Industrial Relations Commission of New South Wales CITATION : Robert Jackson and National Aboriginal Islander Skills Development Association (NAISDA) Inc. [2003] NSWIRComm 118 APPLICANT: PARTIES : Robert Jackson RESPONDENT: National Aboriginal Islander Skills Development Association (NAISDA) Inc. FILE NUMBER: 6250 of 2002 CORAM: Sams DP Termination of employment - unfair dismissal - notice of motion - Commission's jurisdiction - s83(1)(b) of the Act - what constitutes "remuneration" - whether benefits exceed statutory threshold - whether fringe benefit tax savings are part of remuneration - whether frequent flyer reward points are part of remuneration - value of benefits - agreed matters. CATCHWORDS : Held, remuneration includes fringe benefit tax saving to applicant - frequent flyer reward points retained by applicant - applicant accepts points are a benefit - real and tangible benefit to applicant - difference between income and remuneration - benefits form part of remuneration - difficulty of assessing value - best evidence - examples of flight costs and reward points accepted - benefit of doubt to applicant - assessment made - applicant's remuneration exceeds statutory threshold - notice of motion granted - application dismissed for want of jurisdiction. Industrial Relations Act 1996 LEGISLATION CITED : Industrial Relations (General) Regulation 2001 Income Tax Asessment Act 1936 Workplace Relations Regulations 1996. Browne v Dunn (1894) 6 R 67 Kagan v Primus Telecommunications (Aust) Pty Ltd (No 2) [2000] NSWIRComm 185 Kerr and Another v Jaroma Pty Ltd t/as Treasury Motor Lodge (1996) 70 IR 469 McBlane v National Transport Insurance Limited (1997) 77 IR 185, CASES CITED : Payne v Commissioner of Taxation Nos 461 of 1995 and NG 239 of 1995, Foster J, 4 March 1996 Schmidt and Paino Holdings Pty Limited, Sams DP, IRC98/4676, 5 February 1999 Shead v Summit Western Pty Ltd t/as Blacktown Mitsubishi (1998) 81 IR 347 Simmonds v Pongrass Furniture Pty Limited (1997) 74 IR 443, Talbot and Rostcom Pty Ltd, Sams DP, IRC99/1617, 2 September 1999 HEARING DATES: 04/01/2003; 04/02/2003 DATE OF JUDGMENT: 04/24/2003 APPLICANT: Mr D Strain of counsel appearing for the respondent (applicant on the motion) SOLICITOR: LEGAL REPRESENTATIVES: Mr R Downey RESPONDENT: Ms E Brus of counsel appearing for the applicant (respondent on the motion) JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 24 April 2003 Matter No IRC02/6250 ROBERT JACKSON AND NATIONAL ABORIGINAL ISLANDER SKILLS DEVELOPMENT ASSOCIATION (NAISDA) INC. Application by Robert Jackson re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION ON NOTICE OF MOTION [2003] NSWIRComm 118 1 Robert Jackson ("the applicant") was dismissed for alleged misconduct on 18 October 2002. He had been employed by the National Aboriginal Islander Skills Development Association (NAISDA) ("the respondent") as its General Manager. On 6 November 2002 the applicant filed a claim for relief from his alleged unfair dismissal pursuant to Pt 6 ch 2 of the Industrial Relations Act 1996 ("the Act"). 2 It is unnecessary, for the purposes of this decision, for the Commission to refer to, or make findings, on the reasons for dismissal or whether the dismissal was unfair in terms of Pt 6 ch 2 of the Act. 3 On 26 November 2002, the Commission listed the matter for conciliation and directions. No settlement of the claim resulted from the conciliation proceedings. At this time, no issues were raised regarding the applicant's remuneration level. The respondent maintained that the applicant had been dismissed for misconduct following an investigation of certain allegations against him. The applicant strenuously denied any misconduct and sought reinstatement to his former position and compensation for unfair dismissal. Pursuant to s87 of the Act, the Commission made a finding of unsuccessful conciliation and issued directions in preparation for the arbitration of the claim. 4 The substantive arbitration proceedings were listed to commence on 1 April 2003. However, on 18 March, the respondent filed a notice of motion which sought to have the applicant's unfair dismissal claim dismissed for want of jurisdiction. Shortly stated, the respondent argued that the applicant's annual remuneration was in excess of the statutory threshold set by s83(1)(b) of the Act and the relevant regulations. As a consequence, the applicant's claim was incapable of being determined by the Commission. 5 I pause at this point to note that these contentions regarding the applicant's annual remuneration were not raised until the notice of motion was filed on 18 March 2003 - almost four months after the conciliation proceedings. It is somewhat curious that the respondent had not raised the issue earlier. 6 At a mention of the notice of motion on 25 March 2003, Mr D Strain of counsel appeared for the applicant on the motion and Ms E Brus of counsel appeared for the respondent. For convenience, I shall hereinafter refer to Mr Jackson as the applicant and the employer as the respondent. 7 Following counsels' preliminary submissions it was not possible in the time available to take all of the evidence and hear further submissions of the parties. The Commission adjourned the proceedings on the notice of motion to the first and second day of the substantive hearing. 