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Remote Area Travel Allowance Considered Earnings
The Fair Work Commission (the “FWC”) has considered the remote area travel allowance of an environmental advisor (the “Applicant”) as remuneration, pushing the Applicant’s earnings over the high-income threshold cap to bring an unfair dismissal claim.
The Applicant made an unfair dismissal application alleging that the termination of her employment by Rio Tinto Aluminium Limited (the “Respondent”) was harsh, unjust or unreasonable. The Respondent raised a jurisdictional objection, claiming that the Applicant’s remuneration was in excess of the high-income threshold.
The Respondent claimed that the employee’s income totalled $193,216, comprising $112,810 in base salary, $28,202 in remote area allowance, $22,720 in remote area travel allowance and $29,484 in employer-provided accommodation.
The Applicant contested the inclusion of the remote area travel allowance and the accommodation as being part of her earnings.
Date of termination
Interestingly, there was also a disagreement between the parties regarding the date that the Applicant’s dismissal took effect. The Applicant submitted that her dismissal took effect on 1 July 2020, which would result in the relevant high-income threshold being $153,600. The Respondent, on the other hand, argued that the dismissal took effect on 30 June 2020 when the Respondent emailed the Applicant’s termination letter. The high-income threshold would have been $148,700.
The Respondent sent the termination letter to the Applicant’s legal representative at 7:43pm on 30 June 2020. Given this was after business hours, he notified the Applicant of the dismissal on 1 July 2020.
The relevant test to consider in assessing the date of a dismissal is that the dismissal does not take effect unless and until it is communicated to the employee who is being dismissed. Further, where the communication is in writing only, the communication must be received by the employee in order for the termination to be effective, as established in Ayub v NSW Trains.
On this basis, the date that the dismissal took effect was 1 July 2020.
Commissioner Spencer agreed with the Respondent’s argument that because the remote area travel allowance was not entirely spent on business-related travel and could be “determined in advance”, it should be counted as earnings.
However, she accepted the Applicant’s argument that the company-provided housing constituted a non-monetary benefit with no agreed value and found that it should not be included in her earnings.
The Applicant’s final earnings calculation, which included the remote area travel allowance, amounted to $165,455, preventing the Applicant from bringing an unfair dismissal claim.
- Employers should be aware of what components are included within “earnings” that may push an employee’s salary above the high-income cap for unfair dismissal claims.
- Employees eligible to make unfair dismissal claims, are able to challenge their termination far more readily and cheaply than those who are ineligible.
- When sending a termination letter by email, employers should make sure the letter is sent to the employee’s current email address and a “read and delivery” receipt is attached.
Read the full decision here.
Rocio Jamardo Paradela