Industrial Relations Commission of New South Wales CITATION : Austeck Pty Ltd v Charalambos Atsalos [2003] NSWIRComm 290 APPELLANT Austeck Pty Limited PARTIES : RESPONDENT Charalambos Harry Atsalos FILE NUMBER: IRC 32 of 2003 CORAM: Walton J Vice-President; Boland J; Macdonald C Appeal - Application for leave to appeal and appeal - Unfair dismissal - Finding at first instance that annual remuneration of employee whose conditions of employment were not set by an industrial instrument was less than the prescribed amount - Statutory Interpretation - Section 83(1)(b) of Industrial Relations Act 1996 - meaning of "annual remuneration" - Whether annual remuneration was to be determined according to the actual amount paid to the employee in the 12 months preceding termination of employment or whether it was to be according to what the applicant was entitled to under the employment contract at the time of the termination of employment - History of section 83(1)(b) - Relevance of provisions of Workplace Relations Act 1996 (Cth) and Regulations to interpretation of "annual remuneration" under New South Wales Act - Whether Parliamentary debates provide assistance in interpreting meaning to be assigned to "annual remuneration" - Purposive approach to interpretation - Importance of interpreting particular words in context - Held that annual remuneration for the purpose of s 83(1)(b) was to be determined according to what the applicant was entitled to under the employment contract at the time of the termination of employment - Leave to appeal granted - Appeal upheld - Decision of Commissioner set aside Unfair dismissal - Appeal - Application for leave to appeal and appeal - Finding at first instance that annual remuneration of employee whose conditions of employment were not set by an industrial instrument was less than the prescribed amount - Statutory Interpretation - Section 83(1)(b) of Industrial Relations Act 1996 - meaning of "annual remuneration" - Whether annual remuneration was to be determined according to the actual amount paid to the employee in the 12 months preceding termination of employment or whether it was to be according to what the applicant was entitled to under the employment contract at the time of the termination of employment - History of section 83(1)(b) - Relevance of provisions of Workplace Relations Act 1996 (Cth) and Regulations to interpretation of "annual remuneration" under New South Wales Act - Whether Parliamentary debates provide assistance in interpreting meaning to be assigned to "annual remuneration" - Purposive approach to interpretation - Importance of interpreting particular words in context - Held that annual remuneration for the purpose of s 83(1)(b) was to be determined according to what the applicant was entitled to under the employment contract at the time of the termination of employment - Leave to appeal granted - Appeal upheld - Decision of Commissioner set aside CATCHWORDS : Statutory Interpretation - Appeal - Application for leave to appeal and appeal - Unfair dismissal - Section 83(1)(b) of Industrial Relations Act 1996 - meaning of "annual remuneration" - Whether annual remuneration was to be determined according to the actual amount paid to the employee in the 12 months preceding termination of employment or whether it was to be according to what the applicant was entitled to under the employment contract at the time of the termination of employment - History of section 83(1)(b) - Relevance of provisions of Workplace Relations Act 1996 (Cth) and Regulations to interpretation of "annual remuneration" under New South Wales Act - Whether Parliamentary debates provide assistance in interpreting meaning to be assigned to "annual remuneration" - Purposive approach to interpretation - Importance of interpreting particular words in context - Held that annual remuneration for the purpose of s 83(1)(b) was to be determined according to what the applicant was entitled to under the employment contract at the time of the termination of employment - Leave to appeal granted - Appeal upheld - Decision at first instance set aside Industrial Relations Act 1988 Industrial Relations Act 1996 Industrial Relations Bill 1996 Industrial Relations (General) Regulation 2001 LEGISLATION CITED : Industrial Relations (General) Amendment (Unfair Dismissal) Regulation 1997 Interpretation Act 1987 Workers Compensation Act 1926 Workplace Relations and Other Legislation Amendment Bill 1996 Workplace Relations Regulations 1996 (Cth) Workplace Relations Act 1996 (Cth) Bull v Attorney-General (NSW) (1913) 17 CLR 370 Club Employees (State) Award and Other Awards, Re [2002] NSWIRComm 362 G G Maxwell v Acacia Resources (unreported, Ross VP, Drake DP and Lawson C, 31 October 1997, Print P6396) Kagan and Primus Telecommunications (Aust) Pty Ltd (No 2) [2000] NSWIRComm 185 CASES CITED : Keith Miller & Sons Builders Pty Ltd v Flemming (1999) 91 IR 399 Knowles v Anglican Property Church Trust (No 2) (1999) 95 IR 380 Moxham v Henderson [1981] 2 NSWLR 282 Police Association of New South Wales v Commissioner of Police [2002] NSWIRComm 126 Shead v Summit Western Pty Ltd t/as Blacktown Mitsubishi (1998) 81 IR 347 HEARING DATES: 06/06/2003 DATE OF JUDGMENT: 09/12/2003 APPELLANT Mr S Prince of counsel SOLICITOR Ms J Bull LEGAL REPRESENTATIVES: Jenny Bull & Company Solicitors RESPONDENT Mr D Shoebridge of counsel JUDGMENT: - 4 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM: Walton J, Vice-President Boland J Macdonald C 12 September 2003 Matter No IRC 32 of 2003 AUSTECK PTY LTD v CHARALAMBOS ATSALOS Application by Austeck Pty Ltd for leave to appeal and appeal against a decision of Commissioner McLeay given on 16 December 2002 in matter no IRC 4307 of 2002 DECISION OF THE COMMISSION [2003] NSWIRComm 290 1 This is an application for leave to appeal and, if leave be granted, appeal from an interlocutory decision of Commissioner J McLeay on 9 December 2002. The matter before the Commissioner concerned a claim for relief under Part 2 Chapter 6 of the Industrial Relations Act 1996 ("the Act") by Charalambos Harry Atsalos ("the respondent") that his dismissal by his employer Austeck Pty Limited ("the appellant") was harsh, unreasonable or unjust. 2 Section 83 of the Act has the effect of excluding from the Commission's jurisdiction any claim for relief by an employee whose conditions of employment are not set by an industrial instrument and whose annual remuneration is greater than the amount prescribed from time to time by the regulations. The relevant amount in this case was $81,500. It was common ground that the respondent was not covered by any industrial instrument. 