8 At that time evidence was provided by the applicant, Mr Peter Barker, the respondent's Finance Manager and Mr Robert Scott, Deputy President of the respondent's Board. Detailed submissions were made by Mr Strain and Ms Brus. The Commission reserved its decision and adjourned the substantive proceedings pending judgment on the notice of motion. AGREED MATTERS 9 The applicant was employed as the respondent's General Manager. He holds an Economics degree and is a Certified Practising Accountant. The applicant commenced employment as General Manager in June 1999 and was provided with a letter, dated 9 June 1999, outlining his conditions of employment in the following terms: CONDITIONS OF EMPLOYMENT - GENERAL MANAGER You will be employed under the same conditions of employment as the rest of NAISDA staff and it (sic) expected that you will abide by the directions of the Board of NAISDA, as this is a critical element of your employment. Your commencement salary is $46,000.00 per annum and you will be entitled to the following: - Superannuation contributions at the approved rate which is currently 7% - Annual Leave as determined by the conditions of employment - Sick Leave as determined by the conditions of employment - LSL as determined by the conditions of employment - All other entitlements as applied to other staff as determined by the conditions of employment. As a condition of variation to the standard conditions of employment, you will be permitted to engage in non NAISDA paid activities, provided that these activities do not interfere with your primary duties to NAISDA. 10 It was agreed that the applicant was a non award employee for the purposes of s83(1)(b) of the Act. During the course of the proceedings the following items were agreed as components of the applicant's annual remuneration at the time of dismissal: Salary (includes annual leave loading): $63201.00 (Ex "B") Superannuation: $ 5530.94 Private use of company vehicle: $ 500.00 11 In respect to superannuation, Ms Brus had foreshadowed a submission as to whether the minimum employer Superannuation Guarantee Charge (SGC) of 9% should be included in the applicant's annual remuneration. Ms Brus relied on the following passage in Kagan v Primus Telecommunications (Aust) Pty Ltd (No 2) [2000] NSWIRComm 185: The final matter that should be referred to is the issue of superannuation as an ingredient of an employee's remuneration for the purposes of s83(1)(b). While it is plain, on an analysis of relevant authorities that, where an employee for whom conditions of employment are not set by an industrial instrument in terms of s83(1)(b), has superannuation benefits in excess of statutory requirements those benefits are part of the employee's remuneration, irrespective of whether they are part of a salary packaging arrangement. What has yet to be considered at Full Bench level is whether the statutory superannuation entitlements under the SGC legislation should be considered part of an employee's remuneration for the purposes of s83(1)(b). We consider that this issue should be reserved for future consideration by a Full Bench in an appropriate case. In reserving this issue we are mindful of the analysis in, for example, McBlane v National Transport Insurance Limited which we consider is correct in principle. However, this issue may become of great significance and may require Full Bench determination. 12 I simply note that while this case may have been an appropriate one for the Full Bench to consider, the issue was ultimately not pressed before me. Accordingly, it is unnecessary for me to take this matter any further. 13 I turn now to the respective cases of the parties on the contested issues. FRINGE BENEFITS TAX Respondent's Case 14 It was common ground between the parties that the applicant received an annual gross salary of $60,100. It is to be noted however, that the applicant's 2001/02 tax return disclosed an annual salary of $63,201. This figure was accepted as the annual gross salary. The applicant received a tax free amount of $200 per week or $10,400 p.a. Mr Barker said the figure was $202.76 based on 27 pay fortnights. 15 The tax free component of $200 arises from the respondent's status as a charitable organisation for which certain fringe benefits and tax exemptions apply. The employer is not required to pay FBT on grossed up amounts up to $30,000 per employee. 16 The tax saving on $10,400 p.a. was said by the applicant to be $5044. The respondent argued that the annual salary should include both the actual tax free amount of $10,400 and the tax saving which it calculated as $5,474.52 i.e. $202.76 multiplied by 27 fortnights (See Mr Barkers' evidence). 17 Mr Strain emphasised that Mr Barker's evidence on this issue was not challenged. As a consequence, the applicant could not put submissions to the contrary (See Browne v Dunn (1894) 6 R 67). 18 Mr Strain pointed out that the applicant himself described the $5044 as a tax saving for the employee. In cross examination, the applicant had described the fringe benefit as allowing the employer the ability to remunerate its employees a little better, whilst the gross payment remained the same. 19 Mr Strain concluded that the tax saving should be regarded as part of the "real and actual" benefits to the applicant. He said it was a discretionary payment which must be viewed as a "tangible benefit". He stressed that a benefit to the employee does not have to produce a detriment to the employer. There was no requirement on the respondent to pass on the benefit to its employees. Applicant's Case 20 In the applicant's affidavit he deposed that the tax free component was not a fringe benefit, as FBT was not paid. He said that the charitable status of the respondent was to provide it with an opportunity to pay staff at a competitive level with non-charitable organisations. 