Atsalos and Austeck Pty Ltd [2002] NSWIRComm 1090 (9 December 2002)

Last Updated: 3 February 2003

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: McLEAY C

9 December 2002

Matter No IRC 4307 of 2002

Charalambos Harry Atsalos and Austeck Pty Ltd

Application by Charalambos Harry Atsalos re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

________________________________________________________________

DECISION RE JURISDICTION

This is an application by Charalambos Harry Atsalos for unfair dismissal against Austeck Pty Ltd pursuant to section 84 of the Industrial Relations Act 1996 (“the Act”). The application shows that Mr Atsalos was dismissed from the position of service manager on 9 July 2002, having commenced with the respondent on 29 July 1992.

The matter was set down for preliminary hearing on 13 September. The respondent raised the issue of jurisdiction, based on the assertion that Mr Atsalos’ income was beyond the jurisdictional limit of $81500. When the matter was not resolved by conciliation, directions were issued regarding the filing and serving of witness statements. The matter was listed for hearing of the jurisdictional issue on 3 December.

At the hearing, the applicant was self-represented. He gave evidence on his own behalf and called evidence from his wife, Mrs Elizabeth Atsalos. The respondent was represented by Mr J Atkin, solicitor, who called evidence from Mr Tristan Day, a director of the respondent, and Mr C Roth, solicitor.

The respondent claimed that the applicant’s remuneration consisted of the following:

$

1 Annual salary 65000.00

2 Superannuation (9% of gross salary) 5850.00

3 Annual leave loading (at 20%) 1000.00

4 Private Health Insurance

Annual premium 2459.60

Fringe Benefits Tax 2316.85 4776.45

5 Motor Vehicle

Fuel 3200.00

Registration 333.00

CTP green slip 354.00

Comprehensive insurance 1178.00

Repairs & maintenance 1500.00

Depreciation 2619.00

Fringe Benefits Tax 1499.00 10683.00

6 Mobile phone 1250.00

88559.45

Additional benefits

Smash repair 400.00

Hire car 13 days 1070.39

Airfare to Gold Coast - B Atsalos 280.74

Meals etc Gold Coast - B Atsalos 523.10

Pink slip 26.00

HCF Eyecare excess 100.00 2400.23

TOTAL 90959.68

Mr Atsalos claimed that his remuneration was $73320.36 consisting of the following elements:

1 Annual Salary 61250.00

2 Superannuation 5199.96

3 Annual leave loading 942.30

4 Private health insurance 2459.60

5 Motor vehicle

Petrol 1279.70

Expenses 2188.80 3468.50

6 Mobile phone - no personal use 0.00

73320.36

CONSIDERATION

Application for unfair dismissals are covered by Part 6 of Chapter 2 of the Act. Section 83 reads as follows:

(1) This Part applies to the dismissal of: (a) any public sector employee, or (b) any other employee, except an employee for whom conditions of employment are not set by an industrial instrument and whose annual remuneration is greater than $62,200 (or such greater amount as is prescribed by the regulations).

The amount fixed by regulation as from 1 July 2002 is $81500, pursuant to the Industrial Relations (General) Amendment (Unfair Dismissal) Regulation 1997. It is common ground between the parties that the work done by Mr Atsalos was not covered by an industrial instrument. According to the respondent’s submission, Mr Atsalos’ annual remuneration was greater than $81500, resulting in the exclusion of his application from the jurisdiction of the Commission. Mr Atsalos claims that his remuneration was less that $81500 and is therefore within jurisdiction.

The meaning of ‘remuneration’ in this context has been considered at length in Shead v Summit Western Pty Ltd (81 IR 347), where the Full Bench observed that the Act does not provide a definition, but rejected a narrow interpretation of the meaning of the word, as follows:

Nevertheless, for our purposes, it confirms the view to which we have come, namely, that the word 'remuneration' is not used consistently throughout the 1996 Act. We are satisfied that in Part 6 of Chapter 2 the word is used in its ordinary broad sense as comprehending an employee's total package as a reward for the work performed.

Reaffirming the decision in Shead, the Full Bench in Kagan v Primus Telecommunications (Aust) Pty Ltd (No 2) [2000] NSWIRComm 185 (15 Sep 2000), a Full Bench said that:

The extracts from the judgements in Shead v Summit Western Pty Ltd t/as Blacktown Mitsubishi and Higgins v Prospect County Council demonstrate that, although the word “remuneration” is to be construed relevantly as having a wide meaning and operation, it should not be construed so widely that it is given an operation beyond its wide meaning. For example, if money be received over and above what is reasonably considered consideration for the employee providing his services to the employer, then such moneys would not be considered to be remuneration, or part of the remuneration paid or payable to the employee. Although the ordinary meaning of the word “remuneration” is not confined to cash benefits, nevertheless it must involve the notion or concept of payment for services rendered or work done.

