12 month period, both of which would need to be taken account of.
[72] Extrapolating this example to the issue of the motor vehicles, it is my view that account should be taken of the fact that over the previous 12 months, the applicant was provided with two different motor vehicles. It was agreed that the Mitsubishi had, in the end, cost the company $47,000. Mr Tandy indicated that, for lease purposes, the value of the car was set at what the company had paid - $47,000. 72 It was also common ground that the second car, the Subaru, cost the company $42,854.29.
[73] The vehicle reimbursement rates, set by the RACV, distinguishes between medium vehicles (under $50,000) and medium vehicles (over $50,000), with different rates applying. As both vehicles cost under $50,000, the appropriate reimbursement rate for both vehicles and, therefore, for all of the private usage kilometres is 70.1 cents/km.
[74] Accordingly, the real value of the applicant’s private usage of the motor vehicle is estimated to be $3,869.52.
Mobile phone and tolls
[75] The other benefits in this matter relate to private use of a mobile phone and the value of tolls as the result of the private vehicle usage.
[76] The respondent contended that both these benefits needed to be taken account of in assessing whether Mr Tuohy’s earnings exceeded the high income threshold. On the other hand, the applicant argued that, as the value of these non-monetary benefits had not been agreed, they could not be included under s.332(1)(c). The Tribunal was urged not to make an estimation of these benefits pursuant to Regulation 3.05(6). For the same reasons set out in paragraph 63 above, with respect to the value of private usage of the motor vehicle, I propose to estimate the real or notional money value of the mobile phone and tolls.
Mobile phone
[77] The respondent, but not Mr Tandy, personally undertook a line by line assessment of all of Mr Tuohy’s telephone calls outside the hours of 8.25 am and 5.00 pm and calls made on weekends, public holidays and annual leave. As part of the exercise, Mr Tandy stated that calls to customers, including overseas and other work related calls, which were made outside of working hours, had not been included. 73 As a result, it was found that the cost of personal calls was $549.37.
[78] The applicant held a different view and argued that it was unsafe for the Tribunal to estimate the value of the personal calls. However, in the written submissions filed 74 for the purposes of the calculations, the figure of $267 was adopted.75
[79] In terms of the provisions of Regulation 3.05(6), it is my view that the requirements of (a) and (b) have been met in respect of both the mobile phone and the tolls. It was agreed between the company and Mr Tuohy, but not recorded in the employment contract, that he would be provided with a mobile phone and that his tolls would be paid as part of the provision of a fully maintained car. In addition, the benefits are not the payment of money and they are not benefits within the meaning of s.332(3) of the Act. With respect to subsection (c)(iii), I am satisfied that both these benefits should be considered in assessing whether the high income threshold applied to Mr Tuohy at the time of the dismissal. Further, a reasonable money value has not been agreed by the parties and I am of the view that Fair Work Australia can estimate a real or notional money value of these benefits.
[80] I have considered all of the material before me and I accept the value of the personal mobile phone calls put forward by the employer. I am satisfied that the methodology used is robust and that as fair an assessment as possible has been undertaken.
[81] Therefore, I estimate the real money benefit of the private mobile phone calls to be $549.37.
Tolls
[82] I have already addressed the requirements of Regulation 3.05(6) in paragraph 78 above.
[83] The employer estimated that there were 145 work days when Mr Tuohy went directly into work from home. Account was taken of when the applicant had not gone directly into work and the capped toll at $5 each way between Vermont South and the Dandenong exit was assumed. The value of the benefit was therefore estimated at $1450.
[84] For the applicant’s part, it was his evidence that the overwhelming use of the e-tag was for work as, because of his home location and the nature of his personal trips, he did not use the e-tag much for personal travel. 76 In the written submissions on behalf of the applicant, for the purposes of the calculations, $1350 was suggested on the basis of 135 non work days and a $10 per day toll figure.77
[85] On the basis of the material before me, it appears that, between Mr Tandy’s first and second statements, the estimate of the benefit reduced from $2200 to $1450 by taking out the number of days the applicant did not directly attend the office from home. Taking the employer’s 145 days estimate and dividing that figure by 48 weeks (assuming four weeks annual leave) this means that 3.02 times out of a possible five times each week, the applicant came directly into the office from home. It was common ground that the applicant travelled extensively throughout the metropolitan area and country Victoria in his position as Sales Manager. The methodology used by the employer to determine that the applicant’s personal benefit from the tolls was 145 days worth appears to be unsound. The figure was the result of the extrapolation out of a period of time in the applicant’s electronic diary. However, the diary was not provided to support - and explain - the basis of the employer’s figures.
