Application by S Bruce pursuant to section 84 of the Industrial Relations Act 1996 re alleged unfair dismissal [2003] NSWIRComm 1049 (10 October 2003)

Last Updated: 31 October 2003

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Industrial Relations Act 1996

SIMON BRUCE

(Applicant)

-V-

HYROCK PTY LTD

(Respondent)

COMMISSIONER CAMBRIDGE 10 October 2003

Matter No. IRC 4704 of 2002

Application by S Bruce pursuant to section 84 of the Industrial Relations Act 1996 re alleged unfair dismissal.

Section 83(1)(b): Examination of annual remuneration of applicant being an employee for whom conditions of employment are not set by an industrial instrument.

[ IMAGE ]

I N T E R L O C U T O R Y D E C I S I O N

1.

This Decision involves a preliminary issue regarding the calculation of the annual remuneration of the applicant, Simon Bruce. The respondent employer, Hyrock Pty Ltd has sought Interlocutory Relief claiming that the applicant's annual remuneration exceeded the amount fixed by Regulation pursuant to section 83(1)(b) of the Industrial Relations Act 1996 (the Act).

PROCEDURAL BACKGROUND

2.

On 14 August 2002, solicitors acting on behalf of the applicant filed a claim for Relief in relation to unfair dismissal. The claim was made pursuant to section 84 of the Act. The application nominated the place of work to be 31 Shaft Street, Lithgow. The matter was initially listed for conciliation proceedings in Bathurst on 2 October 2002.

3.

Unfortunately the Notice of Listing incorrectly advised that the matter was listed for Sydney rather than Bathurst and the proceedings for 2 October were cancelled and rescheduled for 6 November 2002 in Sydney. The Commission was advised that the 6 November date was not suitable to the Parties and the matter was re-listed for 28 January 2003.

4.

The solicitors acting for the applicant provided written request for consideration to be given to the matter being listed prior to the end of the 2002 year, and the Commission rescheduled the conciliation proceedings for 2 December 2002. On 2 December 2002, the matter commenced, however the applicant failed to appear and there was no appearance by the solicitors on record for the applicant, or any other person acting on behalf of the applicant. The matter was subsequently re-listed for Mention on 21 February 2003.

5.

At the Mention proceedings on 21 February 2003, the respondent sought to have the question of the applicant's annual remuneration Determined as a preliminary issue and prior to there being any conciliation conducted by the Commission. The Commission refused the respondent's request and listed the matter for Conciliation Conference on 3 April 2003.

6.

On 26 March 2003, the respondent filed a Notice of Motion together with supporting affidavit material which sought to have the Commission provide Interlocutory Relief (and costs), by way of Determination that the applicant was excluded from access to the unfair dismissal provisions of the Act by virtue of the applicant's annual remuneration exceeding the amount fixed by Regulation pursuant to section 83(1)(b) of the Act.

7.

On 3 April 2003, attempts at reaching conciliated settlement of the matter were undertaken but did not resolve the claim. The application was pressed and the respondent requested that the Notice of Motion be Heard and Determined. Directions were subsequently made regarding the exchange of evidentiary material regarding the issues raised by the Notice of Motion. A Hearing regarding the Notice of Motion was held on 28 August 2003, at the conclusion of which the Commission reserved Decision in respect to the Notice of Motion.

BACKGROUND

8.

The applicant is a male who was some forty one years of age at the time of his alleged unfair dismissal on 29 July 2002. The applicant was employed in a position described as "Manager, Business Development". The applicant had been employed by the respondent for a period in excess of nine years when he was dismissed on 29 July 2002 for reasons relating to alleged misconduct.

9.

The applicant was an employee for whom conditions of employment were not set by an industrial instrument. The application document indicated that the normal gross pay received by the applicant each week was $1,403.84 and in addition extra non wage benefits for the applicant were noted as "private use of car, mobile phone."

10.

The Notice of Motion filed by the respondent asserted that the applicant's annual remuneration was $95,680.17 and thereby exceeded the annual remuneration threshold relevant to the dismissal of the applicant which was $81,500.00. Consequently the Commission has been required to Determine the annual remuneration of the applicant for the purposes of the potential operation of the exemption to access to the unfair dismissal provisions arising from section 83(1)(b) of the Act.

THE EVIDENCE

11.

