copyright  |  disclaimer  |  privacy policy  |  print ready

« back

Australian Industrial Relations Commission clarifies "remuneration"

Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 85, 26 July 2005

In Anderson and STA Travel Pty Ltd (19 May 2005) a full bench of the Australian Industrial Relations Commission (AIRC) has discounted the value of a company supplied motor vehicle and excluded a bonus payment not earned in the previous 12 month in recalculating an employee's "remuneration."

The Federal Workplace Relations Act excludes award free employees from bringing an unfair dismissal application if the employee earns a rate of remuneration which exceeds the specified rate immediately before the termination. The NSW Industrial Relations Act contains a similar but not identical provision.

At the time of Mr Anderson's termination in June 2004, the specified rate was $85,400. The amount is indexed and is currently $98,200.

Commissioner Blair of the AIRC at first instance took into account Mr Anderson's total remuneration which included base rate, superannuation, annual leave loading, quarterly bonus, annual bonus and a motor vehicle allowance. The Commissioner calculated Mr Anderson's remuneration as $97,029.

Mr Anderson appealed to a full bench of the AIRC which concluded that Mr Anderson's remuneration was $90,559.

The full bench ruled that Commissioner Blair did not take sufficient account of Mr Anderson's limited business use of the vehicle or that some other employees used it from time to time.

The full bench did not agree with Mr Anderson that a pro - rata bonus payment he received was discretionary and therefore should not be included in his remuneration. It held that Mr Anderson had a contractual right to the bonuses as he had met the criteria set for their payment. It did however discount the value of a bonus earned before the 12 month period immediately before the termination began.

HR Tips

When faced with an unfair dismissal application by a former employee, an employer should consider whether the employee was covered by either a federal or state award.
If the employee is not covered by an award, the employer should carefully check the elements of the former employee’s remuneration by examining his or her contract of employment and any relevant policies that deal with benefits to be provided to the employee.

Gordon Jervis
Senior Associate
Australian Business Lawyers