SANDERS and MINISTER FOR HEALTH - [2012] WASAT 228

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: EQUAL OPPORTUNITY ACT 1984 (WA)

CITATION: SANDERS and MINISTER FOR HEALTH [2012] WASAT 228

MEMBER: MS D TAYLOR (SENIOR MEMBER)

HEARD: DETERMINED ON THE DOCUMENTS

DELIVERED : 16 AUGUST 2012

PUBLISHED : 19 NOVEMBER 2012

FILE NO/S: EOA 5 of 2012

BETWEEN: LUCAS SANDERS
Applicant
AND
MINISTER FOR HEALTH
Respondent

Catchwords:

Unlawful discrimination Marital or family status Employer entitled to determine terms and conditions upon which meal allowance is paid Claim dismissed as misconceived

Legislation:

Australian Tax Office Public Rulings and Guidelines, ATO Ruling TR 97/17
Equal Opportunity Act 1984 (WA), s 9, s 11, s 90, s 35A, s 35B(2)
Fringe Benefits Tax Assessment Act 1986 (Cth)

Result:

Claim dismissed

Summary of Tribunal's decision:

The applicant, Dr Sanders, complained that he had been unlawfully discriminated against on the grounds of marital and family status when his employer introduced changes in the policy, applied to claims for reimbursement for the costs of meal entertainment, in an attempt to combat fraud.
The changes in the policy restricted the type of meal benefit available to Dr Sanders by excluding a number of types of meals for which he had been able to make claims previously.
Dr Sanders complained that he was adversely affected by the change in policy, as were families with young children, as a result of indirect discrimination arising directly from the new conditions imposed in connection with payment of his fringe benefit.
The Tribunal found that Dr Sanders' claim of discrimination was misconceived, as it relied on a number of flawed assumptions about the nature of lives led by single people and families with young children that were not supported by evidence.
The Tribunal dismissed the claim.

Category: B

Representation:

Counsel:

Applicant: No appearance
Respondent: No appearance

Solicitors:

Applicant: No appearance
Respondent: No appearance

Case(s) referred to in decision(s):

Grover v Commissioner of Police [2005] WASC 263
Winter and Commissioner of Western Australian Police Service [2006] WASAT 87

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

I am required to determine a dispute between Dr Lucas Sanders (applicant) and the Minister for Health (respondent) in relation to changes in the policy governing the meal entertainment fringe benefit paid to the applicant as part of his salary packaging arrangements.
The applicant claims that the respondent's recent introduction of measures intended to reduce the scope for fraud by employees entitled previously to claim reimbursement for expenditure on meals has the effect of indirectly discriminating against single people like himself, and families with young children.
The applicant asserts that the changes in the policy breach the provisions of the Equal Opportunity Act 1984 (WA) (EO Act) and give rise to a claim of unlawful indirect discrimination on the grounds of marital and family status in employment.

