Terry Bodinner v CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust

[2020] FWC 6648

[2020] FWC 6648

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Terry Bodinner
v
CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust
(U2020/10673)

DEPUTY PRESIDENT BINET PERTH, 17 DECEMBER 2020

Application for an unfair dismissal remedy.

[1] On 6 August 2020, Mr Terry Bodinner (Mr Bodinner) filed an application (Application) pursuant to section 394 of Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC) alleging he was unfairly dismissed by CFC Consolidated Pty Ltd as Trustee for the CFC Employment Trust T/A Centurion Transport Co Pty Ltd (CFC).

[2] On 19 August 2020, CFC filed a Form F3 – Employer response to unfair dismissal application. CFC’s response raised a jurisdictional objection to the Application asserting that Mr Bodinner earned more than the high income threshold (Jurisdictional Objection).

[3] Taking into account the parties wishes and circumstances, it was determined that a Hearing rather than a Determinative Conference would be the most effective and efficient way to determine the Application. Consequently, the Application was listed for a Hearing in Perth on 18 November 2020 (Hearing).

[4] Directions for the filing of materials in advance of the Hearing were issued to the parties on 27 August 2020 and 7 September 2020 (Directions).

Permission to be represented

[5] The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which any hearing is conducted is fair and just.¹

[6] Both parties sought permission to be represented at the Hearing.

[7] Having considered the submissions of the parties, leave was granted to both parties to be represented, pursuant to section 596(2)(a) of the FW Act, on the grounds that it would enable the matter to be dealt with more efficiently taking into account the complexity of the matter.

[8] At the Hearing Mr Bodinner was represented by Mr Steve Heathcote, a lawyer employed by APX Law and CFC was represented by Mr Jeff Uphill, a paid agent of Jeff Uphill Employee Relation Services.

Evidence

[9] At the Hearing Mr Bodinner gave written and oral evidence on his own behalf.

[10] At the Hearing Mr David Tate (Mr Tate) and Mr John Paul Doherty (Mr Doherty) gave written and oral evidence on behalf of CFC.

[11] Mr Tate is a truck driver employed at CFC’s Kununurra Depot who reported to Mr Bodinner before his dismissal.

[12] Mr Doherty is the Head of People and Culture for CFC and is based in Perth.

Background

[13] Mr Bodinner commenced employment with CFC on 1 November 2006.² At the time of his dismissal he was employed in the role of Branch Operations Manager at the Kununurra Branch of CFC.

[14] During the 14 years that he worked for CFC he was only assigned a work vehicle when he worked in Kununurra. 3

[15] His most recent contract of employment commenced operation on 29 August 2018 (Contract).⁴

[16] In or around September 2018 Mr Bodinner was provided by CFC with a 2015 Toyota Hilux vehicle (Vehicle). He says the value of the Vehicle was never discussed with him. 5

[17] The parties are in dispute as to whether the Vehicle should be included as ‘earnings’, and if so what value should be attributed to the Vehicle for the purposes of determining whether Mr Bodinner earns less than the high income threshold and is therefore protected from unfair dismissal.

[18] Mr Bodinner says that he understood that the Vehicle was provided to him as a tool of trade because of the distances he was required to travel in his role. For example, he says that he travelled to the Argyle Mine Site, a round journey of 340km once every month and that he would drive to Halls Creek, a round trip of 750kms, twice a year. He says that he often attended the Depot or a nearby yard to check on CFC assets and/or employees out of hours.  6

[19] No odometer recording was taken when he was allocated the Vehicle nor any record kept of the distance the vehicle travelled during the period he was provided with the Vehicle.

