Mr Shane Martin v B&J Catalano Pty Ltd T/A B&J Catalano

[2014] FWC 7175

[2014] FWC 7175

FAIR WORK COMMISSION

DECISION

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

Mr Shane Martin
v
B&J Catalano Pty Ltd T/A B&J Catalano
(U2014/10983)

COMMISSIONER CLOGHAN PERTH, 17 OCTOBER 2014

Unfair dismissal - jurisdictional objections - high income threshold - no enterprise agreement - no modern award.

[1] On 18 July 2014, Mr Shane Martin (Mr Martin or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from his former employer, B&J Catalano Pty Ltd (Employer).

[2] The application was made pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[3] In response to the application, the Employer asserts that the Applicant is not protected from unfair dismissal of the FW Act because:

• his annual rate of earnings is more than the high income threshold of $133,000;



• an enterprise agreement does not apply to Mr Martin’s employment;



• a modern award does not cover the Applicant’s employment; and



• he resigned from his employment on 3 July 2014.

[4] The Applicant concedes that an enterprise agreement does not apply to his employment. Consequently, at this point in the application, two questions have to be determined by the Commission and they are:

• was the sum of the Applicant’s annual rate of earnings, and such other amounts (if any) less than the high income threshold of $133,000; and



• did a modern award cover Mr Martin’s employment.

[5] I now turn to those questions for determination.

RELEVANT LEGISLATIVE FRAMEWORK

[6] Mr Martin is protected from unfair dismissal in accordance with s.382 of the FW Act as follows:

“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.” (my emphasis)

[7] Section 332 of the FW Act is 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

(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) ...” (my emphasis).

[8] Regulation 3.05 of the Fair Work Regulations 2009 (FW Regulations) explains how to calculate the amounts for the purpose of assessing whether Mr Martin’s annual rate of earnings is less than the high income threshold. Regulation 3.05 is as follows:

“3.05 When a person is protected from unfair dismissal—high income threshold

(1) For subparagraph 382(b)(iii) of the Act, this regulation explains how to work out amounts for the purpose of assessing whether the high income threshold applies in relation to the dismissal of a person at a particular time.

Note: Under section 382 of the Act, a person is protected from unfair dismissal if specified circumstances apply. One of the circumstances is that 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.

Piece rates

...

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.” (my emphasis)

RELEVANT BACKGROUND

[9] Mr Martin commenced employment as a Transport Coordinator on 1 November 2010.

[10] On or about 30 March 2011, Mr Martin commenced full-time employment as the Employer’s Operations Manager (Metropolitan). At Clause 5 of Mr Martin’s contract of employment, it states that in addition to his salary of $87,500 (exclusive of superannuation), the Employer would provide:

“ a mobile telephone (primarily for work related purposes and restricted private use) in accordance with Company policy. The policy currently states that the Company will pay for the cost of using the mobile phone up to a maximum of $100 per month; and

• a fully maintained motor vehicle for company and private use in accordance with Company Policy. The Company will pay the Fringe Benefit tax attributable to your private use of the motor vehicle.” (my emphasis)

[11] At the time of Mr Martin’s cessation of employment, his salary, exclusive of superannuation, was $122,385.

[12] Accordingly, it is necessary to determine Mr Martin’s total annual rate of earnings inclusive of the value of non-monetary benefits, if any, Mr Martin received from the Employer which can be properly considered.

[13] “Earnings” as defined in subsection 332(1) of the FW Act includes “the employee’s wages” and the “agreed money value of non-monetary benefits” at paragraph 332(1)(c).

[14] There is no dispute between the parties that Mr Martin did receive the benefit of a fully maintained motor vehicle for private use and mobile telephone for private use. Where the parties disagree is the monetary value to be attributed to the benefit of both assets.

[15] The Applicant’s calculations of the monetary value of the assets bring him below the high income threshold. The Employer’s calculation of the monetary benefit of the assets to Mr Martin, bring him beyond the high income threshold. In the absence of agreement, it is necessary for the Commission to estimate a real or notional benefit of the mobile telephone and motor vehicle.