3 In the course of the proceedings before the Commissioner the respondent claimed that the appellant's annual remuneration exceeded $81,500 thereby excluding his claim for relief from the jurisdiction of the Commission. Mr Atsalos, on the other hand, claimed that his remuneration was less than $81,500 and that his claim was, therefore, within jurisdiction. Commissioner McLeay found that the appellant's "maximum annual remuneration" was $79,356.97 and, therefore, his application was within jurisdiction. 4 The figure of $79,356.97 was arrived at as follows: $ 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 5 In her decision Commissioner McLeay said that: 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. 6 The appellant submitted that in arriving at the conclusion that the respondent's annual remuneration was less than $81,500 the Commissioner erred in a number of respects. Firstly, that she erred by accepting the respondent's contention that annual salary was to be determined according to the actual amount paid to the employee. For example, the appellant had contended for an annual salary of $65,000 whereas the respondent had claimed that his earnings were $61,250 calculated as follows: Annual salary as at 01/07/01 $57,500 Annual salary as at 01/01/02 $65,000 Earnings July - Dec 01 $28,750 Earnings Jan - June 02 $32,500 $61,250 7 The appellant further contended that the Commissioner erred in finding that "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 costs associated with a benefit cannot be considered as part of the applicant's remuneration". The appellant submitted it followed from the Commissioner's finding as to the private use of the motor vehicle by the respondent that the figure of 70 per cent of the FBT of $1,499 amounting to $1,049.30 should be added to the amount determined as part of the employee's salary package. It was submitted that FBT on motor vehicle expenses was an additional cost associated with providing a vehicle for the employee's use; that this represented a tax saving to the employee where, if he had received the benefit by way of income rather than by way of provision of a motor vehicle, he would have had to pay tax on the amount received. 8 The third error contended for by the appellant was in relation to private health insurance. The appellant agreed that the respondent's salary package included the benefit of private health insurance paid by the employer to the amount of $2,459.60 but submitted that FBT associated with the benefit should be included as part of the employee's remuneration in amount of $2,316.85. It was submitted that if the employee was simply to receive an extra $2,459.60 per annum by way of income which he was to attribute to the payment of private health insurance, he would have to pay income tax on that money. Further, that the employee had impliedly chosen not to receive that reward or recompense for his services as income but had requested his employer to pay that money directly to the health care fund. In doing so, the employer has been required to pay a tax in respect of the benefit provided, which tax would have otherwise been payable by the employee if he received the money directly. 9 The fourth error which the appellant contended had been committed by the Commissioner was that she applied a rate of 8 per cent of gross annual salary as the employer's superannuation contribution when the correct rate at the time of the termination of the appellant's employment was 9 per cent. Leave to appeal 10 Section 188(1) of the Industrial Relations Act provides that an appeal from a member of the Commission may only be made with leave of the Full Bench. Section 188(2) provides that leave will be granted if the Full Bench is of the opinion that the matter is of such importance that, in the public interest, leave should be granted. Section 188(3) provides that the Full Bench may deal with an application for leave to appeal separately and without conducting a hearing into the merits of the appeal. 11 The appellant's submissions in support of the grant of leave were that: · Jurisdiction cannot be conferred by consent and the matter needs to be determined according to law prior to any further hearing of the merits of the case. · Jurisdiction is a discrete issue which was determined by the Commissioner's decision. · The question of whether there is jurisdiction is a matter of law and does not involve or require a determination of the facts relating to the merits. · The proposed appellant contends that the Commissioner's decision was wrong in law. · The appeal raises important issues of statutory interpretation relating to the Commission's jurisdiction which have not been resolved and which are novel. 12 The respondent opposed the granting of leave on the following bases: · The Commissioner adopted settled principles in making mixed findings of fact and law as to the respondent employee's annual remuneration and such findings were available to the Commissioner and reasonably open on the evidence at first instance. · The appellant employer has failed to establish jurisdictional error by the Commissioner. · The grounds of appeal, particularly as to the question of Fringe Benefits Tax, do not raise matters of interest beyond the parties. · The grounds of appeal seek to challenge findings that rely on the Commissioner's findings of fact at first instance in circumstances where the Commissioner had the benefit of seeing the parties and hearing their evidence · The grounds of appeal do not raise matters of public interest. 13 Leave to appeal will, as a general rule, be granted where an appellant demonstrates that the appeal proceedings "raises substantial issues of principle or law or has wider implications for the jurisprudence of this Commission, including whether the decision has widespread practical application" (see Knowles v Anglican Property Church Trust (No 2) (1999) 95 IR 380 at 382). 14 This appeal raises an issue of widespread practical application, namely, the interpretation of the phrase "annual remuneration" as it is used in s83(1)(b) of the Act. Accordingly, we grant leave to appeal. The relevant legislation 15 Section 83(1) of the Act reads as follows: 83. Application of Part (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). 