[20] Mr Bodinner estimates that he travelled approximately 10,000 km per year for work purposes. He says that he returned the Vehicle to his workplace whenever he took personal or annual leave. 7

[21] The only evidence led by CFC of Mr Bodinner’s private use of the Vehicle was a one page witness statement of Mr Tate. Mr Tate says that he saw Mr Bodinner with the Vehicle at Lake Argyle just after Christmas 2019 and at Lake Argyle in January 2020. Mr Tate conceded that the balance of his evidence with respect to Mr Bodinner’s private use of the Vehicle was speculation or hearsay.

[22] Mr Bodinner concedes that he used the Vehicle to travel between his home and the Kununurra Depot. A distance of between 9km to 10.5km. However, he says that part of this journey routinely included visiting a yard to inspect CFC assets. He acknowledges that on few occasions family members travelled with him on his commute between work and home. However, he says that otherwise he made very limited personal use of the Vehicle.  8

[23] Mr Bodinner says that he and his wife have a family vehicle which they use for personal use. He concedes that on two occasions he used the Vehicle to tow his boat but that on both occasions he stopped during the journey at his workplace or a nearby yard to check on CFC assets and/or employees. He also recalls another occasion where he met his wife and children at the Boat ramp in the Vehicle however, he says that he had been at work immediately prior to doing so. On one other occasion he says that he used the Vehicle to tow his boat so that he could participate in a fishing competition sponsored by CFC.  9

[24] Mr Bodinner acknowledges that he installed child restraints in the Vehicle but he says that he did so only for emergency situations and not for the routine transfer of his children.  10

[25] Mr Bodinner was on sick leave for cancer treatment from the period 28 March 2020 to 9 July 2020. ¹¹

[26] Mr Bodinner returned his work vehicle to the CFC site in Kununurra prior to going on sick leave. ¹²

[27] Mr Bodinner returned to work in Kununurra on 10 July 2020. His work vehicle was not made available to him on his return to work. ¹³

[28] Mr Bodinner was dismissed from his employment with CFC on 16 July 2020. ¹⁴

Is Mr Bodinner protected from unfair dismissal?

[29] Section 382 of the FW Act provides that for a person to be protected from unfair dismissal the person must be an employee who has been employed by their employer for a minimum period of employment and one or more of the following must apply:

a. A modern award covers the person.

b. An enterprise agreement applies to the person.

c. 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 Fair Work Regulations 2009 (Cwth), (FW Regulations) is less than the high income threshold.

[30] The high income threshold is currently $153,600.

[31] The parties agree that neither an award or enterprise agreement applied to Mr Bodinner’s employment. Mr Bodinner is therefore unable to access the unfair dismissal regime unless his annual rate of earnings at the time of his dismissal was less than the high income threshold.

[32] Section 332 of the FW Act defines ‘earnings’ as:

“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.”

[33] The parties agree that Mr Bodinners ‘earnings’ included:

a. Base salary $115,000

b. Housing $28,600

c. Utilities $6,600

TOTAL $150,200

[34] The parties are in dispute as to whether the Vehicle should be included as ‘earnings’, and if so what value should be attributed to the Vehicle for the purposes of determining whether Mr Bodinner earns less than the high income threshold and is therefore protected from unfair dismissal.

[35] If a value is attributed to the Vehicle the value must be less than $3,400 for Mr Bodinner to earn less that the high income threshold and be protected from unfair dismissal.

Is the provision of the Vehicle ‘earnings’ for the purposes of section 382 of the FW Act?

[36] The Contract contains the following clause: 15

“3 REMUNERATION

The Employee will be remunerated in the manner set out in Item 5 paid from the CFC Employment Trust.

The remuneration and benefits to be provided in this contract will compensate you for any entitlements or benefits including but not limited to allowances, leave loading and overt that you may have under any industrial instrument (should an industrial instrument apply).

Other Benefits:

We will provide to you:

•  A company mobile phone

•  A vehicle; and

•  a laptop

‘Business necessity’ Tool of Trade

You will be supplied with a fully maintained company vehicle, including fuel card and E-Tag (where applicable) laptop computer and mobile phone. ‘Tools of trade’ are applicable to the current position only (refer to Item 2 in schedule 1) and do not form part of your package.