21 In annexure A to his affidavit, the applicant provided calculations which disclosed that the FBT rebate to the respondent was $9,692.00. This meant that the tax saving was at no cost to the organisation. 22 The applicant described the arrangement this way: The first problem that we have with this particular document is the way in which it was put together. The issue is really that accounting packages are not built for charitable organisations, they are built for ordinary business organisations, that indeed do pay a fringe benefit tax and the grossing-up amount, which is the reportable fringe benefit, is calculated on the basis of the amount of money received by the person as the cash amount. In my particular case I was given $400.00 a fortnight that is the amount I had paid back to me. That was calculated and when grossed-up comes to about $20,000.00. That presumes, as with ordinary normal business that do have fringe benefit tax payable, that is the amount paid on the tax. It is either the employee or employer who pays that tax. In relation to charitable organisations, it doesn't work like that. What is assumed in the process is that the amount of your earnings - in my case $70,5000 (sic) is the actual grossed-up amount - the $400.00 per fortnight I was getting is taken off that. The tax I would pay would be the tax on that net amount or salary amount, which would come back to $60,100.00. The tax paid on that is calculated and the difference on the $70,500 is actually calculated. It is that difference that is rebated back to the organisation, which subsequently comes back to the employee as a form of reduced taxation amount. (Tp.52) 23 In cross-examination, the applicant agreed firstly, that he received the amount of $10,400 from the respondent; secondly, that no tax was paid on that amount; thirdly, that it represented a tax saving to him of $5044; and fourthly, it was a benefit to him provided by the employer. However, the applicant said that the tax saving of $5044 should not be added to the annual salary, as it forms part of the total amount. 24 Ms Brus submitted that the applicant's evidence, while complicated, was quite clear - the $10,400 tax-free amount was a global benefit inclusive of the tax saving of $5044. Ms Brus put that Mr Barker misrepresented the true nature of the arrangement and the applicant's evidence should be preferred. Further, it was not correct for Mr Strain to put that the FBT saving could be retained by the respondent, or used for any other purpose other than salaries. 25 In reply, Mr Strain put that the respondent accepted the applicant's own characterisation of the benefit in Exhibit A, in which he described the $5044 as the "tax saving for employee." AMERICAN EXPRESS (AMEX) CARD REWARD POINTS Respondent's Case 26 As General Manager the applicant had responsibility for the authorisation and approval of all the respondent's expenditure. He was provided with an AMEX credit card in his own name for business expenses incurred on behalf of the respondent. The evidence was that the respondent's recurring bills such as travel, office expenses, petrol, accommodation and meals were paid for by the AMEX card. Mr Barker said that, to his knowledge, no reward points were redeemed for use by other of the respondent's employees. 27 The respondent tendered extracts of AMEX records (Ex 4) which Mr Barker said disclosed that the applicant redeemed 440,686 AMEX reward points for Qantas frequent flyer points from November 2001 - July 2002. AMEX card account records for Jan/Feb 2002 and Sept/Oct 2002 were not able to be located. 28 Mr Barker had undertaken an exercise of examining the minimum and maximum cost of Qantas flights from: Sydney to Cairns, Sydney to Manila, and Sydney to Osaka and the number of Qantas frequent flyer points required for each flight. The details were sourced through the Qantas internet site. I shall refer in more detail to these calculations later. In the result, Mr Barker concluded that the value of 440,686 Qantas frequent flyer points was between $6,300 and $21,708. 29 The respondent conceded that the cost of airline tickets was variable according to the time of the year, seat availability and the extent of advance booking (See Mr Barker's cross-examination). 30 Mr Barker also undertook an exercise of calculating the value of the AMEX reward points when redeemed for certain household goods. The examples were contained in Ex 6 and Ex 7 and disclosed that the purchase of a Lexmark printer required 10,000 points plus $55.00. 31 During the proceedings it was agreed by both counsel that the applicant redeemed 379,697 AMEX reward points for Qantas frequent flyer points in the twelve months prior to dismissal. The points were available to him for personal use (see Tp.43). 32 Mr Robert Scott's evidence largely corroborated that of Mr Barker. Mr Scott has ten years experience as a licensed travel agent. He had purchased about five Sydney to Perth trips in the last twelve months and said that the cost of such a trip was between $450 - $1300 or 30,000 frequent flyer points. He had therefore assessed the value of one point as ranging between 1.5 and 4.3 cents (see Tp.33). 33 As the Board's Deputy President since 1998, Mr Scott said that the applicant was provided with an AMEX card for business purposes. The respondent could not take out a credit card in its corporate name. A named individual had to appear on the card. Mr Scott agreed it was logical that the applicant, as the General Manager, had the card. The previous General Manager had a Diners Club card, which also accrued reward points available for his personal use. 34 Mr Scott said the Board was aware that the business expenditure on the card would attract reward points in the applicant's name. AMEX reward points could be converted to Qantas frequent flyer points at the applicant's discretion. The Board regarded this benefit as part of the applicant's employment package which served as an incentive for him to remain with the organisation. In cross examination, Mr Scott agreed with Ms Brus that the reward points were "not something earned by way of labour" (Tp.35). 