At the commencement of the Hearing on the Notice of Motion, an issue arose regarding the attendance of deponents of affidavits for the purposes of cross-examination as witnesses. The respondent sought to tender various affidavits that had been filed and served in accordance with the earlier Directions of the Commission. The applicant sought to have the deponents present for the purposes of cross-examination as witnesses. The respondent advised that the deponents were unavailable as they had not been advised of the requirement to attend in accordance with Rule 122 of the Industrial Relations Commission Rules 1996 (the Rules).

12.

The applicant had filed and served one affidavit, the deponent being the applicant. The respondent had advised the solicitors acting for the applicant of the requirement for the applicant to attend for the purposes of cross-examination in respect of his affidavit. The respondent had received no advice requiring the attendance of any of the deponents of the affidavits that had been filed and served by the respondent.

13.

The respondent asserted that in the absence of any advice required by Rule 122, for the attendance of any of the deponents of the affidavits that were sought to be relied upon, the Commission should permit the affidavits to be admitted as evidence in the proceedings. The respondent relied upon Authority established by a Judgement of the Full Commission in the matter of Ronald Kagan and Primus Telecommunications (Aust) Pty Ltd,(Kagan) [1] and pressed for the affidavit material to be admitted without the requirement for the deponents to attend. The applicant objected to the admission of the material in the absence of the deponents.

14.

The Commission was persuaded that, notwithstanding a practice ordinarily anticipating the presence of deponents of all affidavits for the purposes of providing evidence as a witness, the provisions of Rule 122 and the Authority as established in the Judgement in the matter of Kagan, compelled the admission of two affidavits of Geoffrey Anthony Griffiths, who was not available for cross examination. Mr Griffiths was an Accounts Manager responsible for overseeing certain payments of wages and other matters relating to remuneration of employees of the respondent. Various objections were taken to particular contents of the two affidavits of Mr Griffiths and subject to some alterations as a consequence of those objections, the affidavits of Mr Griffiths were respectively marked as Exhibits 1 and 2 without Mr Griffiths attending for the purposes of cross examination.

15.	Consequently the respondent's primary evidentiary material was represented by the contents of the affidavits which became Exhibits 1 and 2.

16.

The applicant was called as a witness pursuant to a requirement exercised under Rule 122 of the Rules. The applicant attested to the veracity of an affidavit that he had sworn for these proceedings and which became Exhibit 3. The applicant was cross-examined at some length particularly about his knowledge of international telephone calls that were the subject of telephone account records as contained within the respondent's affidavit material.

THE RESPONDENT'S CASE IN SUPPORT OF THE NOTICE OF MOTION

17.

Mr N Turner, solicitor, appeared for the respondent at the Hearing on the Notice of Motion. Mr Turner submitted that the Commission did not have jurisdiction to Hear and Determine the application because the applicant was an employee to which the provisions of Part 6 of Chapter 2 of the Act were not available.

18.

Mr Turner submitted that there was no dispute that the applicant was not covered by any New South Wales Award or Agreement, and that the relevant amount of annual remuneration prescribed by Regulation pursuant to section 83(1)(b) of the Act was $81,500.00. Mr Turner made detailed submissions as to the components that should be aggregated so as to determine the annual remuneration of the applicant for the purposes of section 83(1)(b) of the Act.

19.

Mr Turner submitted that at the time of the applicant's dismissal his base annual remuneration was a figure of $73,167.00. Mr Turner submitted that the Parties were agreed that this was the salary at the date at which the applicant was dismissed. Further, Mr Turner acknowledged that the actual amount of remuneration of the applicant in the twelve months prior to dismissal would have been $73,917.00. Mr Turner submitted that the actual amount received was slightly higher because there were some additional payments that were included in the twelve months period 29 July 2001 to 29 July 2002. Mr Turner submitted that the figure of $73,917.00 was not the correct amount but rather the appropriate base salary figure should be $73,167.00, an amount which would be determined by a gross weekly figure of $1,407.05 multiplied by fifty two, which generated a precise figure of $73,166.60. This figure was then rounded up to the nearest dollar and according to the submissions of Mr Turner, the appropriate base salary was therefore $73,167.00.

20.	Mr Turner submitted that the applicant was in receipt of the legislative superannuation requirement of 9% to be applied to that figure and therefore an additional amount of $6,585.03 should be included as remuneration derived by way of superannuation.