There can be no doubt that the annual remuneration in s83 includes the benefit gained by the applicant from direct payments such as salary and annual leave loading, as well as the private use of a motor vehicle and mobile phone, together with such other benefits as health insurance and superannuation.

The difference between the parties on the issues of annual salary, superannuation and annual leave loading is that Mr Atsalos calculated the amount paid to him while Mr Atkin relied on the rate of payments at the time of the termination of the relationship. It is appropriate to rely on the amounts actually paid, so that the figures provided by Mr Atsalos are those which form part of the annual remuneration for the purpose of determining the outcome of this aspect of the claim.

Both private health insurance and motor vehicle costs require a consideration of Fringe Benefits Tax (FBT) and a consideration of whether FBT should be counted. This issued was considered by Commissioner Cambridge in Shingler v Tony Azzi (Automobiles) Pty Ltd & Harrisa Pty Ltd [IRC 5386 of 2002, 5 November 2002], where he said:

99. In the case of Blankey v. Platinum Software (Aust) Pty Ltd (Blankey) I previously considered the issue of whether or not fringe benefits tax (FBT) payable on a motor vehicle should be included as remuneration for the purposes of section 83(1)(b) of the Act. There was no material presented in this case which would persuade me to depart from the reasoning that I adopted in my Decision in Blankey of 3 December 1998. 100. In essence I believe that the question of whether or not FBT should be included as part of remuneration must essentially be determined upon the factual circumstances of each individual case. There are circumstances, such as those that were identified in Blankey, which would compel the Commission to include FBT as a component of annual remuneration. The factual circumstances relevant to the issue of FBT in the case of Blankey can be distinguished from the relevant factual circumstances in this matter. 101. In the present case the employer adopted a practice whereby a particular fixed amount was deducted from the applicant’s salary as contribution towards the employer’s requirement to pay FBT. This was an arrangement quite different from the salary sacrifice packaging that occurred in the case of Blankey. Consequently I do not believe that the circumstances of this case represent a salary sacrifice arrangement inclusive of FBT such that would compel inclusion of the FBT as a constituent part of the annual remuneration of the applicant. 102. Instead it seemed that the gross salary of the applicant was established, and then a contribution for payment towards FBT was deducted from that gross amount. The amount deducted from the salary of the applicant did not represent the total paid as FBT by the employer in respect to the motor vehicle provided to the applicant. In these circumstances it would seem to be inappropriate for the amount paid by the applicant towards the employer’s requirement to FBT to be included as remuneration for the purposes of aggregating annual remuneration. If it was included the amount would be “double-counted” as both cash remuneration and also FBT. 103. However the applicant made submissions which involved various calculations that included an FBT component by adding to the annual remuneration figure, that amount that the employer paid over and above the amount deducted from the applicant’s salary in respect to FBT. There is some strength to the proposition that the amount that the employer paid in addition to the amount deducted from the applicant’s salary, may have represented a quantifiable but indirect benefit to the employee. Therefore it was conceivable that the employer’s decision to deduct only a proportion of the total FBT payable had been factored into the gross remuneration fixed for the applicant’s position. The corollary of this analysis would mean that the annual remuneration of the applicant should have added to it the amount paid by the employer which would have otherwise been deducted from the gross cash pay so as to meet the full FBT requirement. 104. The rationale for inclusion of the FBT not deducted from the applicant’s salary as part of the total annual remuneration, would require evidence of the conscious decision of the employer to convert what would have otherwise been deducted from the employee’s salary, into a decrease in the amount fixed as the salary component of the annual remuneration. This approach would necessarily involve an analysis of evidence which might reveal that in the absence of the provision of a motor vehicle, the employee (or any other employee), would have a salary component of annual remuneration which would be increased by all costs associated with the provision of the motor vehicle including all FBT which would have been paid by the employer. It is relevant to note that the evidence in Blankey established that the salary sacrifice arrangements in that case did involve all costs associated with the provision of the motor vehicle including all FBT. 105. In the present case there was insufficient evidence about the construction of the salary package provided to the applicant to properly conclude that the FBT paid over and above the salary deductions, should be included as part of annual remuneration. On balance, and by adopting a position which provides benefit of any doubt to the applicant, it would seem, in the circumstances of this case, to be appropriate to exclude any of the FBT paid for the purposes of aggregating the applicant’s annual remuneration.