35 Mr Scott deposed that he was aware the applicant was a Qantas frequent flyer member (Tp.30). Mr Scott believed that during the applicant's employment he had accrued about 400,000 AMEX points - all of which the applicant had redeemed for Qantas frequent flyer points. Mr Scott agreed that airfares may vary between, and within airlines and are variable according to a number of factors, such as advance bookings, time of day, links to accommodation packages, school holidays or whether the person travelling was accompanied. 36 Mr Scott referred to a meeting between himself, the applicant and the Board's President, Ms Chapman in mid 2002 at the Double Bay 18 Foot Sailing Club. Mr Scott said it was his idea for the meeting. He had intended to raise the possibility of changing the name on the AMEX card to Ms Chapman as she was not paid as President. The applicant had objected to the idea ("got very upset") and said words to the effect: I don't agree with changing the name on the card. I accrue points from the use of the card and that forms part of my employment package. 37 Mr Scott said the suggestion was dropped. He agreed the matter had been raised at a Board meeting in July and he had been given the task of reviewing and reporting on the matter. He said the idea was for the card to be given to someone senior in the organisation and rotated after six months. Mr Scott agreed the suggestion would have removed an incentive for the applicant to remain with the organisation (Tp.42). 38 Mr Scott was recalled to give further evidence. He said that the organisation no longer had a corporate card. He said an application had been made in Ms Chapman's name, but had not been pursued. He agreed that Ms Chapman might not have satisfied the credit requirements of AMEX. 39 Mr Strain submitted that the frequent flyer points earned through business expenditure on the AMEX card were non salary benefits received by the employee from the employer and therefore formed part of the employee's remuneration. 40 Mr Strain said the respondent regarded the points as a benefit to the employee. They represented part of his package and were an incentive for him to stay with the organisation. Indeed, when there was talk of removing the benefit, the applicant protested and the suggestion was dropped. In cross-examination, the applicant had agreed the frequent flyer points were a benefit provided by the employer. 41 Mr Strain put that the evidence as to the accrued value of the frequent flyer points assessed by Mr Scott and Mr Barker was not contradicted. The Commission should take judicial notice of this evidence and accept a value of between 1.5 cents and 5.3 cents for each point, or an average of 3.2 cents. Mr Strain also referred to an example of the value of the points when redeemed for goods. 42 Mr Strain conceded that the precise value of the points could not be calculated. However, courts often have to assess the value of non-tangible benefits (See Kerr v Jaroma Pty Ltd (1996) 70 IR 469). He said the Commission should accept the respondent's calculations as they were credible, were not challenged and no alternatives were proposed. The Commission should reject the applicant's evidence that the points represented no value to him. In fact, Mr Strain said the applicant had agreed they were a benefit and had gone to the trouble to redeem them. 43 Mr Strain referred to the argument that because frequent flyer reward points were not taxable income under the Income Tax Assessment Act 1936 ("the Tax Act") they could not be regarded as remuneration. He said this was a flawed argument as there was a distinction between 'income' under the Tax Act and 'remuneration' under the Industrial Relations Act 1996. 44 Mr Strain distinguished the conclusions in Payne v Commissioner of Taxation Nos 461 of 1995 and NG 239 of 1995, Foster J, 4 March 1996, from the circumstances in this case. In Payne the employer did not know the employee was receiving the benefit of frequent flyer points. In those circumstances, it was held that the benefit was not provided by the employer for work performed by the employee. 45 Ultimately, Mr Strain put that the Commission must decide if frequent flyer points are not a benefit, what are they? Applicant's Case 46 The applicant regarded his letter of appointment (Ex "C") as encompassing the entire employment relationship. It was inferred that, as there was no reference to the AMEX card, it was not part of his employment contract. 47 The applicant accepted that in the twelve months prior to his dismissal, the AMEX card accrued 379,697 points, which he converted to frequent flyer points. He used them for one holiday, and the remainder were otherwise available for him to use. 48 The applicant accepted that the frequent flyer points were a benefit (Tp. 59). However he didn't believe the points were of any value at all (Tp.61). He agreed he received the benefit because the employer allowed him to do so. The applicant said that when he received the frequent flyer point statements, he normally threw them out. In re-examination, the applicant said that he did not believe frequent flyer points could be redeemed for anything other than flights. He had continued to accrue points from his other business interests. 