16 The relevant regulation is cl5 of the Industrial Relations (General) Regulation 2001 which provides: 5. Exemptions from unfair dismissal provisions---maximum annual remuneration of employees for whom employment conditions not set by industrial instrument (1) For the purposes of section 83 (1) (b) of the Act, the amount prescribed is: (a) except as provided by paragraph (b)---the specified rate referred to in regulation 30BB of the Workplace Relations Regulations 1996 of the Commonwealth from time to time, or (b) that amount as indexed from time to time in accordance with regulation 30BF of those Regulations. (2) This clause applies with respect to dismissals occurring on or after 1 October 1997, whether the contracts of employment concerned were entered into before or after that date. (3) A change in the amount prescribed in accordance with subclause (1) applies with respect to dismissals occurring on or after the date on which the change occurs, whether the contracts of employment concerned were entered into before or after that date. 17 Regulation 30BB of the Workplace Relations Regulations 1996 (Cth) provides as follows: 30BB Specified rate For paragraphs 170CC (3) (b) and (4) (b) of the Act, the specified rate is $64,000 per year, or that amount as affected by indexation in accordance with regulation 30BF. By virtue of the operation of regulation 30BF the amount of $64,000 at the time of the respondent's termination of employment was $81,500. 18 Section 170CC(3) and (4) of the Workplace Relations Act 1996 (Cth) are in the following terms: 3) This subsection applies to an employee if: (a) the employee's remuneration immediately before the termination of employment was not wholly or partly determined on the basis of commission or piece rates; and (b) the rate of remuneration applicable to the employee immediately before the termination exceeds a rate specified, or worked out in a manner specified, in the regulations (the specified rate ). (4) This subsection applies to an employee if: (a) the employee's remuneration immediately before the termination of employment was wholly or partly determined on the basis of commission or piece rates; and (b) in accordance with the regulations, the rate of remuneration that is taken to be applicable to the employee immediately before the termination exceeds the specified rate. Annual remuneration 19 We deal, firstly, with the question of annual remuneration. It was submitted for the appellant that it follows from a reading of the relevant legislation and subordinate legislation that: the Commissioner's determination that the Employee's annual salary was to be determined on the amount actually paid over the previous 12 months, was wrong in that it did not follow the legislative requirements of calculating it by reference to the rate of remuneration immediately preceding the date of termination. 20 The appellant submitted that when one takes a purposive approach to the interpretation of the legislation and has regard to extrinsic material indicating that the New South Wales Parliament, in determining the remunerative cut-off point for accessing the unfair dismissal laws, adopted the "lead" of the Commonwealth Parliament, the correct interpretation in respect of the term "annual remuneration" as it is used in s83 of the Act is the annual rate of remuneration payable to the employee immediately preceding the date of termination and not, as the respondent contended, on the basis of the amount earned over the preceding 12 months. 21 The respondent submitted that the interpretation of the Act contended for by the appellant was wrong because: 1. The New South Wales Act and Regulation at no time make reference to s 170CC of the Workplace Relations Act 1996 (Cth). The reference in cl 5 of the New South Wales Regulation is only to "the specified rate referred to in regulation 30BB of the Workplace Relations Regulations ". Regulation 30BB of the federal Regulations provides, so far as it is relevant: "the specified rate is $64,000.00 per year" as indexed. Accordingly, there is no basis for the Commission to take into account the wording of s 170CC of the federal statute. 2. In determining the annual remuneration of an applicant for the purposes of s 83(1)(b) of the Act the amount of remuneration received in the year prior to termination is the most appropriate measure. This is consistent with the approach in s 89(5). 3. Further, this approach allows for a determination of the Commission's jurisdiction based on past ascertainable facts rather than future speculation. In the present case, the appellant employer seeks to have all non-wage aspects of the remuneration (fuel, registration, health insurance, mobile phone, etc) calculated on the applicant's actual benefits received over the past 12 months, however it seeks to have the wage and superannuation component of the remuneration calculated on an annualised rate based on the respondent employee's salary at termination. This approach is internally inconsistent. 4. The interpretation proposed by the appellant would allow for its abuse by unscrupulous employers. For example, if an employer sought to evade an unfair dismissal claim it would only be necessary on the day prior to termination to increase an employee's annual salary from that day to a rate in excess of the then specified rate and thereby avoid the Commission's jurisdiction. This would be so notwithstanding the fact that the employee's actual remuneration over the twelve months prior was less than the specified rate. 5. Adopting the approach propounded by the employer would lead to inconvenience, injustice or absurdity: Shead v Summit Western Pty Ltd (1998) 81 IR 347 at 357. 22 It may be seen that there was considerable reliance by the appellant on the debate in the New South Wales Parliament at the time of the introduction of s83(1)(b) of the Act. In interpreting the meaning of that provision it is permissible to have regard to those debates: s34(2)(h) of the Interpretation Act 1987 (although the extent of the references to the debates which we now give reflects the amount of time devoted to the issues by the parties' submissions rather than a reflection of our view of the significance of those matters). Section 34(1) of that Act provides: (1) In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material: (a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), or (b) to determine the meaning of the provision: (i) if the provision is ambiguous or obscure, or (ii) if the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made) leads to a result that is manifestly absurd or is unreasonable. 23 Section 83(1)(b) had its origins in the Industrial Relations Bill 1996. The Bill proposed a provision in the following terms: 83 Application of Part (1) This Part applies to the dismissal of: (a) an employee for whom any conditions of employment are set by an industrial instrument, or (b) a public sector employee, or (c) any other employee of a class prescribed by the regulations. 