Overview of complaint and factual context

The respondent is the Minister in charge of the government department responsible for the provision of health care in the State. As part of a plan to attract and retain staff in the public sector, the department offers employees salary packaging arrangements with substantial taxation advantages. The Director General of Health determines the scope of the salary packaging arrangements. The arrangements are optional, with employees having the choice as to whether or not they wish to opt in to the scheme.
Employees who choose the salary packaging arrangement may have a portion of their salary allocated to the provision of fringe benefits, such as a meal entertainment benefit. Fringe benefits for employees performing duties in a public hospital are either exempt from taxation or taxed at a lower rate. They are subject to the Fringe Benefits Tax Assessment Act 1986 (Cth) and the Australian Tax Office (ATO) public rulings and guidelines.
The conditions attached to claims for reimbursement for costs incurred for meals as part of the meal entertainment benefit changed on 1 April 2010, following a departmental review prompted by evidence of a significant number of fraudulent and/or improper claims. The changes were introduced in order to reduce the scope for fraudulent behaviour on the part of employees and to ensure their compliance with taxation obligations.
The applicant is a cardiothoracic surgeon employed by the respondent at Sir Charles Gairdner Hospital. He is a single man, without dependants, who comes from the Netherlands. Prior to the changes introduced on 1 April 2010, the applicant entered into a salary packaging arrangement with the respondent that included the meal entertainment option. He made a number of claims for reimbursement for costs for meals permitted under the policy in place at the time. These included meals at home and abroad, paid for in cash and by credit card, and taken either alone or with others including family members in the Netherlands, as circumstance and preference prevailed.
The applicant's ability to make claims as before was curtailed with the introduction of the new policy on 1 April 2010.
The applicant's grievance
The applicant complained to his employer about the range of injustices he saw arising from the changes in policy. He sought clarification from the ATO.
The applicant objected to the restrictions introduced with the new policy, particularly as it pertained to the interpretation of the meaning of meal entertainment. Under the new policy, 'meal entertainment' was construed by the department as having to include another person. As a result, the applicant was no longer able to claim the cost of dining alone, as was his practice and preference. He believed this to be indirectly discriminatory of him as a single man because it required him to find a guest in order to qualify for meal entertainment benefit. He said this was not always easy because he did not have a spouse or companion, as would someone who was part of a family or a couple.
The applicant was particularly aggrieved by the decision to remove meals taken overseas from the eligible category, as he had family abroad.
The applicant considered the discrimination to extend to families with young children, whom he assumed would prefer to stay in and eat take-away meals, rather than incur the cost of a babysitter and go out.
The applicant also complained that the new requirement to pay by credit card unfairly excluded businesses that did not have credit card facilities.
The exchange of correspondence between the applicant and the respondent reveals that, among other things, central to the complaint lay a grievance about the construction of 'meal entertainment' as an activity requiring more than one person to be at the table at the same time.
On 30 November 2010, Ms Julie Feeney, Director Workforce Services in the Department of Health, wrote to the applicant concerning his complaints about the changes in the policy governing the meal entertainment benefit. She said:
…
You would be aware that the policy was amended in 2010 following the review undertaken by Corporate Governance into the use of this benefit by WA Health employees. In view of the potential for, and instances found of, misuse of this benefit[,] the Director General imposed limits on its use.
These limits are consistent with advice from the salary packaging providers and the Australian Taxation Office (ATO) about the intent of the benefit as entertainment and application to take[]away meals.
It is unfortunate that you feel single people and those with small children are discriminated against by these rules. However, they are in place to ensure that WA Health, its employees and the salary packaging providers are compliant with the ATO requirements and that the risk of misuse is reduced.
The applicant queried Ms Feeney's response and on 15 December 2010 she wrote again and said:
…
The decision to exclude single dining and take[]away [meals] from the WA Health meal entertainment benefit was made by the Director General based on advice from the salary packaging providers who base their advice on Commissioner of Taxation decisions and circulars. As I understand it, the Commissioner of Taxation does not consider take[]away food to be consistent with the notion of an [sic] meal being entertainment in itself. Take[]away [meals] [are] regarded as sustenance, rather than entertainment.
Similarly, while not explicitly determined by the Commissioner of Taxation, meal entertainment would normally be considered to include more than one person. That is, a meal out for two people or more is entertainment.
There is no inference in implementing these rules that single people are more likely to corrupt the system. The rules about take[]away and dining alone apply to all users of the benefit irrespective of their personal circumstances. The Director General is maintaining a conservative approach to the provision of this benefit[.]