21.

Mr Turner made further detailed submissions about what he described as the most contentious issue, that being the value that should be assigned to the provision of a motor vehicle for the applicant's private use. There was no dispute that the respondent provided the applicant with a Toyota Lexcen motor vehicle which was a 1993 sedan model. Mr Turner submitted that the objective retail value of this particular motor vehicle was $6,999.00, although the respondent had the vehicle insured for a figure of $9,000.00.

22.

Mr Turner then asked the Commission to calculate a total benefit cost for the applicant based upon what he described as the objective retail value of the vehicle at the figure of $6,999.00. Mr Turner submitted that the annual value that would consequently be assigned to the provision of the motor vehicle amounted to some $11,504.30.

23.

Mr Turner made further submissions about the alleged value to the applicant of the provision of a mobile phone with which the applicant was permitted to make an unlimited number of private calls. According to the submissions of Mr Turner the provision of the mobile telephone amounted to a net benefit to the applicant that should be calculated as representing $4,423.84 on an annual basis.

24.	Mr Turner then made submissions which summarised the various components that he said comprised the applicant's annual remuneration such that they should be calculated as follows:

Base salary - $73,167.00

Superannuation - $6,585.03

Value of use of car - $11,504.30

Value of use of mobile phone - $4,423.38

Value of private use of employer provided land line telephone - $218.59

Total = $91,917.30

25.	Mr Turner summarised his submissions by asserting that the applicant's annual remuneration exceeded the relevant limit of $81,500 by more than $10,000 and therefore the Commission did not have jurisdiction to further Hear the unfair dismissal claim.

THE APPLICANT'S CASE OPPOSING THE NOTICE OF MOTION

26.	Mr R Moore, barrister, appeared for the applicant at the Hearing on the Notice of Motion. Mr Moore commenced his submissions by challenging the value that should be considered as representing the objective retail value of the motor vehicle that was provided to the applicant.

27.

Mr Moore made detailed submissions about the particulars of the 1993 Toyota Lexcen sedan that was provided to the applicant for both business and private use. Mr Moore stressed that the vehicle had travelled in excess of 260,000 to 300,000 kilometres and that it had been provided to the applicant principally for the purposes of business use. Mr Moore submitted that the value that should be assigned to the vehicle was much less than that proposed by the respondent. Mr Moore stressed that the vehicle was nine years old and had been primarily provided for the extensive business use undertaken by the applicant. Mr Moore submitted that the private use of the vehicle was very limited.

28.

Mr Moore made further detailed submissions about the telephone account details which had been provided. Mr Moore submitted that many of the private calls that could be identified from the telephone account records involved the applicant telephoning his home whilst absent on business for the respondent. Mr Moore submitted that it was inappropriate to include these calls as representing part of any annual remuneration calculation.

29.

Mr Moore made further submissions which sought to have the base salary of the applicant calculated on a figure lower than $73,167.00. Mr Moore submitted that as the applicant had received a pay increase part way through the twelve months period prior to dismissal, the Commission should adopt a lower base salary figure for the purposes of calculating annual remuneration. Mr Moore also stated that a lower superannuation figure should be applied as the 9% amount operated on and from the 1 July 2002, and 8% applied prior to that.

30.	In respect to both the base salary and the superannuation figure, Mr Moore urged the Commission to adopt figures which would be based upon the amounts received in the twelve months prior to dismissal and using a formula as anticipated by Regulations made in respect of the Workplace Relations Act.

31.

Mr Moore made further detailed submissions regarding the various components that the Commission might use so as to establish the value that should be assigned to the private use of the employer provided motor vehicle. In this respect Mr Moore repeated his earlier submissions that the particular motor vehicle was one that was older than might ordinarily be anticipated and had travelled significant distances, such that it would have been greatly depreciated by the extensive business use that it had performed.

32.

Mr Moore made further submissions which sought to reduce any value that might be determined for the benefit obtained by the applicant's use of the employer provided mobile telephone. In addition Mr Moore submitted that there should be no value attributed to the applicant's use of a land line telephone, even if the applicant had been able to make international calls gratis. Mr Moore reiterated his submission that the value that should be assigned to the motor vehicle should have regard for the particular vehicle that was not a new or recent model but instead a greatly depreciated vehicle.