What was the monetary benefit, if any, to Mr Martin of the private use of the mobile telephone?

[16] The Commission is faced with two competing claims. The Applicant estimates a private use monetary benefit of $200 per annum for the mobile telephone. The Employer asserts $1 200 per annum.

[17] There is no third party independent formula to which the parties can make an assessment of the non-monetary benefit of private telephone calls. Further, the dollar value assessment by both parties has not included a detailed analysis of all the private phone calls undertaken. Finally, the analysis does not take into account the capital investment, and any other related expenditure, with a mobile telephone.

[18] When considering the non-monetary benefit of the private use of a mobile telephone, it can be said, with some confidence, that $200 would be insufficient to buy some mobile telephones. It is also true that some mobile telephones can be bought for less than $200. However, the actual cost of private calls is somewhat difficult to assess as it depends on usage, various “plans/packages”, the “provider”, whether you pay as you go and whether telephone calls are to or from landlines or mobiles. For most users of mobile telephones, comparative costing is confusing. In Mr Martin’s case, he estimates $4 per week or approximately 50 cents per day. Intuitively, this seems relatively low.

[19] In contrast, the Employer asserts that it is $1 200 per annum or $25 per week. On a daily basis, it is approximately $3.50 per day.

[20] While the precise cost of the actual private mobile telephone calls is unknown, I have Mr Martin’s contract of employment which both he and the Employer agreed to, in advance. The agreement is that Mr Martin could access private telephone calls up to a maximum of $100 per month.

[21] In the absence of actuals, I am satisfied that $1 200 per annum is the appropriate monetary benefit, as it is consistent with paragraph 332(1)(c) of the FW Act which is where the parties have agreed to the monetary value of a non-monetary benefit in advance.

What was the monetary benefit, if any, to Mr Martin of the private use of the motor vehicle?

[22] In this case, the Commission is again faced with two competing assertions.

[23] While the parties agree on the formula, they disagree on the amount of private use of the motor vehicle. The Applicant asserts it is 15%, whereas the Employer asserts it is 30%. Again, the precise percentage of private use of the motor vehicle is unknown.

[24] At the time of Mr Martin’s cessation of employment, he was driving a 2012 Toyota Hilux 4x4 Workmate for approximately four (4) weeks. The annual cost of running a comparable vehicle, according to the Royal Automobile Club (RAC) is 94.71 cents per kilometre. The annual kilometrage of the vehicle was 26 248, or over the four (4) week period, 2 019.08 kilometres. The Employer submits an estimated private use of 30%, or 605.72 kilometres, which results in a monetary benefit is $507.41.

[25] I now return to the remaining 48 weeks in which Mr Martin was driving a Toyota Landcruiser. The reason why Mr Martin was driving the Toyota Hilux was that the Employer was sourcing a new model replacement for the Toyota Landcruiser GXL (4x4) which Mr Martin had driven for the previous 48 weeks.

[26] The total running costs of the Toyota Landcruiser is 143.58 cents per kilometre according to the RAC.

[27] The kilometrage of the Toyota Landcruiser is estimated at 28 102.15 kilometres for the 48 weeks. Applying the Employer’s 30% private usage formulae, the private use kilometrage is 8 430.65 kms. Adopting 143.58 cents per kilometre, realises a personal benefit to the Applicant of $12 104.72.

[28] Combing both vehicles, the Employer asserts the total personal monetary benefit for private use of the motor vehicle is $12 675.13.

[29] It is necessary to consider Mr Martin’s benefit of both vehicles separately because Regulation 3.05(6)(a) refers to a benefit that “has [been] received” - that is, the actual or real benefit and not a benefit based on what vehicle Mr Martin was driving at the time of his cessation of employment.

[30] I now turn to the issue of whether the private use is 30% as contended by the Employer, or 15% as contended by the Applicant.

[31] Both parties have adopted the formula set out in the Commission’s Bench Book on Unfair Dismissal, except they disagree on the amount of private use of the motor vehicle.

[32] The Applicant provides an assumed total annual kilometrage of 40 000 for both the Toyota Hilux or the Landcruiser and applies a 15% private use. Applying a 15% private use, the resulting financial benefit is either $5 650.20 or $8 614.80 depending on whether it is the Hilux or Landcruiser.

