WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES’ COURT

PARTIES DANIEL JOSEPH DOHERTY

APPLICANT

-v-

LOWAN FINE FOODS PTY LTD

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD WEDNESDAY, 8 JUNE 2005, WEDNESDAY, 6 JULY 2005, WEDNESDAY, 2 NOVEMBER 2005, WEDNESDAY, 16 NOVEMBER 2005

CLAIM NO. M 29 OF 2005

CITATION NO. 2005 WAIRC 03178

CatchWords Long Service Leave; Remuneration; Ordinary pay; Salary package

Legislation:

Industrial Relations Act 1979 Section 81CA (1) (b)

Long Service Leave Act 1955 Sections 4,8 & 11

Cases referred to in decision:

Capewell –v- Cadbury Schweppes Australia Ltd 78WAIG 299;

Blake –v- Robowash Pty Ltd 78 WAIG 2925;

Holland –v- GAM Steel Pty Ltd Unreported AIRC (Melbourne) delivered 5 January 2000;

Vickridge –v- 89 Enterprises (1981) 80 WAIG 4485; and

Fliedner –v- Philips Electronics Australia Ltd [2003] NSWIR Comm 23.

Result Claim dismissed

REPRESENTATION 

Applicant  Mr R Clohessy appeared as agent for the Claimant.

Respondent  Mr G Pearson represented Lowan Fine Foods Pty Ltd, the Respondent.

REASONS FOR DECISION

Background

1         On 30 June 2004 the position of Business Development Manager held by the Claimant in his employment with Lowan Foods Australia Ltd was made redundant.  Consequently the Claimant’s employment was terminated.  At termination the Claimant had been in continuous employment with the Respondent and its predecessors for almost 17 years.  The Respondent in this matter is named by the Claimant as being Lowan Fine Foods Pty Ltd.  By its response the Respondent has defended this claim on the basis that the correct Respondent entity is Lowan Australia Ltd and not the entity described by the Claimant.  There has been no application to amend the name of the Respondent.  Notwithstanding that Lowan Foods Ltd and its successor Green’s Foods Ltd has continued to defend the claim.  The misnomer of the Respondent has not been in the forefront of the defence in this matter.  Rather the claim is opposed on its substantive merits. 

2         The correct identity of the Respondent will only become pertinent if the Claimant otherwise proves his claim.

3         The evidentiary material before me reveals that the Respondent’s predecessor Consolidated Foods Australia Ltd (CFA) by written agreement appointed the Claimant in the position of Business Development Manager with effect from 1 July 2000.  The statement of terms and conditions of employment include the following relevant provisions.

4 Salary and Benefits

Your salary is $83,729 per annum and is deposited on 15th of the month into your nominated bank account.  This figure includes annual leave loading.  In addition to your base salary a further 9% of this amount will be paid in accordance with the superannuation guarantee legislation.

Salaries are reviewed annually with effect from 1st April.

5 Motor Vehicle

A CFA vehicle will be provided to you as a tool of trade.  The vehicle remains the property of CFA and as such any employee, subject to the company’s Group Motor Vehicle Policy may use the vehicle for business circumstances.  Continued use of the vehicle is dependent upon strict adherence to the company’s Group Motor Vehicle Policy.  The employee agrees to return the motor vehicle to CFA upon cessation of employment.

6 Annual Leave and Long Service Leave

Your annual leave provision is twenty working days per annum.  Except by prior arrangement with the Chief Operating Officer, annual leave must be taken within six months of the end of the year in which it is accrued.

Your long service leave provision will be as provided by Company policy, which will be no less than the prevailing State legislation.

4         In his testimony Mr Doherty said that he considered the vehicle supplied by the Respondent, which he was permitted to use for private use, constituted part of his salary package.  He said that there had been discussion concerning the provision of the vehicle and that he could have been paid $18,000 to $19,000 more per annum had he not taken the vehicle as part of his package.

5         On termination the Claimant was paid a termination payment comprising redundancy, annual leave and long service leave entitlements.  The long service leave component did not take into account the value of the private use of the motor vehicle supplied by the employers for the period of the accrued long service leave.

The Claim

6         The Claimant, who on common ground is award free, seeks pursuant to Section 8 of the Long Service Leave Act 1954(the Act) to recover the value of the motor vehicle ($14,000) on a pro rata basis for 14.64 weeks amounting to $3968.46.  He says that he has been underpaid that amount by virtue of the Respondent’s failure to take the sum into account when calculating his termination payment.  The Claimant further says that amount should be paid on a quantum meruit basis.  The Claimant also seeks interest on the alleged unpaid amount and also seeks costs.

Response

7         The Respondent says that Mr Doherty was supplied a tool of trade motor vehicle in order for him to undertake his sales duties and visit customers on a regular basis and the vehicle did not form part of his remuneration.  Even it if could, which is denied, the claim cannot succeed in any event because Section 8(1) of the Act only entitled an employee to ordinary pay as defined in Section 4 of the Act.

Determination

8         The claim is one made pursuant to Section 8(1) of the Act which provides

8. Long service leave

(1) An employee is entitled in accordance with, and subject to, the provisions of the Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer.

9         “Ordinary pay” is defined in section 4(1) of the Act as follows:

…..“ordinary pay” means subject to subsection (2), remuneration for an employee’s normal weekly number of hours of work calculated on the ordinary time rate of pay applicable to him, as at the time when any period of long service leave granted to him under this Act commences, or is deemed to commence and where the employee is provided with board and lodging by his employer, includes the cash value of that board and lodging, where such board and lodging is not provided and taken during the period of leave, but does not include shift premiums, overtime, penalty rates, commission, bonuses, allowances, or the like.