CONSIDERATION

33.

The Determination of the Notice of Motion in this matter has required the Commission to calculate the annual remuneration of the applicant for the purposes of section 83(1)(b) of the Act. The most significant point of contest in this instance involved the value that should be assigned to the provision of a motor vehicle for the applicant's private use. In addition there were some further arguments about the precise amount that should be determined as the applicant's base salary and the superannuation benefit that should also be included in the calculation of annual remuneration.

34.

I propose to adopt the base salary figure of $73,167.00. This approximates with the weekly figure that was included in the application document. The weekly figure included in the application document seems to have been calculated by dividing the fixed annual remuneration of $73,000.00 by fifty two weeks. Of course there are slightly more than fifty two weeks in each year and therefore the amount of $73,167.00 may be, even on the basis of the respondent's approach to using the devisor of fifty two weeks, slightly less than the actual amount of base salary that would have been paid to the applicant in a calendar year.

35.

In respect to the question of superannuation, I propose to apply the relevant superannuation figure percentage as existing at the time of the dismissal. It seems logical that for the purposes of a description such as annual remuneration, the amount of superannuation expressed as a percentage of salary would be the appropriate means by which to allocate a figure for the purposes of aggregation of total annual remuneration. In the present circumstances the 9% legislative minimum should therefore be added to the base salary figure. This therefore provides a superannuation component of $6,585.03.

36.

The most strongly argued aspect of this matter involved the value that should be assigned to the employer provided motor vehicle. There was no dispute that some value should be assigned to the private use of the employer provided motor car. In the application document, the private use of the car and the mobile phone were identified as extra non wage benefits. It should be noted that on any estimation, the applicant's stated salary and superannuation components would aggregate to a figure that came close to the annual remuneration threshold of $81,500.00. The applicant acknowledged this in his affidavit where he stated as follows:

"... for the prescribed limit to be exceeded I would have to derive benefits apart from base salary and superannuation totalling some $2,480.00 before the remuneration threshold is breached" ^[2]

37.

This meant that on the applicant's own calculations, if the annual remuneration value assigned to the employer provided motor vehicle exceeded $2,480.00, the applicant would be barred from taking the unfair dismissal proceedings. Further, if the logical and realistic figures for base salary and superannuation are applied as I have determined above, the amount that is relevant to providing for any additional value for private use of car and mobile phone would only need to amount to $1,747.97 and the applicant would exceed the specified amount of $81,500.00.

38.

Consequently the applicant's case at best, would need to establish that the value of the private use of car and mobile telephone did not exceed $2,480.00 on an annual basis so as to avoid exceeding the prescribed limit of $81,500.00. It would seem that without conducting a detailed calculation of the value of an employer provided motor vehicle, even a significantly dilapidated vehicle would be likely to provide for an annual benefit in the order of $2,480.00. Notwithstanding this obvious difficulty and the apparent pursuit of related proceedings taken under section 106 of the Act, the applicant has resisted the Notice of Motion and the Commission has been required to Determine the matter. The primary issue has involved the calculation of an objective and reasonable value that is assigned for the provision of the particular motor vehicle, in this case being the 1993 Toyota Lexcen sedan. The approach to a calculation of this type was the subject of detailed analysis in an earlier Decision in the case of Shingler v. Tony Azzi (Automobiles) Pty Ltd and Another (Shingler). [3] I propose to adopt the methodology as set out in Shingler.

Step 1 - The Retail Value Of The Motor Vehicle

39.

There was considerable argument about the retail value that should be assigned to the particular motor vehicle provided to the applicant. It was clear that the motor vehicle provided was not a new or late model vehicle. The Toyota Lexcen sedan had been extensively used over many years for business purposes. I am prepared to provide the applicant with considerable benefit in respect to a retail figure of the vehicle. I am prepared to adopt a figure less than the lowest of the estimates that were provided by way of the "red book" figures. It should be noted that the "red book" figures suggested a range between $7,250.00 to $4,100.00 for a 1993 Toyota Lexcen sedan VXI four door automatic, four speed 3.8I. Given the extensive travel that this particular vehicle had undertaken I propose to adopt a retail value of $3,675.00 for the vehicle.

Step 2 - Annual Interest Applied To Retail Value Figure

40.	Having established the monetary retail value of this particular motor vehicle, it is next appropriate to apply a reasonable and realistic interest figure on the amount so determined.