49 The applicant described the points as 'subsidiary' or 'secondary' to his employment. The primary use of the card was for other reasons, i.e. the administration of the organisation. 50 The applicant's evidence of the meeting at the 18 Foot Sailing Club was that it was a regular Executive Committee meeting of the organisation. Ms Chapman had raised the credit card issue. The applicant denied that he said anything about the card being part of his employment package. The applicant deposed that he didn't have a particular need or desire to have the card and, if they (Ms Chapman), wanted to have the frequent flyer points, they were welcome to them. However, he pointed out the administrative difficulties of signing for the business expenses on the card when Ms Chapman lived in Grafton. 51 Ms Brus emphasised that the AMEX card was used solely for the administration of the respondent's expenses associated with running the organisation. It was not available for the applicant's personal use. It wasn't the applicant's services, or his labour which caused the reward points to arise; it was an administrative tool. The concept of remuneration must be linked to the services of the employee. (See Shead v Summit Western Pty Ltd t/as Blacktown Mitsubishi (1998) 81 IR 347) 52 Ms Brus said it was perfectly logical for the applicant, as the person authorised to pay the bills and administer the finances, to be the named person on the card. In any event, the respondent as an entity could not be named on the card. 53 There was no dispute that the points accrued by the use of the card flowed as a benefit to the applicant. However, Ms Brus submitted that the issue is what is the benefit and who provides it? She said that the reward points could not be remuneration because the benefit is provided by a third party, which is not a party to the contract of employment. Ms Brus drew an analogy with an employee being wined and dined in a corporate box at a sporting event. It was a "perk". She said accepting the respondent's argument would open a "Pandora's box" of what could be included in remuneration. 54 As to the value of the frequent flyer points, Ms Brus argued that they can only have potential value and, even then, cannot have an actual value because it depends on when and how the points are redeemed. 55 Ms Brus said the respondent's evidence of the Qantas printout was extremely unfair to the applicant. She said there was no suggestion that the applicant had, or would redeem the points for the flight schedules which were quoted. 56 Ms Brus put that any value of the points must take into account the restrictive airline policies applying to the use of frequent flyer points. In any event, the applicant's primary submission was that the points could not be regarded as remuneration for the purposes of s83(1)(b) of the Act. 57 Ms Brus submitted that the applicant's actual remuneration was: Salary $70,400.00 Annual leave loading $ 809.00 Superannuation $ 5,530.94 Total $76,739.94 58 In reply, Mr Strain said the applicant redeemed every available reward point for Qantas points because the residue of 15,000 accrued points was not known at the time. Ms Brus had queried whether there was a nil balance of reward points at the time of the applicant's dismissal. 59 Mr Strain accepted that in other circumstances frequent flyer points might not form part of an employee's remuneration - but in this case they do. Each case must be determined on it's own facts. He therefore rejected Ms Brus' submission about opening "Pandora's box". CONSIDERATION 60 For present purposes, Pt 6 ch 2 of the Act does not apply to non award employees whose annual remuneration is greater than $81,500. This statutory prohibition is found at s83(1)(b) of the Act: 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). 61 The current statutory threshold of $81,500 is derived from the Industrial Relations (General) Regulation 2001 which sees the threshold periodically indexed in accordance with Reg 30BF of the Workplace Relations Regulations 1996. 62 In determining this matter, it is appropriate to commence with consideration of the definition of 'remuneration' for the purposes of s83(1)(b) of the Act. Helpful assistance in this regard is found in two Full Bench decisions of this Commission - both of which were referred to me by counsel during the proceedings. 63 In Shead, the Full Bench dealt extensively with the meaning of 'remuneration'. Observing that the Act does not define the term, the Full Bench nevertheless went on to reject a narrow interpretation of the word: Nevertheless, for our purposes, it confirms the view to which we have come, namely, that the word 'remuneration' is not used consistently throughout the 1996 Act. We are satisfied that in Pt 6 of Ch 2 the word is used in its ordinary broad sense as comprehending an employee's total package as a reward for the work performed. 64 More recently, the Full Bench of the Commission in Kagan, reaffirmed the conclusions in Shead, and added: The extracts from the judgments in Shead v Summit Western Pty Ltd t/a Blacktown Mitsubishi and Higgins v Prospect County Council demonstrate that, although 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. For example, if money be received over and above what is reasonably considered consideration for the employee providing his services to the employer, then such moneys would not be considered to be remuneration, or part of the remuneration paid or payable to the employee. Although the ordinary meaning of the word 'remuneration' is not confined to cash benefits, nevertheless it must involve the notion or concept of payment for services rendered or work done. 65 It follows from this Full Bench authority, that remuneration for the purposes of s83(1)(b) includes benefits gained by an employee from direct cash payments, such as salary and annual leave loading and non cash benefits such as employer provided superannuation, mobile phone, health insurance, child care and the private use of an employer provided vehicle. 