The complaint to the Commissioner for Equal Opportunity

On 8 March 2011, the applicant lodged a complaint of unlawful discrimination with the Commissioner for Equal Opportunity (Commissioner) in which he alleged indirect discrimination on the grounds of marital and family status in the area of employment. He wrote:
WA [H]ealth provides Meal Entertainment reimbursement for its employees. Since April 2010 WA Health has put limitations in place for this benefit. Previously allowed items were takeaway meals, overseas meals, meals for one person and meals paid in cash. Since April 2010 meals are only payable with a credit card, have to include more than one person and overseas meals as well as takeaway meals are excluded. I question the legal authority and right of WA [H]ealth to put restrictions on HOW and WHERE provided benefits are made use of. I consider the restriction of meals to include more than one person indirectly discriminatory towards my marital status as a single person ([necessitating] a guest [companion]). I consider the exclusion of takeaway meals indirectly discriminatory towards the family status of families with young children (needing a babysitter when going out). Couples and families without young children are more likely to be able to benefit from meal entertainment reimbursement, indirectly benefitting them and discrimination against single persons and families with young children. I consider the exclusion of meals paid in cash as an unlawful exclusion of businesses that have no credit card facilities. I have been in correspondence with WA Health with no resolution of my complaint … As clearly stated in their letter the limitations were put in place because of misuse of the benefit provided. WA [Health] now justifies the limitations stating [it has] been in conversation with the ATO and salary package provider. The latter confirmed that [it] only follow[s] the instructions of WA [H]ealth. The ATO website does, as far as I can see, only make reference of allowance of meal entertainment for single persons (which WA Health controversially now excludes). WA [H]ealth does not mention any change in laws/regulations that necessitated these changes.
On 18 July 2011, the Commissioner received a written response to the allegations from the Director General. It said:
…
Like many private and public sector employers and as part of its arrangements to attract and retain staff, the Department makes available to employees an option to enter into a salary packaging arrangement whereby a portion of an employee's salary is able to be allocated to the provision of fringe benefits rather than being paid as salary and wages.
Fringe benefits tax is payable by the employer but recovered from the employee as a cost of providing the salary packaging arrangements. Fringe benefits provided to employees who perform duties in relation to public hospitals are exempt from fringe benefits tax subject to a cap on that exemption of $17,000. There are substantial taxation advantages to certain employees who select [sic] to receive fringe benefits rather than salary and wages.
Salary and wages are taxable in the hands of the employee but the employer is required to deduct PAYG amounts from the payments it makes to employees.
Various benefits are able to be selected by Department employees including car fringe benefits and superannuation. A Meal Entertainment benefit is one benefit that may be selected.
The provision of fringe benefits is subject to the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBT Act) and Australian Tax Office (ATO) public rulings and guidelines. Extracts from the FBT Act and ATO Ruling TR 97/17 are set out in appendix A to this letter. In the case of the Department, the Western Australian public sector salary sacrifice policy is applicable. The Director General of Health on behalf of the employer may also determine the scope of salary packaging arrangements.
It is correct that from 1 April 2010 the Director General of Health introduced revised conditions attached to the provision of Meal Entertainment benefits. These changes are set out in the attached message by the Acting Director General of Health sent to all staff on 10 March 2010. This followed evidence of a significant number of fraudulent and/or improper claims resulting in a review being undertaken by the Department into the use of the benefit by Department employees.
The revised conditions were also imposed to minimise the Department's risk of noncompliance with its taxation obligations and are consistent with advice from the Department's contracted salary packaging provider and the ATO [R]uling TR 97/17.
In particular, the compliance with ATO rulings and the definition of 'Meal Entertainment' provides certainty to:
(a)the employee that the benefit is a fringe benefit subject to fringe benefits tax and the FBT free threshold for that employee; and
(b)the employer that the amount of the benefit is taxable as a fringe benefit to the employee and not subject to PAYG withholding obligations by the employer.
There is no reason why Dr Saunders [sic] is unable to access the Meal Entertainment benefit because he does not have a spouse. Dr Sanders is able to comply with the requirement that there be more than one person in attendance as there is nothing about his status as a single person that would prevent him from entertaining with another person. Every employee, irrespective of their marital status, must have an accompanying person for the meal to qualify.
Takeaway meals are excluded to all employees and there is no imposition of a requirement on any particular class of persons.
It is unclear how the allegation that the exclusion of meals paid in cash is an unlawful exclusion of businesses that have no credit card facilities comprises unlawful discrimination.
The Department does not accept that it has unlawfully discriminated against Dr Lucas [Sanders] and is of the view that his complaint is misconceived and lacking in substance.
The Commissioner endeavoured, without success, to resolve the complaint.
On 14 December 2011, the Commissioner wrote to the applicant indicating that she had dismissed the claim as misconceived and advised him of his ability to seek referral of the matter to the Tribunal.
On 21 December 2011, the applicant gave notice that he required the Commissioner to refer his complaint to the Tribunal.
On 17 December 2011, the Commissioner referred the complaint to the Tribunal pursuant to the provisions of s 90 of the EO Act.

