Industrial Relations Commission of New South Wales CITATION : Pathak v Kone Elevators Pty Ltd [2002] NSWIRComm 360 PARTIES : Sharad Pathak Kone Elevators Pty Ltd FILE NUMBER: IRC 3511 of 2002 CORAM: Grayson DP Unfair dismissal - challenge to jurisdiction - applicant's annual remuneration allegedly greater than amount prescribed by regulations - dispute as to actual date of dismissal - dispute as to value of motor vehicle component of remuneration package - dispute as to superannuation component of remuneration package - dispute as to health benefit component of remuneration package - agreement as to base salary and profit share components - coverage by industrial instrument not contended CATCHWORDS : Held, applicant's annual remuneration greater than amount prescribed by regulations, absent probative evidence to the contrary, respondent's evidence supported by business records accepted, remedy in unfair dismissal not available - application dismissed Industrial Relations Act 1996 LEGISLATION CITED : Industrial Relations Regulations 1996 Workplace Relations Act 1996 HEARING DATES: 11/10/2002 DATE OF JUDGMENT: 12/20/2002 Mr J Drake, agent LEGAL REPRESENTATIVES: Mr B O'Donnell, Australian Industry Group JUDGMENT: - 6 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES Coram: Grayson, DP Friday, 20 December 2002 SHARAD PATHAK V KONE ELEVATORS PTY LTD Application by Sharad Pathak re unfair dismissal pursuant to s 84 of the Industrial Relations Act 1996 DECISION NSWIRComm 360 1 This matter proceeded by way of determination as to the threshold question whether the applicant by reason of his annual remuneration is precluded from obtaining relief which might otherwise be available under Part 6 – Unfair Dismissal of Chapter 2 of the Industrial Relations Act 1996 (the Act). 2 The Act relevantly provides: SECTION 83 APPLICATION OF PART 83(1) [Application] This part applies to the dismissal of: … 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 $62,000 (or such greater amount as is prescribed by the regulations). 3 It is not contended that the applicant is covered by an industrial instrument, and the parties agree that the amount prescribed by the regulations was $75,200 up to 1 July 2002 and $81,500 thereafter. 4 It may be observed for completeness that the first amount should properly be $76,600 (see attached media release from Federal Minister for Employment and Workplace Relations as to erroneous amounts calculated in accordance with Regulation 30BF of the Workplace Relations Regulations of the Commonwealth up to 30 June 2002). 5 Kone Elevators Pty Ltd (the respondent) asserts 3 June 2002 as the date upon which it dismissed Mr Pathak (the applicant), whilst the applicant asserts 10 July 2002. 6 It will be seen that little turns on that issue although I may say in the interests of conveniently disposing of it, that I accept the respondent's evidence given through Mr C Peebles, Human Resources Director that he gave the applicant a signed letter of termination on 3 June 2002 when he dismissed him. A copy of the termination letter is Attachment C to Mr Peebles' affidavit. It follows that I do not accept the proposition for which the applicant contends namely, that he was not formally advised of his termination or the operative date of it until 10 July 2002 when the matter was before the Commission for conciliation. This is particularly so when the application for relief in relation to unfair dismissal, which was filed by the applicant on 18 June 2002, expressly attests to 3 June 2002 as the date of dismissal. 7 Turning then to the question of annual remuneration, Mr Peebles said that the applicant's package was made up as follows: SALARY PACKAGE 2002 $ Salary 62, 000 Superannuation (%15) 9,300 Private Value of Vehicle 12,000 Health Fund Subsidy 760 Profit Share Entitlement 1,500 Total Package 85,560 8 Additionally, the applicant was said to have been issued with a mobile phone for both business and private use, the value of which was not quantified. 9 The applicant, through his representative, cross-examined Mr Peebles as to the accuracy of his evidence seeking by that means to provide an evidenciary platform for his assertion that the annual value of the superannuation component of his package was nil; that the annual value of the motor vehicle component was $1900; and that the annual value of the health fund subsidy component was $380. A document depicting those asserted values, although not proving them, was admitted without objection and marked Exhibit B in the proceedings. The remaining components of the remuneration package (ie, salary and profit share entitlement) are agreed. 10 As to superannuation, Mr Peebles explained that the applicant was a member of a 'defined benefits scheme' by which he was entitled, based on his length of service with the respondent, to an annual amount of 15% of his base salary of $62,000, that amount being $9,300. 