​Fringe benefits tip salary over dismissal threshold

Cases

​Fringe benefits tip salary over dismissal threshold

A tribunal's calculation of a manager's income has tipped his salary over the unfair dismissal income threshold.... by a mere $315.

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In a dispute over what items in an employee’s remuneration package should be counted as “income” for the purposes of the unfair dismissal claim threshold, the Fair Work Commission has ruled that an employee’s income was $315 above the limit of $145,400, therefore he was ineligible to claim unfair dismissal.

The FWC ruled that his annual leave loading and 80% of both his car fuel allowance and use of an employer-provided mobile phone were all counted as income. The three items were valued at $5,715.02.

Facts of case


Rob Maloney was an operations manager who was retrenched by John Herrod and Associates. He was on a base salary of $140,000 but also received other employment benefits. He lodged a claim of unfair dismissal but the employer claimed that he was ineligible to do so because the value of the other benefits took the total package to $146,435, above the threshold of $145,400. Mr Maloney claimed that his package was $143,600, comprising base salary and the full value of the fuel allowance, although he disputed that its full value should be counted.

The employer valued his leave loading at $1884.62, the fuel allowance at $3600 and personal phone use at $950.40.

Mr Maloney argued that the leave loading should not be counted because his contract letter did not list it as an “entitlement” (it listed entitlements to annual, sick and long service leave), plus it should be treated as a “bonus”. Also, only his private use of the car should be counted in the fuel use and a deduction should be made for “significant business-related use” of the phone.

Decision


The FWC dismissed Mr Maloney’s claim that changes to his work duties meant that he had become an award-covered employee (and therefore eligible to make a claim of unfair dismissal). It then examined the evidence and estimated that about 80% of the fuel allowance amounted to private use and 80% of the phone use was for private calls. It found that the annual leave loading was counted as remuneration, because it was a payment of “wages”.

The fuel allowance was to cover use of his own car for work purposes. Neither party had kept detailed records of work versus private use, which prevented following the normal process used to calculate the value of private use, but it was safe to assume much of the car’s use was private use. The FWC estimated that 80% of the car’s use was private and 20% employment-related.

Similarly, phone records were not detailed, but there was evidence that Mr Maloney had made several lengthy calls to his partner’s number. The FWC estimated that 80% of the phone’s use was private and 20% employment-related.

Therefore, his earnings were calculated at base salary $140,000 plus annual leave loading $1884.62 plus fuel allowance $2,880 (80% of $3,600) plus phone use $950.40 (80% of $99 per month x 12) = $145,715.02. As this exceeded the threshold by $315.02, Mr Maloney was ineligible to claim unfair dismissal.

The bottom line: This case provides some insight into how the FWC will calculate various components of employee earnings for the purposes of the dismissal claim threshold. Where evidence is not detailed and clear re business versus private use of facilities and benefits provided, the FWC will assume that at least some use was private and calculate a percentage of the value of the facility/benefit.

Read the judgment


Maloney v John Herrod and Associates Pty Ltd [2019] FWC 3071, 9 May 2019 
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