Any item owned by us and provided to you must be returned to us immediately on our demand or on termination of your employment with us.

All salary information including commission and incentives is confidential and may not be shared with other employees or competitors. Only authorised individuals may relay salary information to employees or non-employees. Any unauthorised disclosure of confidential information by employees is a violation of this employment contract and is subject to disciplinary action up to and including termination of employment”

[37] Item 5 of Schedule 1 of the Contract describes Mr Bodinner’s renumeration as follows:

ITEM 5	Renumeration
Base Salary	$115,000.00
Estimated Super based on annual contribution threshold	$10,925.00
Total package	$125,925.00
Housing Allowance	$600 per week and Company to pay utilities (excluding phone and internet)

[38] Consistent with the statement in clause 3 of the Contract, that the mobile phone, lap top and vehicle do not form part of his package they are not included in the renumeration described in Item 5 of Schedule 1.

[39] In Rofin Australia Pty Ltd v Newton (Rofin), 16 a Full Bench of the Australian Industrial Relations Commission drew a distinction between the provision of a motor vehicle as part of a salary package and the provision of a motor vehicle as a piece of equipment supplied by the employer to enable the employee to perform the job as follows:

“Where a motor vehicle is provided to an employee in lieu of salary that might otherwise have been paid, it is appropriate that the private benefit derived by the employee from the provision of the motor vehicle be counted as part of the employee’s remuneration. Where, however, the vehicle is provided for business purposes and the employee’s entitlement to private use is purely incidental, the provision of the motor vehicle should be treated no differently to the provision by the employer of any other tool or piece of equipment essential to the performance of the job.”

[40] In McDonnell v Qube Ports & Bulk Pty Ltd (McDonnell), 17 SDP Watson held that a vehicle which is supplied as a tool of trade does not form part of ‘earnings’ for the purposes of section 382(b)(iii) of the FW Act:

“I find that the vehicle was supplied as a “tool of trade” and apply Rofin. Mr McDonnell’s entitlement to private use is incidental. That private benefit does not form part of Mr McDonnell’s earnings for the purpose of s 382(b)(iii) of the Act. Accordingly, I find that the earnings of M- McDonnell were less than the high income threshold and he is a person protected from unfair dismissal under s 382(b) of the Act.”

[41] The Contract clearly provides that the contractual basis on which the Vehicle was, at least initially, provided was as a ‘tool of trade’. Clause 20 of the Contract provides that the Contract reflects the entire agreement between the parties including all of the terms and conditions of Mr Bodinner’s employment.

[42] If, notwithstanding clause 20 of the Contract, the Contract could have been and was verbally varied by the parties to provide Mr Bodinner with an entitlement to private use of the vehicle. There is no evidence to suggest that this occurred in lieu of a salary that might otherwise have been paid. For example, there is no evidence that CFC sought to recognise exceptional performance or incentivise Mr Bodinner to remain with the organisation by reviewing his renumeration arrangements and providing a vehicle for private use. There is no evidence that Mr Bodinner would have been paid an additional salary if he declined the provision of the vehicle. The evidence is that throughout his 14 years of employment a vehicle was only provided when he was required to travel long distances to perform duties in the north-west of Western Australia.

[43] There is no record of the mileage on the Vehicle’s odometer at the time Mr Bodinner commenced using the Vehicle or when he last returned the Vehicle and no evidence of a requirement that he (or any else) maintain such records.

[44] The fact that Mr Bodinner returned the Vehicle while he was on sick leave and that the Vehicle was not made available to him on his return to work is not consistent with the proposition that the Vehicle formed part of his salary.

[45] The evidence that Mr Bodinner was not the only person to use the Vehicle is not consistent with the proposition that the Vehicle formed part of his salary.

