Shiwanka Perera v Naracoopa Mineral Sands Pty Ltd

[2024] FWC 2770

[2024] FWC 2770

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Shiwanka Perera
v

Naracoopa Mineral Sands Pty Ltd

(U2024/7464)

DEPUTY PRESIDENT COLMAN MELBOURNE, 4 OCTOBER 2024

Unfair dismissal application – jurisdictional objection – high income threshold

1. Shiwanka Perera (applicant) has made an application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). His former employer, Naracoopa Mineral Sands Pty Ltd (respondent), objects to the application on the basis that the applicant was not a person protected from unfair dismissal as he was not covered by an award or enterprise agreement and his annual rate of earnings was above the high income threshold (see s 382(b)(iii)).

1. The applicant was dismissed on 17 June 2024. At that time, the high income threshold was $167,500. The applicant submitted that pursuant to a contract of employment dated 22 May 2023, his annual salary as a mine supervisor on King Island had been $172,347, but that on 2 April 2024 the parties entered into a ‘separation deed’ under which the applicant’s salary was reduced to $142,347, and the employment would end on 31 December 2024, unless terminated earlier. The deed also provided for a $30,000 bonus to be paid to the applicant if his employment ended on 31 December 2024 and not before, however this condition was not satisfied. On 17 June 2024, the respondent wrote to the applicant, stating that it was not satisfied with his performance and that it had decided to terminate his employment. The letter stated that the respondent would pay the applicant four weeks’ pay in lieu of notice and that it had also decided to ‘honour’ his original base salary of $172,347.

1. Junyao Zhang, the respondent’s general manager, told the Commission that the reason the company reinstated the applicant’s original salary on the last day of his employment was because the original purpose of restructuring his salary to include a bonus was to incentivise good performance. It did not want to reduce his remuneration. Mr Zhang said that, despite the terms of the separation deed, it was only between 27 May 2024 and Friday 14 June 2024 that the respondent paid the applicant at the lower salary rate. On Monday 17 June 2024, the respondent reinstated his original salary ($172,347) and paid out his four weeks of notice based on that salary. Mr Zhang also said that in addition to salary, the applicant received several significant non-monetary benefits from the respondent over the period of his employment and up until the date of dismissal. First, the applicant and his family were provided with accommodation on King Island in the form of a furnished two bedroom house. Mr Zhang said that there was very high demand for rental accommodation on the island. The company estimated that the current value of the accommodation was $450 a week ($23,400 per annum). Mr Zhang said that this estimate was based on the fact that the company had entered into a rental agreement for a similar property on the island, but unfurnished, for $350 a week.

1. Mr Perera disputed the value of the accommodation. He assessed its value at $4,800 per annum ($92.31 a week), however he did not provide any rationale for this particular figure. During the determinative conference, he suggested that the value might be $250 per week, which is an annual amount of $13,000. He noted that King Island only has fifteen thousand inhabitants, that the property was 30km from the main town, that there were minimal furnishings, and that a company director would stay at the house when she visited the island.

1. Mr Zhang said that a second significant non-monetary benefit provided by the respondent to the applicant was power (electricity and gas), as well as water. He valued the electricity and water at $8000 a year. Mr Perera said that the value of the utilities was much lower. He estimated the value to be $2,666 a year. He also said that the property did not have reticulated water, only rainwater. Mr Zhang said that the water for the premises came from the company’s reserves or was bought from the council. He cited a recent quarterly electricity bill for the property in January 2024 which amounted to $1973, which alone would produce an annual figure of $7892.

1. Mr Zhang also said that Mr Perera and his wife had access to a company vehicle, a Toyota Hilux, which was available for their private use, the value of which was $10,400 per annum. Mr Perera did not dispute the value of this benefit but said that he did not use the car very much. He also said that his personal use of the vehicle had been rescinded in a message from the company on 23 April 2024.