Proceeding before the Tribunal

By agreement between the parties, the claim is being determined on the documents filed in this proceeding. This material comprises the material in the report to the Tribunal from the Commissioner, and written submissions from the applicant dated 21 March 2012 and from the solicitors for the respondent dated 30 April 2012.

Orders sought by the applicant

The applicant seeks the 'uplifting of restriction of meal entertainment reimbursement on single persons, takeaways, cash payments and overseas meals'. He also seeks reimbursement for the additional costs he has incurred since the policy was changed.

Orders sought by the respondent

The respondent seeks the dismissal of the claim.

The relevant legal principles

The Tribunal has jurisdiction to determine complaints referred to it by the Commissioner (Winter and Commissioner of Western Australian Police Service [2006] WASAT 87). It may consider information and hear evidence regarding any matter relevant to its inquiry, but it cannot assume jurisdiction of its own motion or at the request of a party in respect of an issue that does not arise directly from the referral. The Tribunal's findings must be based upon material that is probative of the matters in issue (Grover v Commissioner of Police [2005] WASC 263 at [26]).
The applicant bears the burden of proving each element of his claim to the requisite civil standard, the balance of probabilities.

Indirect discrimination

Indirect discrimination occurs when an apparently neutral rule, policy, practice or procedure has a negative effect on a substantially higher proportion of people with a particular attribute or characteristic, compared to people without that attribute or characteristic, and the rule is unreasonable in the circumstances.

The legal issues

Discrimination on the grounds of marital family status arises under s 9 of the EO Act that provides:
(1)For the purposes of this Act, a person (in this subsection referred to as the discriminator) discriminates against another person (in this subsection referred to as the aggrieved person) on the ground of the marital status of the aggrieved person if, on the ground of
(a)the marital status of the aggrieved person; or
(b)a characteristic that appertains generally to persons of the marital status of the aggrieved person; or
(c)a characteristic that is generally imputed to persons of the marital status of the aggrieved person,
the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person of a different marital status.
(2)For the purposes of this Act, a person (in this subsection referred to as the discriminator) discriminates against another person (in this subsection referred to as the aggrieved person) on the ground of the marital status of the aggrieved person if the discriminator requires the aggrieved person to comply with a requirement or condition
(a)with which a substantially higher proportion of persons not of the same marital status as the aggrieved person comply or are able to comply; and
(b)which is not reasonable having regard to the circumstances of the case; and
(c)with which the aggrieved person does not or is not able to comply.
Discrimination on these grounds against employees arises under s 11 of the EO Act that provides:
(1)It is unlawful for an employer to discriminate against a person on the ground of the person's sex, marital status, pregnancy or breast feeding
(a)in the arrangements made for the purpose of determining who should be offered employment; or
(b)in determining who should be offered employment; or
(c)in the terms or conditions on which employment is offered.
(2)It is unlawful for an employer to discriminate against an employee on the ground of the employee's sex, marital status, pregnancy or breast feeding
(a)in the terms or conditions of employment that the employer affords the employee; or
(b)by denying the employee access, or limiting the employee's access, to opportunities for promotion, transfer or training, or to any other benefits associated with employment; or
(c)by dismissing the employee; or
(d)by subjecting the employee to any other detriment.
(3)Nothing in subsection (1)(a) and (b) renders it unlawful for a person to discriminate against another person, on the ground of the other person's sex, in connection with employment to perform domestic duties on the premises on which the firstmentioned person resides.

Discrimination on the grounds of family status arises under s 35A of the EO Act.
(1)For the purposes of this Act, a person (in this subsection referred to as the discriminator) discriminates against another person (in this subsection referred to as the aggrieved person) on the ground of family responsibility or family status if, on the ground of
(a)the family responsibility or family status of the aggrieved person; or
(b)a characteristic that appertains generally to persons having the same family responsibility or family status as the aggrieved person; or
(c)a characteristic that is generally imputed to persons having the same family responsibility or family status as the aggrieved person,
the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person who does not have such a family responsibility or family status.
(2)For the purposes of this Act, a person (in this subsection referred to as the discriminator) discriminates against another person (in this subsection referred to as the aggrieved person) on the ground of family responsibility or family status if the discriminator requires the aggrieved person to comply with a requirement or condition
(a)with which a substantially higher proportion of persons not of the same family responsibility or family status as the aggrieved person comply or are able to comply; and
(b)which is not reasonable having regard to the circumstances of the case; and
(c)with which the aggrieved person does not or is not able to comply.
As it pertains to employees, s 35B(2) of the EO Act provides:
…
(b)by denying the employee access, or limiting the access of the employee, to opportunities for promotion, transfer or training or to any other benefits associated with employment; …