24 On 23 May 1996 the Honourable J P Hannaford, Leader of the Opposition in the Legislative Council, proposed an amendment to the Bill in the form of the current s83(1)(b) and s83(2). In introducing the amendment Mr Hannaford said: A matter of agreement between all political organisations is that State and Federal unfair dismissal laws should be consistent. Today the Federal Government introduced legislation relating to unfair dismissal laws on which this amendment is modelled. The Federal legislation provides for regulations to deal with proposed paragraphs (a) to (e), and contains identical wording. Those eligible to go before the commission in respect of unfair dismissals has been increased. The traditional approach was to allow only those covered by awards to have access to the commission. When the coalition was in office I advocated that circumstances should permit others who had been unfairly dismissed to go before the commission rather than be forced before the courts with all of the attendant expense. At that time there was considerable employer opposition to that proposal. That opposition was probably generated from the Victorian experience when unfair dismissal laws got out of control. A review of this issue resulted in a Federal decision, which New South Wales should also make, that people outside the traditional narrow ambit should have access to appear before the commission if they have been subject to unfair dismissal. However, there must be a cut-off point, and it is proposed that it be for those on annual remunerations greater than $62,200. That amount was specified in changes to Federal industrial laws proposed by former Federal Minister Brereton, and it has been retained by the present Federal Government. The New South Wales Government should follow that lead. The amendment proposes that those who receive a salary of more than $62,200 will have to go to the traditional courts to obtain a remedy if their contract of employment is terminated. Those receiving less than $62,200 will be able to go to the Industrial Relations Commission to obtain a remedy to any unfair dismissal. The regulations provide for that amount of $62,200 to be increased. I trust the Government will review that procedure, perhaps annually, as inflation increases. The Opposition would support such a change to the regulation. This amendment will ensure that everyone is given a fair go on the issue of unfair dismissals. I am pleased that the Opposition and the Government have reached agreement. I am pleased also that the New South Wales and the Federal governments are moving in tandem on this issue. 25 In reply, the Honourable J W Shaw, Attorney General and Minister for Industrial Relations, said: The Government does not oppose the amendment. Essentially it constructs three classes of persons who will have access to the unfair dismissal system: first, public sector employees; second, employees for whom conditions of employment are set by an award or an industrial instrument; and, third, those whose conditions are not set by an industrial instrument and whose remuneration is less than $62,200 or such other amount as is prescribed by the regulations. The Government is broadly content with that series of categories. The amendment will provide also for regulations that might exempt employees from gaining access to unfair dismissal remedies. The Executive Government must be careful when framing regulations because essentially they will remove people from the class that can claim unfair dismissal. Due caution and care must be taken when drafting any such exemptions. Certainly I would not indicate any commitment by the Government to exempt each and every class of employee as described in clause 83(2). That series of categories simply indicates the scope of possible exemptions that might be contained in the regulations, and the regulations can be considered by the Executive Government in due course. As is always the case with delegated legislation, if the regulations prove to be unfair or inappropriate, the House can move to disallow them. 26 The reference by Mr Hannaford to the unfair dismissals legislation introduced by the Federal Government was a reference to the Workplace Relations and Other Legislation Amendment Bill 1996, which was read for the first time on 23 May 1996, the day that Mr Hannaford introduced his amendments to the Industrial Relations Bill. The federal Bill was a comprehensive package of measures to amend the Industrial Relations Act 1988 (Cth). However, in relation to unfair dismissals the amendments did not seek to discard the provisions relating to exemption of non award employees, merely to alter the form of the provisions. The previously existing exemption rate of $62,200 was to be retained. Mr Hannaford, in his amendments referred to "paragraphs (a) to (e)" and the fact that these were in "identical terms" to the federal legislation. The reference to paragraphs (a) to (e) was a reference to s83(2) of the Act which was in the same terms as the proposed amendment to s 170CC(1) in the Workplace Relations and Other Legislation Amendment Bill. Sections 170CC(3) and (4) in the federal Bill were in identical terms to s 170CC of the Workplace Relations Act 1996 which substantially commenced on 31 December 1996. 27 Consequently, it was the appellant's contention that in light of the changes to federal unfair dismissal laws embodied in the Workplace Relations and Other Legislation Amendment Bill 1996, the New South Wales Parliament decided to "move in tandem" and adopted terms which are now s83(1) and (2) of the Act. In doing so, it was contended that the New South Wales Parliament embraced the notion in s170CC(3) of the federal Bill that "remuneration" in s83(1)(b) of the Act referred to "the employee's remuneration immediately before the termination of employment …" 28 It may be noted that at the time the Workplace Relations and Other Legislation Amendment Bill 1996 was introduced, the relevant law relating to the exclusion of non-award employees from access to the federal unfair dismissal laws was s170CD of the Industrial Relations Act 1988. That provision excluded employees not employed under award conditions from seeking relief in respect of unfair dismissal if: (a) in respect of an employee who was continuously employed by the employer during the period of 12 months immediately before the termination day on the termination day the employee's relevant wages exceeded the applicable amount; or (b) in respect of an employee who was continuously employed by the employer for a period less than 12 months immediately before the termination day on the termination day the employee's relevant wages exceeded the amount worked out using the formula: days employed x applicable amount 365 (2) The applicable amount for the purposes of subsection (1) is: (a) subject