1. I find that at the time of dismissal, the applicant’s annual rate of earnings exceeded the high income threshold. The applicant’s salary on the day of his dismissal was $172,347, not $142,346.72, as the applicant contended. The original, higher salary was reduced in April 2024. But on the applicant’s last day of employment, it was increased back to the original amount. Mr Zhang said, and I accept, that the company considered it appropriate to pay the applicant’s notice based on his total package, even though he had not qualified for the $30,000 bonus payment. The applicant is quite right to say that the bonus does not count towards his annual rate of earnings. However, the applicant’s original salary was reinstated. The applicant said that the company only did this to push him over the threshold. That is not what Mr Zhang said and I accept his explanation. But even if that is what the company did, it is not clear how this would make a difference. There is no anti-avoidance mechanism in the Act in respect of the high income threshold (contrast s 386(3)). Perhaps in a case of avoidance, an artificial last minute inflation of salary would not reflect a rate of earnings but some other extrinsic payment. But in this particular case, I do not consider that there was any avoidance, nor do I consider that any substantive unfairness was visited on the applicant, because for all but two weeks he was earning a salary that exceeded the threshold. I note that the company produced payment records showing that on 17 June 2024, it paid the applicant $13,257.44; this is four weeks’ pay at 38 hours per week, at the hourly rate of $87.22 indicated in the pay records, which is an annual amount of $172,347.

1. In any event, I find that the applicant was entitled to receive, and did receive, the three non-monetary benefits referred to above, which together took his annual rate of earnings beyond the high income threshold, even based on the lower salary figure. These benefits were not recorded in the employment contract however I consider that they formed part of his remuneration package, either as terms implied by fact or pursuant to a collateral contract. These were benefits that the applicant expected to receive, did receive, and in my view was entitled to receive. Pursuant to reg. 3.05(6), I am satisfied, having regard to the circumstances, that the Commission should consider these benefits for the purpose of assessing whether the high income threshold applied to the applicant at the time of dismissal. I am further satisfied that a reasonable monetary value has not been agreed by the parties but that the Commission can estimate the real or notional money value of them. These values are as follows.

1. In relation to the accommodation, I estimate a value of $350 a week, which is $18,200 a year. This estimate is based on Mr Zhang’s information, which I accept and which the applicant did not challenge, that the company has rented out a similar but unfurnished house for that amount. The estimate gives weight to the applicant’s statement that the accommodation has minimal furnishing, and that the director stays at the house when she visits the island. Mr Zhang said, and I accept, that it is difficult to find long term rental accommodation on the island. A quick internet search confirms as much. King Island is a holiday destination, and most rentals appear to be on a short term basis for substantial amounts. As to the utilities, I accept Mr Zhang’s statement concerning the electricity bill from January 2024; this should be slightly discounted for use by the director during her visits. But gas usage is to be added to this amount, even if water is not. The total seems to me to be more than $8,000, however the company does not claim more than this and I confine the estimate to this amount. In respect of the vehicle, the company’s message of 23 April 2024 stated that the applicant would not be able to use it after two months. Therefore, up until his dismissal on 17 June 2024, the applicant retained the benefit of the vehicle. The applicant did not challenge the respondent’s assessment of the annual private use value of the car ($10,400). He said that he did not use it very much but that is a matter of choice. The total of these three additional amounts, when added to the value of the lower salary figure, is $178,947, well above the threshold.

1. At the determinative conference, the respondent said that there were other benefits that were provided to the applicant, including forgiving interest on loans. This would take the annual rate of remuneration even further beyond the threshold.

1. I find that the applicant was not a person protected from dismissal as defined in s 382. The jurisdictional objection is upheld. The unfair dismissal application is therefore dismissed.

DEPUTY PRESIDENT

Appearances:

S. Perera for himself
H. Zhang for Naracoopa Mineral Sands Pty Ltd

Hearing details:

2024
Melbourne (by telephone)
1 October

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