[33] The private use of a motor vehicle is in accordance with “Company Policy” in Mr Martin’s contract of employment. Company policy enables Mr Martin up to a maximum of 1 000 kilometres private use per week, and during annual leave.

[34] In view of the fact that the combined kilometrage of both vehicles was just over 30,000 kilometres for both work and personal use, a maximum of 1 000 kilometres in Mr Martin’s contract of employment seems overly generous.

[35] The Employer’s logic of 30% is derived from dividing weekend days into the overall number of days in a week (2 weekend days as a percentage of 7 days = 28.57%). The Applicant has not set out the logic for 15% private use.

[36] If I apply the Employer’s “logic” on an annualised basis, that is, “private time” versus “work time” in terms of weekends, annual leave and public holidays, the figure is approximately 37% (104 weekend days, 20 days annual leave and 10 public holidays).

[37] While this approach is easily understandable, it does take into account the monies of such an arrangement. For example, according to the Australian Taxation Office (ATO), as a general rule, travel to and from work is private use of a vehicle.

[38] In the absence of the precise percentage of private use and competing claims, it is appropriate to consider Mr Martin’s contract of employment in the context of Regulation 3.05.

[39] Mr Martin’s contract of employment requires the Employer to provide him with a fully maintained motor vehicle for company “and private use in accordance with Company Policy”. Company Policy entitles Mr Martin private use of the motor vehicle to a maximum of 1 000 kilometres per week within a 500 kilometre radius of the employee’s place of residence.

[40] In the absence of actuals and the competing claims of the percentage of private use, it is appropriate to adopt the contract of employment provisions which enabled Mr Martin to the private use of a fully maintained motor vehicle up to 1 000 kilometres per week private use. This is what Mr Martin is entitled to receive.

[41] It is acknowledged, as a matter of fact, that Mr Martin did not access 1 000 kilometres per week. It also has to be acknowledge that Mr Martin’s contract of employment does not set out the actual value of the non-monetary benefit of the private use of the motor vehicle; the benefit is expressed in kilometres.

Regulation 3.05 of the FW Regulations

[42] Before reaching a conclusion on the competing claims about the value of the private use benefit of the motor vehicle, it is useful to examine the Regulation 3.05 of the FW Regulations and in particular 3.05 (6).

[43] Firstly, I am satisfied that Mr Martin is entitled to receive, and has received, a non-monetary benefit being the private use of a fully maintained vehicle in accordance with his contract of employment in accordance with Regulation 3.05(6)(a).

[44] Secondly, I am satisfied that the entitlement is not a monetary benefit and not a non-monetary benefit within the meaning of s.332(3) of the FW Act in accordance with Regulation 3.05(6)(b).

[45] Thirdly, I am satisfied that the Commission should consider the private use by Mr Martin of the motor vehicle for the purposes of assessing whether the high income threshold applies in accordance with Regulation 3.05(6)(c)(i).

[46] Fourthly, with the exception of what is contained in Mr Martin’s contract of employment, the reasonable money value of the actual benefit has not been agreed between the Applicant and the Employer in accordance with Regulation 3.05(6)(c)(ii).

[47] Finally, in the circumstances, I am satisfied that the Commission can estimate a real or notional money value of the benefit in accordance with Regulation 3.05(6)(c)(iii).

[48] Two factors are notable in Regulation 3.05(6) of the FW Regulations and they are the use of the disjunctive “or” in Regulation 3.05(6)(a) and 3.05(6)(c)(iii).

[49] In regulation 3.05(6)(a), the use of the word “or” enables the selection or alternatives of what “the person is entitled to receive” or “has received” in terms of a non-monetary benefit.

[50] It would appear that the Parliament has provided the Commission, when exercising its discretion in determining the real or notional value of non-monetary benefits, to select between what the person is “entitled to receive” or what the person has actually received. Given the nature of the uncertainty of estimating the monetary value of a non-monetary benefit, the Commission has a choice of either a person’s “entitlement” or what the person actually received. This choise assists in minimising the uncertainty of estimating the value of the non-monetary benefit.