11 The applicant sought to cross-examine Mr Peebles on the basis of a letter obtained from Plum Financial Services, a fund manager apparently appointed for the purposes of administration of the respondent's superannuation schemes. Mr Peebles said there were two such schemes offered to employees, one being a 'defined benefits scheme' and the other an 'accumulation scheme'. There was no dispute, indeed it was conceded by the applicant in the course of debate that he belonged to the 'defined benefits scheme' and further that its value as a component of his remuneration package was 15% of his base salary. 12 The cross-examination, I am bound to say, was directed or misdirected as the case may be, to whether on the face of the Plum Financial Services letter, the respondent failed to make proper provision for such a benefit in its dealings with Plum Financial Services. 13 The letter from that organisation was admitted, again without objection by the respondent, and marked Exhibit C in the applicant's case. It was produced on the run as it were, in cross-examination and with every respect to the applicant, it did little to assist his cause. It was not filed or served as evidence he intended to rely upon as the Commission had earlier directed, and in the absence of its author, the nature of the inquiry giving rise to it or other evidence in clarification, it was difficult for Mr Peebles, and therefore the Commission to understand its import. 14 The applicant by his cross-examination and later by his submissions, appeared to rely upon the letter to demonstrate some measure of underpayment or non-payment of his entitlements. He did not dispute, in fact he conceded, that his entitlements were as the respondent asserts, an amount equivalent to 15% of his base salary and whether or not the respondent should have paid in more by way of contributions on the applicant's behalf seems to me to be a matter for another time and perhaps another place. 15 The respondent, by its representative and as I understood it, by its witness Mr Peebles, undertook to make good any shortfall if there be one, and I should not be taken to mean by that observation that there is such a shortfall. 16 Indeed, the letter to the applicant from Plum Financial Services recognises that his "superannuation plan was classified as a Defined Benefit category which is formula based and therefore does not rely on contributions made by the employer" 17 I accept Mr Peebles' evidence and find the amount of $9,300 to be the relevant superannuation component for the purpose of these deliberations. 18 Turning then to the motor vehicle component and to Mr Peebles' quantification of it in the annual amount of $12,000, the evidence again is clearly against the alternative proposition for which the applicant contends namely, that the motor vehicle component is more accurately quantified in the annual amount of $1,900. 19 The basis of the applicant's contention in that regard, which he again sought to establish through cross-examination of Mr Peebles, appears to derive from documents or business records produced by the respondent showing a bimonthly calculation of fringe benefits tax for which it was liable in respect of the motor vehicle in the amount of $314.64. The applicant multiplied this amount by six and asserted the result (ie, $1,900 approximately) to be the relevant annual amount. 20 Further, and I must say somewhat incongruously, it was suggested to Mr Peebles in cross-examination that the new motor vehicle which was provided to the applicant in January 2002 was exclusively for business use and not, as Mr Peebles said, for business and unlimited private use. 21 Mr Peebles explained firstly, that the respondent would not be obliged to pay fringe benefits tax on a motor vehicle used exclusively for business and secondly, that the value of the motor vehicle component of the applicant's annual remuneration was made up variously and collectively of lease costs, registration costs, maintenance costs, running costs, insurance costs and not just fringe benefits tax costs. He refuted the proposition put to him in cross-examination that the applicant's use of the motor vehicle was limited to business purposes and in so doing pointed among other things to the applicant's signature on the Esanda lease document applying to his particular car (Exhibit 1, attachment B). 22 I note further in that regard, the respondent's business record which was produced in response to a summons taken out by the applicant; which was canvassed by the applicant in cross-examination of Mr Peebles and which was ultimately admitted into evidence and marked Exhibit 2. The document clearly identifies a period of 60 days between 31 January 2002 and 31 March 2002 during which the applicant's car was available for private use. 23 As I am disposed, this lends weight to the respondent's assertion as to the vehicle's availability to the applicant as part of his package. 24 The applicant, it seems to me, cannot have it both ways. He cannot say on the one hand that the annual value of the motor vehicle component of his package was limited to the fringe benefits tax payable (viz $1,900) and on the other, that the vehicle he was given was exclusively for business use in which case, as Mr Peebles said, the question of fringe benefits tax does not arise. 