to paragraph (b), $62,200; or (b) if regulations made in accordance with Subdivision CA prescribe a formula for the annual indexation of the amount referred to in paragraph (a) the amount worked out using that formula as it applies from time to time. 29 In considering the amendments to the Industrial Relations Bill proposed by Mr Hannaford in May 1996 it seems to us that he was seeking to achieve some consistency with the federal unfair dismissal laws. Up until that time the New South Wales unfair dismissal laws did not provide for access to those laws by employees whose conditions of employment were not set by an industrial instrument. The Opposition obviously took the view, as expressed by Mr Hannaford, that non-award employees should have such access but that there should be a cut-off point, in remunerative terms, to be the same as provided for in the federal legislation. The Opposition also obviously took the view that there should be consistency of approach between federal and State laws regarding other classes of employees whose access to relief in relation to unfair dismissal should be limited, hence the adoption of s 83(2) of the Act. 30 However, it does not seem to us that there was any intention by the State Legislature to achieve perfect comity. In that respect, there is nothing in the Hansard record of 23 May 1996 that in proposing the amendment in the form of s83, Mr Hannaford had turned his attention to the detailed provisions of the federal Bill and, in particular, s170CC. What we consider the Opposition was aiming to achieve, and which was accepted by the Government, was broad consistency with the federal laws in terms of the classes of employees who might be exempt from the unfair dismissal laws and a remunerative ceiling in relation to non-award employees. 31 If it had been Parliament's intention at the time it considered the Industrial Relations Bill, and the Opposition's proposed amendments, to achieve a level of consistency in relation to the exemption of non-award employees as contended for by the appellant, it would have been a relatively simple matter, having adopted s170CC(1) as s83(2), to also adopt s170CC(3) and (4) and the relevant regulations. But that was not the case. 32 As it happened, the Industrial Relations Act 1996 (NSW), including s83(1)(b), substantially commenced on 2 September 1996. The Industrial Relations (General) Regulation 1996 also commenced on that date but the Regulation did not, from its commencement, contain any provisions dealing with exemptions from the unfair dismissal provisions of the Act. Those provisions were introduced by the Industrial Relations (General) Amendment (Unfair Dismissal) Regulation 1997 and commenced on 1 October 1997. The relevant provisions were cll5A and 5B (later cll 5 and 6 of the 2001 Regulation). 33 Thus, from September 1996 to October 1997 there were no regulations in New South Wales in relation to exemption from unfair dismissal provisions and the position of non-award employees was governed solely by the terms of s83(1)(b) of the Act which, by its terms, excluded employees whose conditions of employment were not set by an industrial instrument and whose annual remuneration was greater than $62,200. 34 In other words, during this time there was no regulation in the form of cl5 of the New South Wales Regulation directing attention to reg 30BB of the federal Regulations and, therefore, no connection at all between the phrase "annual remuneration" as used in s83(1)(b) and ss170CC(3) and (4) of the federal Act. We would have expected that if it had been Parliament's intention to define "annual remuneration" in s83(1)(b) as meaning "the employee's remuneration immediately before the termination of employment", as expressed in s170CC(3) or (4), it would not have left the matter in abeyance for 11 months and then addressed the issue by means of a regulation that, at best, only obliquely refers to s170CC(3) and (4) of the federal statute. 35 The conclusion that the New South Wales Parliament did not intend to achieve perfect consistency with the federal scheme in relation to those classes of employees to be exempted from the unfair dismissal laws, is strengthened by the fact that in introducing cll5A and 5B of the New South Wales Regulation in October 1997 the exemptions in cl5B accord, in the main, with the exclusions under the Industrial Relations Act 1988 (Cth) before its amendment by the Workplace Relations and other Legislation Amendment Act 1996. 36 In our opinion, cl5 of the Industrial Relations (General) Regulation 2001 (NSW), in referring to reg 30BB of the federal Regulations, does not, of itself, add to the meaning of s 83(1)(b) by defining "annual remuneration" as being "the rate of remuneration applicable to the employee immediately before the termination". The reference to reg 30BB is only for the purpose of identifying the level of annual remuneration above which an employee whose conditions of employment are not set by an industrial instrument is excluded from the application provisions of Ch 2 Pt 6 of the Act. Further, reg 30BB does not, by its terms, import s 170CC(3)(b) and (4)(b) into the scheme of Ch 2 Pt 6 of the New South Wales Act simply because it refers to those provisions in a particular context. 37 It will be seen from the foregoing consideration of the origins of s83(1)(b) that, ultimately, the parliamentary debate and the reference in cl5 of the NSW Regulation to reg 30BB in the federal Regulations does not assist in determining the meaning of "annual remuneration" as it is used in s83(1)(b). The debate does not provide support for the appellant's contention as to the meaning of the term. Consequently, it falls to consider the proper construction of s83 without relying, in doing so, on the terms of s170CC(3)(b) and (4)(b) of the federal statute and the federal regulations as proposed by the appellant. 38 The leading decisions in the New South Wales jurisdiction is Shead v Summit Western Pty Ltd t/a Blacktown Mitsubishi (1998) 81 IR 347 and Kagan and Primus Telecommunications (Aust) Pty Ltd (No 2) [2000] NSWIRComm 185. In Shead the Full Bench concluded that although the word "remuneration" is not used consistently throughout the Act, it is used in Pt 6 of Ch 2 of the Act, "in its ordinary broad sense as comprehending an employee's total package as a reward for the work performed". 39 In Kagan (No 2) the Full Bench said: [A]lthough 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. 