66 The conclusions in Shead and Kagan have been followed in many subsequent single member decisions of the Commission. Many of these decisions have involved assessment of motor vehicle benefits. (See Simmonds v Pongrass Furniture Pty Limited (1997) 74 IR 443, McBlane v National Transport Insurance Limited (1997) 77 IR 185, Schmidt and Paino Holdings Pty Limited, Sams DP, IRC98/4676, 5 February 1999 and Talbot and Rostcom Pty Ltd, Sams DP, IRC99/1617, 2 September 1999). CONTESTED ISSUES 67 During the course of the proceedings the differences between the parties were narrowed, so as the remaining issues fell into two categories; the extent of the FBT benefit to the applicant and whether Amex card reward points (converted to frequent flyer points) should be included as a component of the applicant's remuneration. 68 Both of these issues appear not to have been considered before by this Commission or any other industrial tribunal in the context of whether such components should be included in an employee's annual remuneration. The Commission can find no authority which might give guidance on how these issues might be treated for the purposes of s83(1)(b) of the Act. Fringe Benefits Tax 69 In respect to the FBT question I make these observations. There was no argument that the applicant received an FBT component included in his salary of $200 tax free per week totalling $10,400pa. The dispute concerns whether the resultant tax saving of $5044pa should be added to the total remuneration package. 70 Notwithstanding the somewhat confusing and convoluted explanations offered about this FBT component, it seems to me, that the issue can be addressed by reference to whether there was a benefit to the applicant of the arrangement, and if so, what was the value of such benefit? 71 I would firstly observe that FBT is a tax imposed by Federal legislation on an employer - not an employee. The tax is paid by the employer, notwithstanding that the obligation to do so arises from a benefit provided by the employer to the employee. The employer may require, or reach an agreement with the employee for the full or partial reimbursement of the FBT paid. 72 It would seem to follow, as a matter of common sense, that where an FBT amount is paid by an employer other than to, or on behalf of the employee, then such an amount would fall outside the ordinary meaning of remuneration. 73 However, that is not the situation here. In this case, the circumstances are markedly different and quite unique. The FBT was not paid by the employer or the employee. It was a notional tax advantage able to be utilised at the employer's discretion as a benefit to the employees. It was neither a tax paid by the employee or deducted from his annual remuneration. 74 It seems logical that had the applicant received the $200 as a taxable amount he would have lost (on his own evidence) $5044 in tax. By its treatment as an FBT amount he gains the actual amount of $10,400, plus a notional tax saving of $5044 as if the total gross amount in his hands was $15,444. 75 It is really not the point that the tax benefit arises as a rebate from the Tax Office because of the employer's status as a charitable organisation. What must be considered, in my opinion is the actual gross remuneration that the employee receives and the actual benefit derived therefrom. Remuneration is always defined as a gross amount and not what the employee receives as a net figure. 76 Viewing it this way, leads me to conclude that the arrangement had real and tangible advantage for the applicant which should properly be taken into account as part of the applicant's remuneration. 77 I am fortified to this conclusion by the applicant's own view of how he perceived the benefit. He described it as a "tax saving for employee." In cross examination he accepted that it was a benefit (Tp.56). Q. By way of arrangement between the respondent and the Taxation Department, neither the respondent nor yourself as the recipient had to pay tax on that money? A. On the $10,400? Q. Correct? A. Correct, yes. Q. You told the Court the tax saving to you was approximately $5044? A. That is right, yes. Q. You would agree with me that tax saving was a benefit? A. Yes. Q. The benefit was provided to you by your employer due to its charitable nature? A. Yes. 78 It follows then, that, in my view, the value of the applicant' gross salary included the following components: Agreed salary $63,201.00 Tax free amount $10,400.00 Tax saving $ 5,044.00 Total $78,645.00 79 This conclusion, on its own, would take the applicant's annual remuneration (with the other agreed amounts of superannuation ($5530.94) and private use of company vehicle ($500)) to $84,675.94 - well over the statutory threshold. That would seem to end the matter. However, in deference to the detailed arguments put on the reward points issue, I shall now turn to consider that matter. AMEX Reward Points 80 This question is whether AMEX reward points, earned through the business use of the AMEX card and converted to frequent flyer points for personal use, are to be taken as part of the annual remuneration of the applicant for the purposes of s83(1)(b) of the Act? 81 It was common ground that the applicant earned 379,697 AMEX reward points in the 12 months prior to his dismissal. The expenditure which earned the points was all business related and approved of by the applicant in his role as General Manager. The points were credited to an American Express card in his name only. The respondent paid all of the expenses incurred on the card. At the point of dismissal, the applicant had converted the 379,697 reward points to Qantas frequent flyer points. His evidence was that, during the course of his employment, he redeemed some of these points for a holiday. He retained the balance of the points in his own name after his dismissal. 