25 I have no reason to doubt Mr Peebles' evidence, clearly and plausibly explained and supported both by Exhibit 2 and other business records attached to his affidavit, that the applicant was afforded his due entitlement as a Level 4 employee namely, a motor vehicle benefit to the annual value of $12,000 and I find accordingly. 26 Having so concluded, it is unnecessary to decide the remaining disputed component of annual remuneration namely, the health fund subsidy component although I would quietly observe before leaving the matter that it is difficult to see how the so-called "grossed-up" value, or as I understand it, the notional post-tax value of the benefit in the hands of the employee, would not be the relevant value for the purpose of deliberations such as these. The respondent's argument in that regard would therefore prevail as I am disposed. 27 I am of the view on the facts agreed and found that the applicant is precluded by virtue or otherwise of the operation of the Act from obtaining the relief he seeks. 28 The application is dismissed accordingly. Media Release Minister Tony Abbott Department of Employment and Workplace Relations 15/08/02 0530 Termination Of Employment - Remuneration And Compensation Limits My Department has advised me that there have been small errors in information it periodically gave to the Registries of the Australian Industrial Relations Commission and Federal Court of Australia and other interested organisations and people relating to certain indexation adjustments. It is important to emphasise that the errors were small and the number of people affected is likely to be very small. The Department estimates that less than 50 people will have been affected. The indexation adjustments were applicable to the remuneration and compensation limits for termination of employment cases under the Workplace Relations Act. Under the Act, employees who are not covered by a federal award or agreement and who earn more than a certain amount are excluded from seeking a remedy in relation to the termination of their employment. The Act also places a limit on the amount of compensation that may be awarded to non-award or agreement employees. The current remuneration limit is $81,500. The compensation limit for those employees who are not covered by a federal award or agreement is $40,800. The errors relate to the period from 1 July 1997 to 30 June 2002. The amounts previously advised for these years were slightly lower than they should have been. As a result of the errors, some employees may have been incorrectly denied the opportunity to make a claim based on unlawful or unfair dismissal. In addition, some employees who have successfully claimed for unlawful or unfair dismissal may have received slightly less compensation than they were entitled to. It is frustrating that the errors were made. However, a very small number of employees are likely to have been affected. Those people who think that they may be affected by these errors can call (02) 6121 7871 to obtain further information. An outline of the nature of the errors, and details of the correct rates, are attached. ATTACHMENT Termination of employment - Remuneration and compensation limits The Workplace Relations Act 1996 excludes employees not employed under federal award or agreement conditions from the termination of employment provisions of the Act if their rate of remuneration exceeded a specified limit. The Workplace Relations Act 1996 also places a limit on the amount of compensation that may be awarded to employees not employed under federal award or agreement conditions, where termination of employment is found to be harsh, unjust, unreasonable or unlawful. The figures are adjusted annually by reference to an 'indexation factor'. Incorrect information in relation to the indexation adjustments was provided in relation to the remuneration and compensation limits for the period from 1 July 1997 to 30 June 2002. The formula requires the indexation factor to be calculated by reference to 'the average total weekly earnings (seasonally adjusted) for full time adult employees'. However, the 'average total weekly earnings (seasonally adjusted) of all employees' was used resulting in an incorrect indexation factor. The correct remuneration and compensation limits are set out in the tables below: Remuneration Limit Indexation day Correct Previously advised 1 July 1997 $66,400 $66,200 1 July 1998 $69,100 $68,000 1 July 1999 $71,000 $69,200 1 July 2000 $73,600 $71,200 1 July 2001 $76,600 $75,200 Compensation Limit Indexation day Correct Previously advised 1 July 1997 $33,200 $33,100 1 July 1998 $34,600 $34,000 1 July 1999 $35,500 $34,600 1 July 2000 $36,800 $35,600 1 July 2001 $38,300 $37,600 The remuneration and compensation limits following indexation on 1 July 2002 are $81,500 and $40,800 respectively. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.