T9691
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Douglas Stanley Wright and Rexel Australia Ltd ACN 000 437 758
Industrial dispute - alleged unfair termination of employment - severance payment as a result of redundancy - car allowance - car allowance not construed as wages - car allowance not for private use - application dismissed REASONS FOR ORDER [1] This was an application for a dispute hearing made under Section 29(1A) of the Industrial Relations Act 1984 (the Act) by Douglas Stanley Wright of 6 Main Road, Claremont (the employee). [2] The employee was in dispute with Rexel Australia Ltd of North Ryde, New South Wales (the company) over the alleged unfair termination of his employment and the alleged breach of an award or a registered agreement; he also sought a further severance payment as a result of redundancy. [3] At the hearing, Mr Michael Daly, a legal practitioner, sought and was granted leave to represent the employee, and Mr P Mazengarb of the Tasmanian Chamber of Commerce and Industry Limited (the Chamber) represented the company. [4] The employee was employed by the company from 17 April 1989 until 6 July 2001. At the time of the termination of his employment, the employee was the company's Tasmania Operations Manager. He was paid monthly. Also at the time of the termination of his employment, the employee was in receipt of a car allowance based upon an annual amount of $11,160 paid in monthly instalments along with his pay. When the employee took annual leave the car allowance continued to be paid. [5] The employee received a severance payment from the company of three weeks' pay for each year of service. In addition, the employee received five weeks' pay in lieu of notice and this latter payment included a car allowance payment. [6] The employee claimed that the car allowance instalments should have been included in the severance payment, the payment he received for accrued annual leave upon termination of his employment and his accrued long service leave entitlements. [7] The company had refuted the claim, hence the dispute. [8] Eventually, after an adjournment and discussions between the parties, some resolution of the dispute was reached, but, there remained two matters outstanding, not agreed. The employee sought that the payment of the car allowance be included in the severance payment calculation and, if that proposition was accepted by the Commission, the company on its part sought to have the three weeks' pay for each year of service formula reduced. The Commission was requested to arbitrate on these two matters. [9] In evidence, the employee said that the car allowance payment system was brought into being by a previous owner of the company during 1996 to cope with the effect of the Goods and Services Tax on that company. Prior to that, the previous company owned the cars and supplied them for the use of the relevant employees. Under the new system the employee purchased the car and paid all the costs attached. Presumably, the car allowance was meant to cover all the car costs, including purchase, but, after the completion of 20,000 kilometres, a kilometreage reimbursement payment was added. [10] The Human Resources Manager for the company, Mr Mathieu Bernard Claude Oudot, said in evidence there were three different company policies concerning the use of cars and employees had the option of choosing under which policy they worked. [11] The policies were:
[12] The employee chose a facility car allowance which meant that he was required to purchase a car himself. He was able to make the purchase through the company and the purchase price was part of the consideration for the annual allowance he received. [13] There was conflicting evidence at the hearing as to whether the employee purchased the car outright or was leasing it. Both methods were referred to, but, in any case, the fact does not affect the end result in this matter. [14] The company said, for practical purposes, the annual allowance was broken up and paid in 12 equal instalments throughout the year. [15] The employee pointed out that the car allowance was paid during annual leave and it should also be included in the severance payment in the same way. The company submitted that it was not appropriate to determine a weekly wage for severance payment purposes based upon what was paid during an employee's annual leave. In this context, the company quoted and relied upon a previous decision of the Commission, in matter T4013 of 19921. [16] In answer to this, the employee said that what was being sought was a severance payment based upon what was ordinarily paid weekly to the employee. [17] The company, with the aid of a number of precedent federal decisions, submitted that a car allowance could not be construed as wages received by the employee. [18] The employee referred to the case Paterson v Stanmorr Pty Ltd and Another, [2000] 2 VR 4602, and submitted that it upheld the view that the term "wages" should be construed widely and not in a narrow sense. Findings (19) Most or all of the precedent cases quoted by the Company dealt with Section 170CD of the previous federal Industrial Relations Act 1988 (the federal Act) and the question of the quantum and make up of the employment termination payment in those cases was dominated by the limitations applied to that payment by the federal Act. As a consequence, the direct effect of those references in this matter was somewhat diluted and the Commission is sympathetic to the employee's submission in that regard. Nevertheless, the valid residual point was that payments that are made in direct compensation for a cost to the employee and not intended to be part of the wages package should not be construed as the ordinary, regular remuneration for work done. [20] I accept that the car allowance was not part of the employee's ordinary wages and therefore it should not be applied to the severance payment calculation. [21] In formal proceedings, where consideration for a car allowance has been included in severance payments, in this State and elsewhere, it has been on the basis of compensation for the private use of a company car. The decision of Commissioner Shelley in Matter T8934 of 20003, in this Commission, allowing part consideration of a car allowance for redundancy purposes was based upon compensation for the loss of the private use of an employer's vehicle; this application is distinguishable from that. In this case, as a matter of policy choice by the employee, the car was not provided by the company, but, it was purchased and owned by the employee. [22] On the evidence and submissions there was no provision in the car allowance payment for private use. Although not clearly specified, I am satisfied that the car allowance that was paid was in compensation for the purchase price, depreciation, maintenance, repairs and running costs in relation only to the business use of the car. Put another way, there was nothing put to the Commission during the hearing to show that there was an element covering private use in the car allowance paid to the employee. [23] Even though I agree with the employee that the term "wages" should be construed widely, I do not accept that an allowance seeking to cover costs is comparable to the provision of such things as board and lodging or tips which can be seen as adding to the value of the remuneration received by an employee. [24] For these reasons, I do not accept that consideration of the car allowance should have been included in the employee's severance payment. It follows that the employee's claim for the car allowance to be paid on the other items listed in the application, at paragraph o) of Part J, is not accepted. Consequently, the company should not review the severance payment already made. [25] The application is dismissed and I so order.
P A Imlach Appearances: Date and place of hearing: 1 Logan v Otis Elevator Co Pty Ltd (1999) IRCA 4 |