40 In Kagan (No 2) the Full Bench decided that [A]n employee who accepts employment on the basis of a certain salary package, which includes allowance for the use of his private motor vehicle in the course of his employment, could not be reasonably said to have been remunerated for the work done or services provided in terms of the whole salary package if some of that package is shown to be referable to the provision of the employee's private motor vehicle for use in the course of the employment. Provided that the extent of business use can be demonstrated with reasonable accuracy, the employee's remuneration would be the relevant salary package less the amount referable to business use of the employee's motor vehicle. In those circumstances, the proportion of the salary package referable to the use of the motor vehicle is not part of the remuneration for the work done or services provided to the employer. 13 Accordingly, we do not agree with the Commissioner's conclusion that "[any] concession the applicant is entitled to for using his car for business purposes would be the consideration that might be given to him by the ATO in calculating his taxation obligations". We consider that the only conclusion available on the evidence is that, to the extent that the appellant used his vehicle in the course of his employment, the amount of his salary package referable to that use was not "remuneration" for the purposes of s 83(1)(b). 41 Neither Shead nor Kagan (No 2), however, was concerned with the question that arises in these proceedings, namely, in determining an employee's annual remuneration, should it be done on the basis of the actual remuneration earned by the employee in the 12 months preceding termination of the employment? 42 In considering this question it is important to bear in mind the observation of the Full Bench in Shead from the cases referred to in that the word "remuneration" is not used consistently throughout the Act. We are reminded, in that regard, of the discussion by Wright J, President in Police Association of New South Wales v Commissioner of Police [2002] NSWIRComm 126 at [38] and [39] as follows: 38 The reasonable inference from this situation is that the terms of the regulation as they stood at the relevant time represent a consolidation, at least in a practical sense, of provisions which had been varied or added over many years presumably by "drafters" who gave varying importance to precise drafting. As such, the situation appears to come within the approach described by Priestley JA as "change and accretion" in Murphy v Farmer (1987) 87 FLR 149, an approach which was in substance approved in the subsequent proceedings in the High Court. Priestley JA speaking for the Court of Appeal in Murphy v Farmer said (at 151), as to provisions of the Customs Act 1901 (Cth): Secondly, the history and forebears of ss 229 and 234 show that they have reached their present form by change and accretion without great attention being paid to any idea of making all their parts fit neatly into an obvious scheme requiring exact harmonising of language. ... In referring to the change and accretion in ss 229 and 234 I have in mind that the present form of those sections is the product of a long period of evolution, some of which can be traced through ... The sections I have referred to in the earlier Acts all seem to raise problems of construction similar to that in the present case and changes and additions to the legislation all appear to have been made without particular attention being given to the present point. Further, although there is, in a general way, a fairly regular use of terms in the various sections, there does not seem to have been any attempt at a high degree of consistency in the use of terms such as false, untrue or misleading so far as their objective and subjective senses are concerned. 39 When the matter was dealt with in the High Court, the majority of the Court ( Dean , Dawson and Gaudron JJ) said: Murphy v Farmer (1988) 165 CLR 19 at 27: [A]s Gibbs J commented in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 10, the presumption that a word is used with a uniform meaning in a statute is not one "of very much weight ... it all depends on the context". In the same case (at 15), Mason J pointed out that the "presumption readily yields to the context". The presumption of a consistent use of the word "false" is, in any event, of little assistance in relation to the construction of a statute such as the Act where, as Priestley JA pointed out in the Court of Appeal, there does not appear to have been any attempt by the legislature to achieve a "high degree of consistency" in the use of terms such as false, untrue and misleading. 43 These considerations also emphasis the need to consider the provisions of s83 or the meaning of particular words in that section in context. We note, in this respect, the observations of a Full Bench of the Australian Industrial Relations Commission in Keith Miller & Sons Builders Pty Ltd v Flemming (1999) 91 IR 399 at 406 - 407 as follows: [30] We accept what has been said in previous Commission decisions regarding the scope of the word "remuneration". But that acceptance does not determine the matter before us. It is not sufficient to consider the meaning of "remuneration" in abstract, it must be considered in the context in which it appears . [31] The meaning of a word or a phrase is to be derived from its context. As Stamp J put it in Bourne v Norwich Crematorium Ltd [1967] 1 WLR 691 at 696: "Sentences are not mere collections of words to be taken out of the sentence, defined separately by reference to the dictionary or decided cases, and then put back again into the sentence with the meaning which one has assigned to them as separate words, so as to give the sentence or phrase a meaning which as a sentence or phrase it cannot bear without distortion of the English language." [32] A word of wide possible connotation may be limited by the context in which it appears. (As Barwick CJ said in Taylor v Public Service Board (1976) 10 ALR 211 at 215: "Their meaning and operation must be read with and accommodated to the rest of the section". Also see Ross v R (1979) 25 ALR 137 at 145; Prior v Sherwood (1906) 3 CLR 1054 and Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11 at 53 per Toohey and Gaudron JJ.) 44 Further, we accept that Ch 2 Pt 6 of the Act constitutes beneficial legislation that should be construed liberally. However, such an approach does not mean that the true meaning of a term should be strained or exceeded, but that it should be construed so as to give the fullest relief which the fair meaning of the language will allow: Bull v Attorney-General (NSW) (1913) 17 CLR 370 at 384 per Isaacs J. 45 We consider that a reference to "annual remuneration", in the literal sense of that expression, is at odds with an interpretation that favours looking at what the applicant earned in the 12 months preceding termination of employment. We consider that the expression "annual remuneration" should be construed as the rate of remuneration fixed by the contract of employment at the point of termination. The word 'annual', in the context in which it appears, conditions the word remuneration so that the expression 'annual remuneration' is given the meaning - the rate actually fixed as the contractual yearly remuneration. 