82 Ms Brus strongly argued that frequent flyer points could not be regarded as 'remuneration' as defined in Shead. They were 'subsidiary' to the applicant's employment. She described them as a "perk" not unlike being invited to a corporate box at the football. In any event, she said it was a benefit provided by a third party, and not the employer. 83 Were the points of value to the applicant? One way of answering that question is to ask, if the points were not of value to the employee, then what were they? 84 The applicant's evidence was that he didn't believe the frequent flyer points were of any value to him and he would have been content to give up the card. I have trouble accepting this evidence. Such evidence ignores the reality of what an ordinary person would understand about the value of frequent flyer points. How could free air fares for a holiday, provided for by an employer's expenditure, be regarded as not having a value to the employee? 85 I turn then to the argument that because frequent flyer points are not regarded as income under the Tax Act then they should not be regarded as remuneration. In this regard the Commission was referred to the judgment of Foster J, in Payne and the relevant rulings of the Tax Commissioner. 86 Mr Strain submitted that the Industrial Relations Act and the Tax Act are conceptually and fundamentally different. Income and remuneration under the two Acts are not analogous. I consider this submission to be soundly based. It seems to me that there is an obvious distinction between the concept of 'income' for the purposes of the Tax Act and 'remuneration' for the purposes of s83(1)(b) of the Industrial Relations Act 1996. Income is not only wages or benefits provided by an employer. The distinction is amply demonstrated by the fact that income can be derived from a number of sources, including interest on investments. 87 Accordingly, I do not find the comparison to income under the Tax Act to be of assistance in my determination of the issue here. 88 In my view, there are clear factual matters which distinguish this case from the conclusions reached in Payne. For example, in Payne, the employer did not know the employee was receiving the frequent flyer benefit. It was held therefore that the points could not be said to be a benefit "provided by the employer for work performed by the employee". On the other hand, in this case, the arrangement with the applicant was well known to all the parties as a benefit provided by the employer. 89 This leads me to comment on the meeting at the 18 Foot Sailing Club. The meeting involved the applicant, Mr Scott and Ms Chapman (the Board's President). There was an attempt to remove the applicant's AMEX card entitlement and give it to Ms Chapman. There was conflicting evidence of what was said at the meeting. There is no doubt that a meeting between the three took place at which the subject of the AMEX card was raised. I have some doubts as to the propriety and motivation of Mr Scott and Ms Chapman in suggesting the applicant should lose the credit card; particularly as it is now argued that the card formed part of the applicant's conditions of employment. What seems obvious is that a souring in the relationship between the Board and its General Manager was at the heart of this meeting. 90 It is equally obvious and perfectly understandable that the applicant would be upset about the suggestion that the AMEX card be transferred to Ms Chapman. It is likely he protested about the suggestion. In any event, the matter was dropped and not pursued. Therefore, I do not accept the applicant's evidence that he was willing to accept a proposal to lose the benefits of the credit card. There is no doubt, in my mind, that the applicant regarded this benefit as an integral and valuable part of his employment arrangements. 91 I do not judge there to be any particular relevance to the applicant's original offer of employment of 9 June 1999 which makes no reference to the AMEX card being a condition of employment. In my view, it is pellucidly clear from this letter (see para 9) that this was not the full extent of the applicant's employment conditions which were largely referrable to what is said to be "the conditions of employment" as applied to other staff. Moreover, this letter could not be seen as a comprehensive contract of employment as it makes no reference to the $200 tax-free component of the applicant's salary. 92 The frequent flyer points were a benefit which the applicant can still utilise for personal benefit after the termination of employment. In my opinion, such an arrangement can only be regarded as a non-cash benefit in the hands of the employee arising as a consequence of his employment or, in the words of Shead, "a reward for the work performed" or in the words of Kagan involving a concept of a non cash payment "for services rendered." Viewed in this way, it should be included in the remuneration package. 