[46] The actual evidence of private use is extremely limited. In fact Mr Bodinner provided more direct evidence of his personal use than CFC. The journey between his workplace and his home was relatively short, and at least part of that journey included visiting another work location on the way. There is evidence that on at least some of the occasions that he used the vehicle to travel to a destination which was not a workplace that he stopped at a workplace on the way to perform duties on behalf of CFC.

[47] Other than his own admissions of limited use of the vehicle to transfer his children there is no witness evidence that he did so routinely or at all. Rather the witness evidence is limited to evidence that the Vehicle had car seats installed in it. I accept Mr Bodinner’s explanation that the child restraints were installed in the event that an emergency situation arose. There is no evidence as to how the installation of the car seats prevented the business use of the vehicle.

[48] The evidence supports a finding of fact that the vehicle was supplied to Mr Bodinner as a “tool of trade” and that his private use of the Vehicle was purely incidental. The benefit of that use does not form part of Mr Bodinner’s earnings for the purpose of section 382(b)(iii) of the FW Act. Accordingly, I find that the earnings of Mr Bodinner were less than the high income threshold and he is a person protected from unfair dismissal undersection 382(b) of the FW Act and therefore his application is within the FWC’s jurisdiction.

[49] Should I be wrong in that conclusion, I have also considered below whether, if a value is attributable to the private use of the vehicle by Mr Bodinner for the purpose of section 382(b)(iii) of the FW Act, the earnings of Mr Bodinner still fall below the high income threshold.

What is the ‘value’ of the provision of the Vehicle?

[50] Regulation 3.05(6) of the Fair Work Regulations 2009 (Cth) (FW Regulations) provides a mechanism for quantifying the ‘value’ of ‘benefits’ which are not an entitlement to the payment of money and are not a non-monetary benefit for the purposes of section 332(1)(c) of the FW Act 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.”

[51] Mr Bodinner submits that because the Contract does not expressly provide for personal use of the Vehicle that Regulation 3.05(6)(a) of the FW Regulations cannot be satisfied and that therefore the FWC is prevented from attaching a real or notional money value to the provision of the Vehicle.

[52] Mr Bodinner did not identify any authority to this effect. I am not satisfied that the ‘agreement’ for the purposes of Regulation 3.05(6)(a) needs to necessarily be a written contract and that it may not take the form of an oral contract.

[53] Mr Bodinner submits that the words ‘at the time of the dismissal’ in Regulation 3.05(6)(c)(i) require the Vehicle to be in his possession at the time of his dismissal. Mr Bodinner returned the Vehicle before he commenced personal leave. He did not use the Vehicle between his return to work and his dismissal. Mr Bodinner submits that as he did not have the use of the Vehicle at the time of his dismissal that it should not be considered a benefit for the purpose of assessing whether the high income threshold applies.

[54] Mr Bodinner did not identify any authority to this effect. I am not satisfied that the words ‘at the time of dismissal’ in Regulation 3.05(6)(c)(i) necessarily require the employee to be using the benefit on the actual date the dismissal occurred provided they have had use of the benefit within 12 months of the date of the dismissal.

[55] A mechanism for estimating the real or notional monetary value of the benefit of private use of a work vehicle was developed by the Full Bench of the AIRC in Kunbarllanjnja Community Government Council v Fewings (Fewings), 18 which was subsequently followed in McDonnell.

“In our view the most appropriate method of calculating the value of the motor vehicle component of an applicant’s remuneration is as follows:

1. Determine the annual distance travelled by the vehicle in question.

2. Determine the percentage of the annual distance travelled which was for the applicant’s private purposes.

3. Multiply the figures from 1. and 2. This provides the annual distance travelled for private purposes.

4. Estimate the cost per kilometre for a vehicle of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations.

5. Multiply the annual distance travelled for private purposes by the estimated cost per kilometre. The result is the value of the motor vehicle component of the applicant’s remuneration.”