46 A purposive approach may be taken as to the interpretation of s83(1)(b): see s 33 of the Interpretation Act and Re Club Employees (State) Award and Other Awards [2002] NSWIRComm 362. It is appropriate, in that context, to refer to the observations of Wright J, in Police Association v Commissioner of Police (at 45) as to the decision of Hall P (then Chief Industrial Commissioner) as follows: 45 Another useful example of this approach, where careful regard was paid to the importance in interpretation of the context in which the relevant words appear and of having regard to the purpose of the provision, is a decision of the President of the Queensland Industrial Relations Commission, when as Chief Industrial Commissioner, his Honour decided Nunn v Linde Materials Handling Pty Ltd (1999) 160 QGIG 212. Hall P there considered the meaning and application of clause 34(2)(b)(iii) of the Workplace Relations Regulation 1997 (Qld) which provided that the unfair dismissal provisions of the legislation did not apply to an employee "whose annual remuneration immediately before the dismissal [was] more than $64,000". The approach adopted by his Honour, as indicated earlier, usefully exemplified the approach which should be adopted here, and is found in the following extracts from the decision (at 213): But there is no conceptual difficulty in inquiring whether a reasonable person acquainted with all relevant circumstances would, on the day immediately before a dismissal, have said that an employee had an annual remuneration in excess of $64,000. There may be difficulty in assessing whether the employee fell into the category of those whose remuneration exceeded $64,000 per annum. But there is no conceptual difficulty with the proposition and it should, I think, be embraced. ... The process by which the Commonwealth statutory phrase "rate of remuneration" came to be construed as total remuneration received over a twelve-month period expressed as an annual rate is described, and I rather think criticised, in the same decision. [ Bell v Macarthur River Mining Pty Ltd , Australian Industrial Relations Commission, Print Q1629] But that is by the by. The obligation is to construe s 34(2)(b) of the Workplace Relations Regulation 1997. I quite fail to see why one may not look forwards as well as backwards. It seems to me to be perfectly reasonable to say of somebody dismissed that on the previous day he was employed at annual remuneration in excess of $64,000 if he was employed under a contract stipulating an annual rate of $64,000 even though the contract had only run for two months. It seems to me that it would be difficult to say of a person dismissed yesterday and working under a contract stipulating salary of $50,000 per annum that he is employed at an annual remuneration in excess of $64,000 because, up until two weeks earlier, he had been employed under a contract stipulating a salary of $250,000 per annum. One should take a global approach and remember that the task is not to identify with precision an Applicant's annual remuneration but to express a view upon whether an Applicant is to be properly characterised as having an annual income in excess of $64,000 on the day before dismissal. A similar approach was taken in the recent judgment of a Full Bench of this Court in Langan v Ceramiclab Pty Limited (2000) 97 IR 80 at [13]. 47 The purpose of s83(1)(b) is to exclude certain employees from seeking relief for unfair dismissal under Ch 2 Pt 6 of the Act. Parliament has determined that employees whose conditions of employment are not set by an industrial instrument and whose annual remuneration is greater than the prescribed amount should not have access to the relatively inexpensive, quick and informal mechanisms for resolving such complaints; that they should press their complaints in the ordinary courts. Where a jurisdictional objection is taken, the Commission is required to make an assessment as to whether or not a particular applicant is excluded by virtue of s83(1)(b) by reference to his or her annual remuneration. The Commission's task is not to determine what the applicant earned during the 12 months preceding his or her termination of employment but rather whether or not the applicant's annual remuneration was greater than the prescribed amount. 48 In other words, an inquiry as to what an applicant actually earned in the 12 months preceding termination is misdirected. It is also the case that if one were to take that approach literally, an employee who had not been employed for the whole of that period, or who may have been absent on leave without pay for the whole or part of the period under consideration, would be disadvantaged. It would also mean, for example, that an employee whose annual remuneration was $100,000 made up of $40,000 base salary and $60,000 in commission but who had not received the commission payments at the time of termination because of the nature of the commission scheme, but who was owed such payments, would attract the Commission's unfair dismissal jurisdiction. We do not consider that such an outcome was intended by the Legislature. 49 If it had been the Legislature's intention to take a retrospective approach to assessment of annual remuneration then a similar approach to that taken in s89(5) of the Act would have been appropriate. That is, annual remuneration would have been defined as the amount of remuneration the applicant would have received during the 12 months period immediately before being dismissed or, if the applicant was on leave without full pay during any part of the preceding 12 months period, the annual remuneration would be determined as if the employee had received full pay while on leave. 50 The reference to "annual remuneration" in s83(1)(b) does not, of course, mean that persons receiving a weekly or monthly wage or salary, for example, are excluded from the provisions of Ch 2 Pt 6 of the Act. Such an interpretation is clearly not consistent with the purpose of Pt 6. It would be a simple matter of annualising the weekly or monthly remuneration in order to determine whether it was greater than the prescribed amount. 