Motor Vehicles Contractual Notional Value Pushes Employee Over Unfair Dismissal Salary Cap
Baker v Rio Tinto Coal Australia Pty Ltd  FWC 6741
A term in an employee's contract of employment provided that the employee’s company car had a value to the employee, as remuneration, of $8,000. The effect of this term of the contract of employment meant that the notional value of the car to the employee was considered remuneration and added to the employee’s salary, pushing the employee over the high income threshold or salary cap to bring an unfair dismissal claim.
The employer Rio Tinto, objected to the employee's unfair dismissal application, arguing that the employee’s total earnings, including the car, amounted to $131,000 per year and therefore exceeded the $129,300 threshold that applied at the time the employee lodged the claim. Further the employer argued that as the employee was not covered by an award or enterprise agreement, the application for reinstatement should be rejected.
The employer had specifically notified the employee that the benefit of the use of the car was "recognised" and that employees who benefited from the provision of a company car through travel to and from work and from "restricted private use" and would be considered remuneration. The letter to the employee said, "for this reason a notional value of $8,000 will be indicated in your remuneration statement to reflect this benefit and ..... Superannuation will be applied to this notional value."
The employee argued that only $4,000 should be attributed to her as income because she only used the car for private purposes on a limited basis. However Deputy President Asbury noted that under s332 of the Act, employee earnings included non monetary benefits which had an "agreed money value". Section 332(3) defines non monetary benefits as those "for which a reasonable money value has been agreed by the employee and the employer".
The Deputy President said the specialist's actual use of the vehicle was not relevant in the circumstances and “by virtue of the terms of a written contract of employment, agreed between the employee and Rio Tinto, she is entitled to receive a non monetary benefit, the private use of a motor vehicle, to which an agreed amount has been assigned."
The employee's application for a reinstatement remedy was dismissed.