[56] Applying the Fewings methodology, CFC have calculated the value of the Vehicle to Mr Bodinner as between $3799 (based on 4158 km) and $7441 (based on 8144km).

[57] The employer bears the onus of proving that an employee’s ‘earnings’ exceed the high income threshold. 19 Mr Bodinner submits that CFC have produced insufficient evidence to establish the value they submit should be attributed to the Vehicle.

[58] For example, Mr Bodinner points out that there are no odometer readings or any other record of the distance travelled by the Vehicle during the period he used the vehicle. He submits that his commute travel included stopping at another work location and that the direct evidence of personal use is extremely limited. Mr Bodinner also submits that it is not appropriate to rely on the RACV figures, 20 given that the RACV figures:

a. are based on insurance and registration costs in Victoria not Western Australia;

b. provide only generic costings to the type of vehicle without reference to the model, age or condition of the particular vehicle in question; and

c. fail to take into account the effects of depreciation.

[59] Mr Bodinner submits that even if the RACV data is relied upon, that when the approach in Fewings is applied the estimated monetary value of the private use of the vehicle would be $2,091 (2,400km).

[60] Based on the limited evidence before me I estimate that the monetary value of the private vehicle is most likely less than $3400.

[61] If the value is higher, given the limited direct evidence of personal use, the lack of data to substantiate the true value of any personal benefit obtained and considering that Mr Bodinner did not have the use of the vehicle for the last nearly four months of his employment, I am not satisfied, that I should consider the benefit for the purpose of assessing whether the high income threshold applies to Mr Bodinner at the time of his dismissal.

Conclusion

[62] I find that Mr Bodinner was not covered by a modern award.

[63] I find that the Vehicle was supplied by CFC to Mr Bodinner as a ‘tool of trade’ and the value of incidental private usage should not be included in his ‘earnings’ for the purpose of section 382(b)(iii) of the FW Act.

[64] If I am wrong in finding that the Vehicle was provided as a ‘tool of trade’, I find by estimating the value of the private usage of the vehicle using the approach set out in Fewings and having regard to the evidence as to the usage of the Vehicle, that the sum of Mr Bodinner’s annual rate of earnings, and such other amounts (if any) worked out in accordance with the FW Regulations, is less than the high income threshold.

[65] If the value of the private use is higher than $3400, given the limited direct evidence of personal use, the lack of data to substantiate the true value of any personal benefit obtained and that Mr Bodinner did not have the use of the vehicle for the last nearly four months of his employment I am not satisfied, having regard to the circumstances, that I should consider the benefit for the purpose of assessing whether the high income threshold applies to Mr Bodinner at the time of his dismissal.

[66] The Jurisdictional Objection is therefore not upheld. Directions will be issued to the parties for the determination of the merit of the Application.

DEPUTY PRESIDENT

Appearances:

S Heathcote of APX Law for the applicant.
J Uphill of Jeff Uphill Employee Relation Services.

Hearing details:

2020.
Perth:
November 18.

Printed by authority of the Commonwealth Government Printer

<PR725313>

1 Warrell v Walton (2013) 233 IR 335, 341 [22].

2 Digital Court Book, 135 (‘DCB’).

 3   Ibid 30.

4 Ibid 14.

 5   Ibid 29 – 32.

 6   Ibid.

 7   Ibid.

 8   Ibid.

 9   Ibid.

 10   Ibid.

11 Ibid 135.

12 Ibid.

13 Ibid.

14 Ibid 13.

 15   Ibid 42.

 16   Rofin Australia Pty Ltd v Newton (1997) 78 IR 78, 82.

 17   McDonnell v Qube Ports & Bulk Pty Ltd [2013] FWC 702.

 18   Kunbarllanjnja Community Government Council v Fewings Print Q0675 (AIRCFB, Ross VP, Watson SDP, Bacon C, 7 May 1998) (‘Fewings’).

 19   Fewings.

 20   DCB (n 2) 52.