Mrs Kerry Baker v Rio Tinto Coal Australia Pty Limited

[2014] FWC 6741

[2014] FWC 6741

FAIR WORK COMMISSION

DECISION

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

Mrs Kerry Baker
v
Rio Tinto Coal Australia Pty Limited
(U2014/5561)

DEPUTY PRESIDENT ASBURY BRISBANE, 24 SEPTEMBER 2014

Application for unfair dismissal remedy - Jurisdiction - High income threshold.

[1] This decision concerns an application for an unfair dismissal remedy by Ms Kerry Joy Baker. The Respondent, Rio Tinto Coal Australia Pty Limited (Rio Tinto) has raised a jurisdictional objection to Ms Baker’s application pursuant to s.394 of the Fair Work Act 2009 (the Act).

[2] Directions were issued requiring the parties to file and serve submissions and statements of evidence. The parties were further directed to advise whether they sought to cross-examine any person who provided a statement. Both parties were advised that if cross-examination was not required, the matter would be determined on the basis of the material provided by them. Neither party requested to cross-examine any person who made a statement, and accordingly I have determined this application on the basis of the material on the file.

[3] Ms Baker’s employment was not covered by a modern award or enterprise agreement. To be protected from unfair dismissal Ms Baker’s annual rate of earnings had to be less than the high income threshold at the date of cessation of employment. At the date of Ms Baker’s cessation of employment the high income threshold was $129,300.00.

[4] Rio Tinto submitted that Ms Baker earned more than the high income threshold at the date of the cessation of her employment. It submitted that Ms Baker’s package included $8000.00 for the personal use of Rio Tinto’s vehicle. It submitted that this amount was agreed to represent the personal use of the vehicle and comprise part of her income from commencement of employment. It submitted that this provision for the use of Rio Tinto’s motor vehicle took the earnings of Ms Baker beyond $129,300.00.

[5] Ms Baker submitted that only $4000.00 of the $8000.00 allocated in her contract for the private use of Rio Tinto’s motor vehicle should be attributed to her income for assessing whether or not her income was beyond the high income threshold, on the basis that she did not use the vehicle for private purposes or did so on a limited basis.

[6] Section 332 of the Act 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 291-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.”

[7] Regulation 3.05(6) 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.”

[8] The contract of employment between Ms Baker and Rio Tinto sets out her remuneration as follows:

1 Ms Baker’s offer of employment, dated 22 December 2011, (attached to this statement and marked ‘LW1’) included a table outlining her estimated total Remuneration and Benefits. This table is replicated below:

Remuneration Component	Value
Base Salary	$98,000
Location Allowance	$22,500
STIP	$9,800
Notional Car allowance	$8,000
Role remuneration	$138,300
Superannuation	$12,447
Total remuneration and benefits	$150,747

2 Effective 22 June 2012 Ms Baker’s Location Allowance increased to $25,000. With the exception of changes to the superannuation guarantee, the other components of Ms Baker’s remuneration package did not change for the duration of her employment.

3 For the purposes of determining if Ms Baker earned more than the high income threshold, Ms Baker’s earnings at the time of her termination were as follows:

Remuneration Component	Value
Wages (Base Salary and Location Allowance)	$123,000
Agreed value of non-monetary benefits (Notional Car allowance)	$8,000
Total earnings	$131,000

[9] Correspondence to Ms Baker dated 18 January 2012 regarding Rio Tinto’s Tool of Trade Vehicle further articulated how $8000.00 reflected the agreed private use of the vehicle and the application of superannuation to that amount. The substance of that correspondence is set out below:

“Further to your Letter of Offer for the role of Occupational Health Specialist, on commencement in your role you will be provided with a dedicated tool-of-trade vehicle in order to meet the accountabilities of your role. The ‘Motor Vehicle - Tool-of-Trade Policy’ for Rio Tinto Coal Australia Corporate employees applies in relation to the provision and use of this vehicle.

A dedicated tool-of-trade vehicle is a business tool, not an employee benefit. However, it is recognised that employees benefit through the provision of transport to and from work and for restricted private use. For this reason a notional value of $8,000 will be indicated in your remuneration statement to reflect this benefit. Superannuation will be applied to this notional value.

Please be aware that the Company may change this arrangement at anytime, including for reasons of changes to role requirements or provision of suitable alternative transport arrangements such as pool vehicles.

All other terms and conditions of your employment remain unchanged.”

[10] On the basis of the material provided by the parties, I am satisfied and find that a reasonable money value was agreed by Ms Baker and Rio Tinto for a non-monetary benefit being the provision of a Rio Tinto vehicle for private use. That value was $8000.00. I am satisfied and find that Ms Baker’s application is excluded from operation of the Act because her income at the date of termination of employment was in excess of the high income threshold.

[11] In reaching this conclusion, I am of the view that Ms Baker’s actual use of the vehicle is not determinative of whether her annual rate of earnings exceeds the high income threshold. By virtue of the terms of a written contract of employment, agreed between Ms Baker and Rio Tinto, she is entitled to receive a non-monetary benefit - the private use of a motor vehicle - to which an agreed amount has been assigned. That amount is considered to be part of Ms Baker’s salary for superannuation purposes.

[12] Ms Baker’s application for an unfair dismissal remedy is dismissed, and an Order to that effect will issue with this Decision.

DEPUTY PRESIDENT

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