[86] It would seem common sense to assume that a high proportion of a Sales Manager’s time would be spent out of the office visiting customers. It is acknowledged that this may not necessarily mean that the Sales Manager always saw a customer on his way into work. It would depend, for one thing, on the location of the customer. However, on the company’s figures, the applicant would go directly into the office three days out of every five each week before visiting customers in metropolitan Melbourne or regional Victoria. This would seem implausible, given the evidence about his extensive travel. A more likely frequency would be that the applicant went directly into the office on two out of every five days each week, over 48 weeks in the year. This would result in 96 trips directly to the office at $10 per round trip.
[87] Therefore, it is estimated that the notional value of personal use of the e-tag is $960.
[88] Bringing all of this together, I find that Mr Tuohy’s earnings (as per s.332(1) of the Act) are as follows:
(a) wages - $95,319 - 96,222
(b) -
(c) -
(d) benefits prescribed by the regulations:
* private use of motor vehicle - $3,869.52
* private mobile phone use - $549.37
* tolls - $960
[89] Therefore, with respect to s.382, I find that the sum of Mr Tuohy’s annual rate of earnings and other amounts worked out in accordance with the regulations comes to $99,833.89 or $101,600.89. The high income threshold, at the relevant time, is $108,300.
[90] Accordingly, for the purposes of s.382(b)(iii) of the Act, on either basis, I find that the sum of Mr Tuohy’s annual rate of earnings and those amounts worked out in accordance with the regulations, is less than the high income threshold. Consequently, Mr Tuohy is protected from unfair dismissal and can seek a remedy (if the dismissal is determined unfair) from the Tribunal.
[91] The employer’s jurisdictional objection is dismissed and Mr Tuohy’s s.394 application will be referred for conciliation. An order 78 giving effect to this decision will be issued separately.
COMMISSIONER
1 Exhibit A3
2 Transcript PN 48
3 Ibid PN 59
4 Ibid PN 58, 61 - 63 and Exhibit R1
5 Ibid PN 68
6 Ibid PN 69 - 72
7 Ibid PN 97
8 Ibid PN 103 - 104
9 Ibid PN 98 - 102
10 Ibid PN 105 - 110
11 Ibid PN 111
12 Ibid PN 112 - 115
13 Ibid PN 117 - 119
14 Ibid PN 120 - 122
15 Ibid PN 123 - 125 and Exhibit A3 at paragraph 6
16 Exhibit A2 at Attachment NT7
17 Transcript PN 129
18 Ibid PN 144 and Exhibit A3 at paragraph 13(c)
19 Ibid PN 143
20 Ibid PN 145 - 149
21 Exhibit A3 at Attachment NT6 and Exhibit A2 at paragraph 11
22 Transcript PN 150 - 163
23 Exhibit A2 at paragraph 12 and Attachment NT3, Exhibit A3 at paragraph 10 and Transcript PN 165
24 Transcript PN 166 - 173
25 Ibid PN 175 - 179
26 Ibid PN 180 - 190
27 Ibid PN 191 - 226
28 Ibid PN 227 - 323
29 Ibid PN 48 - 51
30 Ibid PN 324 - 379
31 Ibid PN 380 - 383
32 Ibid PN 426
33 Ibid PN 428
34 Ibid 428 and Exhibit R3 at paragraph 6
35 Ibid PN 429 - 430
36 Ibid PN 431
37 Exhibit R1
38 Exhibit R3 at paragraph 3
39 Ibid at paragraph 4
40 Ibid at paragraph 7
41 Ibid at paragraph 10
42 Ibid at paragraph 9
43 Exhibit A1 at paragraphs 2 - 4
44 Exhibit A3 at paragraph 13 with the servicing component deleted
45 Exhibit A1 at paragraph 8
46 Ibid at paragraph 9
47 Exhibit A3 at paragraph 3
48 Transcript PN 438
49 Ibid PN 439
50 Ibid PN 472
51 Ibid PN 473
52 Print Q2019, 17 June 1998
53 Transcript PN 443 - 444
54 Ibid PN 445
55 Ibid PN 446 - 448
56 Ibid PN 458 and 461
57 Exhibit R1
58 Transcript PN 462
59 Exhibit R2 at paragraph 2
60 Transcript PN 463
61 Exhibit R2 at paragraph 11
62 Transcript PN 465
63 Exhibit R2 at paragraph 12
64 Transcript PN 466
65 Ibid PN 467
66 Exhibit R2 at paragraph 9 and Transcript PN 470
67 Ibid at paragraph 13
68 Transcript PN 470
69 Exhibit R1
70 [2010] FWA 2289, (29 March 2010)
71 Exhibit A2 at Attachment NT5
72 Transcript PN 163
73 Ibid PN 325 - 334
74 Exhibit R2
75 Ibid at paragraph 12
76 Exhibit R3 at paragraph 9
77 Exhibit R2 at paragraph 11
78 PR504519
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