41.	In the present circumstances I propose to apply an interest rate of 6.85% per annum and therefore the first constituent element for determining the benefit value of the vehicle is $251.73.

Step 3 - Depreciation

42.

Although the applicant argued that a lower rate of depreciation should apply because the vehicle had suffered as a consequence of the extensive business use, the calculation is designed to make some reasonable and objective estimate of what the vehicle represents to the employee as a benefit. Therefore the deterioration of the particular vehicle because of its extensive business use becomes largely irrelevant for the purposes of calculating what benefit the employee derives by having the private use of the vehicle. The relevant rate of depreciation that I propose to apply is 15% of the total retail value as previously determined.

43.	Therefore the relevant depreciation amount for the purposes of aggregation of the annual benefit obtained by the employee is a figure of $551.25.

Step 4 - Maintenance, Fuel and Repairs

44.

In the Decision in Shingler, an amount for maintenance, fuel and repairs was assigned as $2,000.00 per annum including registration, insurances etc. It is conceivable that maintenance costs might be higher on an older vehicle of lower retail value. Conversely the registration and insurances would logically be lower for the older, lower value vehicle. On balance I am prepared to provide some discount in this instance for this particular figure and I propose to include an amount of $1,600.00 as an annualised figure covering maintenance, fuel, repairs, registration and insurances.

45.	As previously indicated in the Shingler Decision, I am not persuaded to include any amount in respect of fringe benefits tax or to make any adjustment in respect of an allocation based upon the percentage of private versus business use of the motor vehicle.

Summary Calculation

46.	The consequent calculation for aggregation of the value that should be assigned to the private use of the motor vehicle provided by the employer to the applicant is set out as follows:

Step 1 - The Retail value of the motor vehicle

$3,675.00 (beneath lowest of the "red book" figures)

Step 2 - Interest on retail value figure

$251.73 (interest on retail value figure at 6.85% p.a.)

Step 3 - Depreciation

$551.25 (depreciation on retail value figure @ 15% p.a.)

Step 4 - Maintenance, fuel and repairs

$1,600.00 (maintenance, fuel, including registration and insurances)

Total annual monetary value of motor vehicle is: $2,402.98

47.

The assigned value of the provision of the motor vehicle is aggregated with the established base salary and the superannuation, and on these figures the applicant's annual remuneration would total $82,155.01. This amount exceeds the specified limit of $81,500.00 and the applicant's annual remuneration would be increased further by some small amount that should be assigned to the private use of the mobile telephone. However as the applicant's annual remuneration exceeds the limit before any allocation of amounts in respect of private use of telephone, there is no practical purpose served in making any further calculation.

CONCLUSIONS

48.

This Decision has involved determination of the respondent's Notice of Motion. The respondent has sought Interlocutory Relief by way of a determination that the annual remuneration of the applicant exceeded the Statutory limit as fixed by Regulation pursuant to section 83(1)(b) of the Act. The applicant's annual remuneration can be objectively and reasonably established on the following basis:

Base salary - $73,167.00

Superannuation (9%) - $6,585.03

Private use of motor vehicle - $2,402.98

Total (before any value for mobile phone) - $82,155.01

49.

The amount of $82,155.01 exceeds the remuneration limit fixed by Regulation pursuant to section 83(1)(b) of the Act, that being the figure of $81,500.00 relevant at the time of the applicant's dismissal. The applicant was an employee for whom conditions of employment were not set by an industrial instrument, therefore, the applicant is excluded from access to the unfair dismissal provisions, Part 6 of Chapter 2 of the Act.

50.	Consequently the Commission must grant the Interlocutory Relief sought by the respondent by way of Notice of Motion. Therefore the application is dismissed and these proceedings are concluded.

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^[1] Ronald Kagan and Primus Telecommunications (Aust) Pty Ltd, Full Bench of Industrial Relations Commission of NSW, [Wright P, Harrison DP & Redman C], Matter no. IRC 2279 of 2000, Judgement delivered on 15 Sep. 2000.

^[2] Exhibit 3, @ paragraph 15.

^[3] John Jarvis Shingler v Tony Azzi (Automobiles) Pty Ltd & Another, Matter No. 5386 of 2001, Decision delivered on 5 Nov. 2002.