Golja v Lord t/as Kelvin Lord & Co [1996] IRCA 265

DECISION NO: 265/96 CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - COMPENSATION - Income Tax Assessment Act 1936 (Cth): s 27f - taxation aspects of COMPENSATION AWARD Income Tax Assessment Act 1936 (Cth): s 27f Slifka v J W Sanders Pty Limited (Industrial Relations Court of Australia, North J, 19 December 1995, unreported) Lloyd John Boris GOLJA v. Kelvin Ernest LORD t/as KELVIN LORD & CO WI 1193 of 1995 CORAM: MADGWICK J PLACE: PERTH DATE: 20 JUNE 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY No. WI 1193R of 1995 BETWEEN Lloyd John Boris GOLJA Applicant AND Kelvin Ernest LORD trading as KELVIN LORD & CO Respondent CORAM: MADGWICK J PLACE: PERTH DATE: 20 JUNE 1996 MINUTES OF ORDER 1. The respondent is to pay to the Western Australia District Registrar within 28 days the sum of $17,307 (the pre-tax sum of the compensation elements). 2. The Registrar, upon such payment, is to pay the sum of $10,399 (the sum conceded by the respondent to be payable to the applicant) to the applicant. 3. The balance of $6,968 is to be invested by the Registrar in an interest-bearing bank or building society account pending further order of the Court. 4. Either party may apply on 48 hours notice as to the further disposition of the said balance and interest thereon when the approach of the Commissioner for Taxation is known. 5. The parties may jointly apply for a consent order at any time before the time contemplated by Order 4.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY No. WI 1193R of 1995 BETWEEN Lloyd John Boris GOLJA Applicant AND Kelvin Ernest LORD trading as KELVIN LORD & CO Respondent CORAM: MADGWICK J PLACE: PERTH DATE: 20 JUNE 1996 SUPPLEMENTARY REASONS FOR JUDGMENT MADGWICK J:

Taxation Aspects The further submissions made in relation to this matter illustrate the inadequacies of the available machinery for determining the impact of the income tax provisions in framing awards of wage or salary-related compensation. In my decision in principle I indicated that the applicant should, subject to taxation considerations, receive the sum of three components: (a) notional "severance pay" of one week's pay for each year of service. Before tax this would be $8,307. (b) compensation for loss of the high probability that long service leave would soon have accrued to the applicant had the employment not been unlawfully terminated. Before tax this would be $8,000. (c) a differential for a short period between what he would have earned for his employment with the respondent, had it continued, and what he received in other work that he found. Before tax this would be $1,500. Thus, on a gross basis and before taxation considerations are taken into account, a total of $17,807 would be involved. Both parties agree that North J's decision in Slifka v J W Sanders Pty Limited (Industrial Relations Court of Australia, North J, 19 December 1995, unreported) should be followed, both as to the necessity to take tax considerations into account and, in principle, as to how they should be taken into account. I am content to abide those submissions. However the parties do not agree on the result.