[51] Similarly, Regulation 3.05(6)(c)(iii), the Commission can select between the “real” or “notional” money value of the benefit. In this case, the Commission has been given the power to ascribe either the “real” monetary value or assess the money value of the benefit.

[52] Where Parliament has given the Commission alternative approaches to estimating the money benefit of a non-monetary employment benefit, in my view, should apply the alternative which is based upon greater certainty. That approach has been applied in these circumstances, as the parties are in disagreement in their estimate of the non-monetary benefit of the private use of motor vehicle use.

[53] If I apply Mr Martin’s entitlement of up to 1 000 kilometres per week at 143.58 cents per kilometre for the Toyota Landcruiser, it would result in a benefit of $74 661 per annum. Alternatively, 1 000 kilometres for the Toyota Hilux at 94.71 cents is $49 249 per annum. If I applied a 48/4 week split, Mr Martin would have had a notional benefit of approximately $43 809 in total.

[54] The sum of $122 385 and the private use of a mobile telephone of $1 200 is $123 585. As demonstrated, if Mr Martin had accessed, to the maximum, his entitlement under his contract of employment, he would, together with his salary and private use of the mobile telephone, easily exceeded the high income threshold.

[55] In conclusion, the agreed monetary value of the private use of a motor vehicle was not set out in Mr Martin’s contract of employment. However, I am satisfied, that by applying the agreed number of kilometres available to Mr Martin, I can estimate that the notional money value produces an outcome which results in an amount in excess of the high income threshold irrespective of which vehicle he was driving. In reaching this conclusion, I have adopted, for greater certainty, what Mr Martin is entitled to receive rather than “has received”. I have done this because both parties have “guessed” the amount of private use, albeit, the Employer’s approximation has structure.

Did a modern award cover Mr Martin’s employment at the time of his dismissal?

[56] Mr Martin asserts that, “I come under the Federal Modern Award which is the Mining Industry Award 2010”. The Applicant does not state under which classification, in the Mining Industry Award 2010, he is employed.

[57] On cessation of employment, Mr Martin was employed as Operations Manager (Metropolitan).

[58] While Mr Martin claims he has not sighted the Position Description (PD) for the Operations Manager position, the Employer has provided a copy.

[59] It is not necessary to detail the PD, save to set out a summary of the position which is the “management of the daily operations of the transport, materials, plant hire, contracting and earthworks business in the Perth region to meet Company requirements”. The focus of the position is to Manage and ensure compliance with the Employer’s statutory requirements.

[60] The Employer asserts that Mr Martin’s employment was not covered by the Mining Industry Modern Award or any modern award because his duties were managerial in nature.

[61] For Mr Martin to be covered by a modern award, the Employer, in the first instance, must have been covered by the Mining Modern Award, that is, engaged in the mining industry. The mining industry is defined in subclause 4.2 of the Mining Industry Modern Award. In addition, the Employer’s employees, including Mr Martin, must be engaged in the classifications in Clause 13 to the exclusion of any other award.

[62] In summary, there is a two (2) “conditions” test. Firstly, the Employer’s employees are engaged in mining work, and secondly, the employees are engaged in the classifications in Clause 13. Even if the Employer is engaged in the mining industry, which I doubt, Mr Martin was not employed in a classification of employment within the Mining Industry Modern Award. The word “manager” is not used in the Mining Industry Modern Award.

[63] Having considered the submissions and the documents, I find that the modern award does not cover Mr Martin’s employment.

CONCLUSION

[64] For the above reasons, I find that Mr Martin has not met the provisions of s.382(b) of the FW Act to be protected from unfair dismissal. Accordingly, the Commission has no jurisdiction to deal with the application. An order to this effect is made and issued jointly with this Decision.

[65] As a consequence of this Decision, it is not necessary to consider the Employer’s remaining jurisdictional objection, that Mr Martin was not dismissed but resigned on 3 July 2014.

COMMISSIONER

Final written submissions:

Applicant: 11 September and 7 October 2014

Respondent: 26 September and 10 October 2014.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR556477>