93 However, some intriguing and interesting questions flow from this finding. What was the value of the frequent flyer points and how can that value be properly determined? Answering these questions is not without some real difficulties - as Ms Brus ably demonstrated. 94 Unfortunately, the best evidence of the value of the redeemed reward points was not, and could not, be available. This arose as a result of firstly, the AMEX card being in the sole name of the applicant. The transaction details were sent to him directly and the respondent was not able to access the original details from American Express or Qantas. Some of the relevant records of the respondent could not be found. I express no view about that. 95 Secondly, the evidence was that the applicant had not redeemed the majority of the frequent flyer points. In other words, their exact value could not possibly be established because no one could know when, if, and for what purpose the points might be redeemed in the future. A number of variables would produce a different result and value. 96 It is obvious that the value of an airline flight is variable, inter alia, according to time of year and the extent of advance booking. For example, the number of points required might be the same if the purchase price of the flight is $500 or $1000. Another factor going to value (although even more obscure to assess) is the restricted flights and seat availability of frequent flyer tickets offered by the airlines. It follows, therefore, that I cannot be certain of the actual dollar value of the redeemed points in the hands of the applicant. The respondent conceded as much. However, does that mean the points have no value at all? I think not. 97 While there may be a lack of precision as to the actual dollar value of the benefit, this is not, to my mind, a sufficient basis to disregard the benefit entirely. The provision of free accommodation or free meals by an employer are obvious examples of the difficulty of assessing the actual value of such benefits. A further example was evident in this case. The parties agreed on the value of an estimated private use of the motor vehicle of $500. This figure was plainly, not exact. 98 The Commission agrees with Mr Strain's submission that Courts must often speculate about future events or make assessments of non tangible benefits (see Kerr and Another v Jaroma Pty Ltd t/as Treasury Motor Lodge (1996) 70 IR 469). Workers' compensation assessment of future economic loss is a notable example. A court can only do the best it can on the basis of the evidence it has before it. I propose to do so. 99 Based on the evidence and allowing the applicant a most generous benefit of the doubt, it seems to me that it must be accepted that the redemption of 379,697 reward points has a value in excess of $5,000. I arrive at this conclusion by referring to the examples proposed by the respondent. I accept these examples are but a snapshot of the situation prevailing at the relevant time. However, for present purposes, the examples provide a helpful and representative picture of the estimated value of the frequent flyer points. In my opinion, the examples are credible. I note that they were not challenged. Nor were any alternative examples proposed by the applicant in rebuttal. 100 I do not, however intend to rely on the examples given of AMEX points being redeemed for goods such as copiers or printers. The evidence was that once redeemed for frequent flyer points such points were not, and as I understand it, could not be redeemed for goods or services. 101 The respondent provided the following examples of flight costs, relevant points required and the calculations of the point's value: Example A: Sydney/Cairns $464.15 30,000 points Return = 1.54 cents for each point Example B: Sydney/Perth $450.00 30,000 points = 1.5 cents for each point Example C: Sydney/Osaka $1658.56 50,000 points = 3.31 cents for each point Example D: Sydney/Manila $1048.96 50,000 points Return = 2.09 cents for each point 102 Thus, if I take the lowest figure of 1.5 cents per point, 379,697 points equates to $5,695.45. I propose to include this figure as part of the applicant's annual remuneration. CONCLUSION 103 As a result of my consideration of this matter, I find that the applicant's annual remuneration at the time of dismissal was composed as follows: Salary includes annual leave $63,201.00 loading (agreed) Tax free amount (agreed) $10,400.00 Tax saving $ 5,044.00 Superannuation (agreed) $ 5,530.94 Estimated value of AMEX $ 5,695.45 reward points Estimated private use of motor $ 500.00 vehicle (agreed) Total annual remuneration $90,371.39 104 It is to be stressed that, on my estimation, this figure is a conservative one. For abundant caution, I have given the applicant a generous margin for error in his favour in regard to the value of the frequent flyer points. The result, however, leaves no room for doubt. FINDINGS 1. The applicant's annual remuneration in the twelve months prior to dismissal on 18 October 2002 was at least $90,371.39. 2. Pursuant to s83(1)(b) of the Act and the Industrial Relations (General) Regulations 2001, the Commission has no jurisdiction to hear and determine the applicant's claim for relief from alleged unfair dismissal. 3. The respondent's notice of motion filed on 18 March 2003 is granted in terms of this decision. 4. Application IRC02/6250 is dismissed for want of jurisdiction. 5. The proceedings are concluded and the file will be marked accordingly. Peter Sams Deputy President 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.