51 The question of whether an applicant's annual remuneration is greater than the prescribed amount is essentially a question of fact to be determined according to the circumstances of each case and having regard to the purpose of s83(1)(b). The inquiry would inevitably focus on the terms of the applicant's contract of employment. That is, it would be necessary to look to the applicant's contract of employment to determine what the applicant was entitled to in terms of remuneration (as opposed to what he or she might have been paid), to annualise the remuneration if necessary, and compare the outcome to the prescribed amount. 52 Further, we consider that the point in time at which to determine an applicant's annual remuneration is at the time of termination. This must be so because in assessing whether the annual remuneration is greater than the prescribed amount, the prescribed amount is that which applies at the time of termination. This follows from cl5(2) and (3) of the Regulation. 53 It was contended for the respondent that an approach whereby salary for the purposes of s83(1)(b) was determined, on the one hand, at the time of termination but, on the other hand, the value of other non-wage benefits was determined by considering what had been received by the employee over the previous 12 months, was inconsistent. For example, it would be inconsistent to determine the benefit derived from the provision of a motor vehicle to an employee by assessing the cost of running that vehicle over the previous 12 months' period, as Commissioner McLeay did in the proceedings below, yet determine the salary component of the annual remuneration as at the time of termination. 54 The approach to be taken in relation to assessing the value of a motor vehicle to an employee for the purpose of s83(1)(b) is to, firstly, have regard to the terms of the employment contract. If at the time of termination the applicant had been provided with a motor vehicle and derived a benefit therefrom which could be regarded as remuneration for the purposes of s 83(1)(b), an assessment would need to be made to ascertain the monetary value, in annual terms, of that benefit to the applicant at the time of termination. 55 In circumstances where an applicant may have been wholly or partly remunerated by commission, again it would be necessary to consider the terms of the employment contract. The guiding principle, however, is not what the applicant received by way of commission payments but rather what the applicant was entitled to under the employment contract at the time of the termination of employment. 56 In Moxham v Henderson [1981] 2 NSWLR 282, a case referred to us by Mr S Prince of counsel for the appellant, the Court of Appeal was concerned with the meaning of the word "earnings" under the Workers' Compensation Act 1926. The Court held that the word included the amount which a person is entitled to be paid in law, whether by reference to an agreement or statute. At 285 Hope JA observed: Thus suppose there were no provision for industrial awards, and a worker had a contract of employment under which he was to be paid $200 per week. In my opinion the worker's average weekly earnings would be determined by reference to his contractual entitlement even though in the relevant period the employer had consistently under-paid him, and the worker had not sued him for the balance. In other words, the worker's earnings would be what he was in fact paid plus any additional amount which the employer was, in law, bound to pay him. We consider this approach should be adopted in relation to the term "annual remuneration" in s83(1)(b) of the Act. 57 The respondent submitted that an interpretation of s83(1)(b) to the effect that annual remuneration had to be assessed at the time of termination would allow unscrupulous employers to avoid the Commission's jurisdiction by increasing the employee's remuneration on the day prior to termination to an amount in excess of the prescribed amount. It has not been our experience that employers have sought to circumvent the unfair dismissal provisions in the manner suggested by the respondent. Nor had it been the experience of the Australian Industrial Relations Commission whose task it is to apply s 170CC of the federal Act. That provision refers to an employee's remuneration "immediately before the termination of employment": see G G Maxwell v Acacia Resources (unreported, Ross VP, Drake DP and Lawson C, 31 October 1997, Print P6396). 58 Moreover, as the Full Bench of the AIRC observed in Maxwell: [A] purported variation of a contract of employment with the substantial purpose of avoiding the termination of employment provisions in the Act may not give rise to a valid variation as it is not for a lawful purpose. Stipulations in employment contracts by which the law is brought into public disrepute have been held to be contrary to public policy and will render the term illegal and void: see Re Beard, Beard v. Hall [1908] 1 Ch 383; Napier v. National Business Agency Ltd [1951] 2 All ER 264. 59 In the present case, part of the respondent's annual remuneration was his annual salary which, at the time of the termination of his employment, was $65,000. In making application for relief by completing form 7A and in answer to the question "What is your normal gross (before tax) pay every week?" the respondent stated "$1250" which, when annualised, is $65,000. When asked on the form how much he sought in monetary compensation by way of relief, the respondent answered six months' compensation totalling $32,500. There was other evidence tendered in the proceedings that confirmed that at the time of his termination the respondent's annual salary was $65,000. 60 In our opinion, in assessing the respondent's annual remuneration in order to determine whether it was greater than the prescribed amount, the appropriate figure to be taken into account in relation to salary is $65,000. Consequently, we find that the Commissioner erred in using the figure of $61,250 in assessing the respondent's annual remuneration for the purpose of s 83(1)(b) of the Act. 61 If one substitutes $65,000 as the figure representing annual salary for the respondent in lieu of the amount of $61,250 used by Commissioner McLeay, the respondent's annual remuneration exceeds the prescribed amount of $81,500 and it becomes unnecessary for us to consider the appellant's claims relating to FBT on the provision of a motor vehicle and health insurance or the claim relating to superannuation. Accordingly, we do not do so. Orders 1. Leave to appeal is granted. 2. The appeal is upheld. 3. Commissioner McLeay's decision of 9 December 2002 is set aside. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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