Summary of the applicant's position

The applicant is a single man with no dependants. His family reside abroad. He would like to be able to take his meals at home and abroad on the same terms and conditions that applied prior to the change in policy. The changes in policy have had an adverse impact on him.
In order to succeed in establishing his claim, the applicant must show that his marital status, or a characteristic that appertains generally to persons who are single or that is generally imputed to persons who are single, is the reason why he has suffered adversely, and that the less favourable treatment is not unreasonable in the circumstances. His claim is dependent upon establishing that other single people live like him.
The applicant's case regarding discrimination on the grounds of family status is confined in his written submission to a complaint about his inability to seek reimbursement for the cost of meals taken abroad. It is inchoate and unsupported by any evidence.

Discussion

I accept the applicant's account that the change in policy has had an adverse impact on him and that he can see no justification in the introduction of the new measures. I will adopt the applicant's assumption that the department's decision to change the policy was made without prior consultation with the ATO or a request for a ruling as to whether or not taking a meal alone under the new policy would qualify as 'entertainment' and fall within the scope of a fringe benefit. It is clear, from the written material that the applicant has submitted in support of his claim, that significant time and effort has been spent in advocating his cause. He summarises his position in his letter of complaint to the Commissioner dated 22 November 2011:
The more time passes the more I am convinced about my [sic] righteousness of my complaint.
The applicant conveys his sense of indignation effectively and with strong voice. He describes the department's response to his complaints as 'sickening, intrinsically wrong and an abuse of power'.
It seems to me that the applicant's sense of grievance is real and profound.
In her letter to the applicant dated 14 December 2011 dismissing his claim as misconceived, the Commissioner said:
The reasons for dismissing your complaint are that in order to establish a complaint of marital status and family status discrimination you must show that you have been treated less favourably than other persons in the same or similar circumstances, and that the less favourable treatment is due to your marital and family status. There has been no evidence to support this.
The applicant has sought to elevate the solitary aspects of his lifestyle to the status of a characteristic appertaining generally to single people, or a characteristic generally imputed to them. His assumption that other single people live like him is fundamentally flawed, as is his assumption that families with young children like to stay in and eat takeaway meals. His bald assertion that he is the victim of discrimination does not make it so.

Conclusion

It seems to me that the applicant's sense of grievance may have caused him to lose sight of the matters that need to be proved in order to establish that indirect discrimination has taken place. In the absence of adducing any evidence to support his assertions about the characteristics of the single lifestyle upon which he relies, his claim stood no prospect of success.
Given my conclusion regarding this aspect of the claim, it is not necessary to consider any other element of the claim.
However, even if the applicant had been able to establish a foundation for his claim on the basis of his single lifestyle, he would have faced an uphill task in proving that the change of policy was 'not reasonable having regard to the circumstances of the case'. The changes in policy for reimbursement of meals introduced in April 2010 came about as a result of a number of cases of demonstrable fraud on the part of employees who exploited and abused a scheme that relied upon their honesty and integrity. To that end, the few may have spoilt it for many. In introducing measures to combat fraud, the department responded to practices that should not have been in play in a manner that was both orthodox and predictable. The policy changes introduced modest measures that would enable claims for reimbursement to be considered in the light of a clear paper trail. The changes applied across the board to all employees.
The applicant accepted the reasons for the change in policy. There was no reason for him to impugn them. He has advanced no argument capable of demonstrating that the new policy was unreasonable in the context described.

Order

1.The claim is dismissed.

I certify that this and the preceding [44] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS D TAYLOR, SENIOR MEMBER