10      The meaning of “ordinary pay” is further defined in section 4(2) of the Act in the following way:

(2) For the purpose of the interpretation of “ordinary pay” in subsection (1) — 

(a) where the employee is employed on piece or bonus work or any other system of payment by results, he shall be paid during any period when he is on long service leave at the ordinary rate of pay which would be applicable to him if he was employed in the industry appropriate to his calling on a time basis and not on piece or bonus work or other system of payment by results;

(b) where no ordinary time rate of pay is fixed under the provisions of paragraph (a) the ordinary time rate of pay shall be deemed to be the average weekly rate earned by him while in employment during the period of 12 months —

(i) ending on the day immediately preceding that on which he commences long service leave or would but for payment in lieu of long service leave have commenced long service leave, if he is then in employment; or

(ii) ending on the day immediately preceding that on which he was last in employment, if he is not then in employment; or

(iii)  ending on the day immediately preceding that of his death,

as the case requires; and

(c) where the normal weekly number of hours have varied over the period of employment of an employee the normal weekly number of hours of work shall, subject to paragraph (a), be deemed to be the average weekly number of hours worked by the employee during that period of employment (calculated by reference to such hours as are ascertainable if the hours actually worked over that period are not known); and

(d) the cash value of any board and lodging provided for an employee shall be deemed to be its cash value as fixed by or under the conditions of the employee’s employment, or, if it is not so fixed, shall be computed at the prescribed rate; and

(e) where by agreement between the employer and the employee the commencement of the leave to which the employee is entitled or any portion thereof is postponed to meet the convenience of the employee, the rate of payment for such leave shall be at the ordinary time rate of pay applicable to him at the date of accrual or, if so agreed, at the ordinary time rate of pay applicable at the date he commences such leave.

11      It suffices to say that section 4(2) has no application to this matter.  Nor for that matter does section 4(3) of the Act.  Given that the Claimant is award free relevantly section 4(3) provides:

(3) Where a person is, by virtue of — 

(a)  an award or industrial agreement;

(b)  an employer‑employee agreement under Part VID of the Industrial Relations Act 1979 or other agreement between the person and his employer; or

(c) an enactment of the State, the Commonwealth or of another State or Territory,

entitled to, or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under this Act, that person is not within the definition of “employee” in subsection (1).

12      The definition of “ordinary pay” section 4(2) speaks for itself.  In that regard the entitlement to ordinary pay in section 8(1) means an entitlement to remuneration for an employee’s normal weekly hours of work calculated on the ordinary rate of pay applicable but does not include shift premiums, overtime, penalty rates, commission, bonuses, allowance or the like.  “Ordinary pay” also includes the cash value of board and lodging however that has no application in a matter before me.

13      It is axiomatic having regard to the definition of “ordinary pay” that the cash value of a vehicle provided by an employer in a salary package situation is not to be regarded as part of the ordinary pay for the purpose of section 8(1).  Such is to be distinguished from circumstances when part of one salary is sacrificed, as was the case in Hayman –v- Donald F Munro & Associates Pty Ltd - WAIG 3666.

14      The Claimant’s agent cited a number of authorities which he says support his contention that the cash value of a fully maintained motor vehicle supplied to the employee by an employer is to be taken into account in calculating the remuneration of an employee. 

15      Those authorities namely

• Capewell –v- Cadbury Schweppes Australia Ltd 78WAIG 299;
• Blake –v- Robowash Pty Ltd 78 WAIG 2925;
• Holland –v- GAM Steel Pty Ltd Unreported AIRC (Melbourne) delivered 5 January 2000;
• Vickridge –v- 89 Enterprises (1981) 80 WAIG 4485; and Fliedner –v- Philips Electronics Australia Ltd [2003] NSWIR Comm 23.

were decided in the context of claims for contractual benefits unfair dismissal and the like.  None of them specifically were considered or determined having regard to section 8(1) of the Act.

16      Section 8(1) when read with section 4(1) is prescriptive as to what is meant by ordinary pay.  It does not import discretion.  The fact is that the relevant provisions of the Act do not include the cash value of motor vehicles as part of ordinary pay.  For that reason it matters not what other tribunals have found concerning the cash value of motor vehicle for the purpose of determining remuneration in other contexts.  For the purposes of the Act the cash value of the motor vehicle supplied to the Claimant by the Respondent cannot be considered for the purpose of calculating the Claimant’s long service leave entitlement.  On that ground alone the claim cannot succeed. 

17      Further the claim cannot succeed for another reason also, being that the employment agreement, exhibit 2, which is before the Court tendered by consent, states in unequivocal terms at paragraph 5 thereof, that the vehicle provided to the Claimant by the Respondent was provided as a tool of trade and subject to the Respondent’s Motor Vehicle Policy.  In those circumstances it cannot be said that the vehicle was provided for the Claimant’s private use as part of his salary package.  The agreement speaks for itself and undermines the Claimant’s contention given in evidence.  In those circumstances the provision of a vehicle cannot be given a cash value for the purpose of calculating long service leave entitlements.

18      The claim is wholly unmeritorious and must be dismissed.  In accordance with what was said at the trial and for the convenience of the parties, a copy of this decision will be posted to the parties.  The matter will otherwise be listed on for the formal order of dismissal to be made, at which time the parties will be given an opportunity to be heard concerning the proposed order of dismissal and any other consequential matter.

G Cicchini

Industrial Magistrate