With respect, I adopt the reasoning of the Commissioner as outlined. It follows that in this case, where there is no provision in any agreement between the parties to consider FBT as a deduction from the applicant’s annual remuneration, that the employer’s cost associated with the benefit cannot be considered as part of the applicant’s remuneration. This applies to both the private health insurance and the motor vehicle expenses.

Mr Atsalos claimed that 45% of the use of the motor vehicle supplied by the company was private, in that he travelled to and from work in the vehicle and rarely used it outside work hours. He listed a number of places that he visited for deliveries, purchases and other reasons on behalf of the respondent, some of which were challenged by the evidence of Mr Day. Included in his evidence were figures based on travelling 76kms per day to and from work. Mr Atsalos calculated that he attended his place of employment on 221 days during the 12 month period, allowing for periods of leave and for interstate travel on behalf of the respondent. This gives 16796 km as being for private use of the vehicle. Rather than adopt the figure of 45% which appears to be an assessment only, it is appropriate to compare Mr Atsalos’ figure of 16796 km conceded as minimum private usage with Mr Day’s evidence that the vehicle travelled a total of 25133 km in the 12 month period for which figures were available, being 1 April 2001 to 31 March 2002. On these figures, the private use of the vehicle must be at least 67%.

Mr Day’s evidence shows that the work use of the vehicle went to 771 km only. Mr Atsalos provided a list of places visited for work purposes and his assessment of the number of times each place was visited, ranging from “once” to “many times”, resulting in his assessment of 45% personal use as noted above. In the light of the discrepancies in the evidence and in the absence of any documentation setting out the terms on which the vehicle was to be used or a log book showing actual use, it is impossible for me to determine the proportion of personal use with any certainty. The onus on the employer to substantiate the figure provided by them has not been fulfilled. In the circumstances, I accept Mr Atsalos’ evidence that there was minimal private use apart from driving to and from work, and I determine to use a figure of 70% of the cost involved in the provision of a vehicle, including the cost of replacing the vehicle when it was being repaired.

The evidence shows that calls were made by Mr Atsalos to his home on the mobile phone supplied by his company. The records provided in evidence show that the mobile phone accounts for the 12 month period totalled approximately $1250. Mr Day’s assessment was that 5% to 10% of the calls made would be for business use. Mr Atsalos claimed no private use but then conceded that his home number was rung on a number of occasions. A perusal of the accounts shows that his home telephone number appears on every monthly invoice on several occasions, sometimes several times on one day, and for varying lengths of conversations up to almost 30 minutes. In the light of this evidence I cannot accept Mt Atsalos’ assertion that the phone was for business use only. In the alternative, I accept Mr Day’s evidence at its upper limit of 10% of business use, leaving 90% of the total of the accounts to be incorporated into the assessment of annual remuneration, being a private benefit provided by the respondent to Mr Atsalos.

Mrs Atsalos received certain benefits from the company in that her airfare and meals were provided to allow her to accompany her husband to the Gold Coast when he travelled there for business purposes. Whether or not this should properly be construed as a benefit to her husband for the purpose of assessing his annual remuneration makes no impact on the outcome of the question currently before me. It is arguable that the benefit was provided to the applicant in recognition of work performed by him, but no such submission was put. I simply include the amount of the benefit in the calculation of remuneration, for ultimate caution, without drawing any conclusion as to whether or not it is properly part of the applicant’s remuneration.

Consideration of the evidence allows the following table to be produced:

$

1 Annual salary 61250.00

2 Superannuation 5199.96

3 Annual leave loading 942.30

4 Private Health Insurance

Annual premium 2459.60

HCF Eyecare excess 100.00 2559.60

5 Motor Vehicle

Fuel 3200.00

Registration 333.00

CTP green slip 354.00

Comprehensive insurance 1178.00

Repairs & maintenance 1900.00

Depreciation 2619.00

Hire car 1070.39

Pink slip 26.00

70% of 10680.39 7476.27

6 Mobile phone 1125.00

7 Benefits for Mrs Atsalos

Airfare to Gold Coast 280.74

Meals etc Gold Coast 523.10 803.84

Maximum annual remuneration 79356.97

CONCLUSION

On the evidence, the annual remuneration of the applicant as at the date of termination of the relationship with the respondent is less than the amount that would exempt his application from jurisdiction. Accordingly, I find that the application is within the jurisdiction of the Commission. The matter will be set down for further preliminary hearing shortly.

******