Unfair dismisal and the high income threshold

This is a decision of the Fair Work Commission dealing with an assessment whether an employee’s earnings exceeded the high income threshold for the jurisdictional purposes of being protected from unfair dismissal and is an excellent analysis of the legal issues.

“1 Introduction

[1] Mr James Davey (the Applicant) applied for an unfair dismissal remedy on 30 August 2022. 1 BHP Minerals Pty Ltd (the Respondent), his former employer, objected to the application on the basis that he was not a person protected from unfair dismissal because he earned more than the high income threshold ($162,000) and he was not covered by a modern award (Professional Employees Award 20202) or enterprise agreement.3

[2] Whilst the Applicant initially pressed arguments that his annual rate of earnings and such other amounts (if any) were less than the high income threshold and he was covered by the Professional Employees Award 2020, 4 he dispensed of his latter argument before the hearing. It followed that by the time the matter came on for hearing, neither party suggested that the Applicant was covered by an enterprise agreement or modern award. Therefore, the question to be determined is whether the Applicant is prevented from being protected from unfair dismissal by virtue of s 382(b)(iii) of the Fair Work Act 2009 (Cth) (the Act).

[3] It was not in dispute between the parties that the Applicant received the payments detailed in the Form F3, namely:

  1. a) base salary of $128,870;
    b) work allowance of $25,774;
    c) education assistance of $18,140; and
    d) superannuation payments above the superannuation guarantee of $4,510.

[4] These amounts were more than what was provided in the Applicant’s employment contract. However, it was uncontroversial that at some point the Applicant had received a salary increase.

[5] Whilst the parties agreed that for the purpose of s 332 of the Act the base salary formed part of the Applicant’s ‘earnings’, the parties remained in dispute about the other payments received.

[6] For the reasons that follow, I have concluded that the Applicant earned less than the high income threshold. Therefore, the jurisdictional objection of the Respondent on the ground that the Applicant’s annual rate of earnings exceeded the high income threshold is dismissed and an Order 5 to that effect accompanies my decision.

2 Background

[7] At the time of his dismissal, the Applicant was employed by the Respondent as an Engineer – Mining at the Jimblebar mine site in the Pilbara. 6 The Applicant worked in the Production Scheduling department.7 It was uncontroversial that the Applicant performed his duties at the mine site.

[8] The Applicant’s direct manager or line leader at the time of his dismissal was Mr Nicholas Butel. 8 Mr Butel managed a team of mining engineers in the Production Scheduling team at the Jimblebar mine.9 The Applicant was one of those engineers. The key deliverables of the team were said to be mine production schedules and mine plan designs for operational execution.10

[9] Mr Butel’s past work history included various roles for the Respondent totalling a period of approximately nine years. Roles held included Mining Scheduling Superintendent, senior mining engineer and mining engineer. 11 Mr Butel noted that he is a Chartered Professional Engineer and a Registered Professional Engineer in the state of Queensland.12

[10] Mr Butel stated that the Applicant joined the Respondent on 25 February 2018 as a graduate in the business planning stream in the Perth office. 13 This position was a corporate role as opposed to a mining operations’ role.14

[11] The Applicant transferred to the Production Scheduling team at Jimblebar commencing on 1 December 2019 in the role of Graduate Mining Engineer. 15 On 21 June 2021, he transitioned off the graduate program and into the role of Mining Engineer in the Design team, also known as a Field Engineer.16 The Applicant remained in that role until his dismissal.17

[12] Mr Butel explained that the role of Engineer – Mining, also called Field Engineer, is an entry-level role that all new employees joining the Production Scheduling team perform for a time to establish foundational skills. 18 Mr Butel further explained that while some team members have engineering qualifications, such qualifications were not required for the role as a prerequisite.19 It was Mr Butel’s evidence that it was not necessary for an employee to have any engineering qualifications to be employed into the role or to carry out the duties of the role.20 If a candidate was absent tertiary engineering qualifications or engineering experience, then mining operational experience was sufficient to enable employment into the role.21

[13] The Applicant’s employment contract provided the following in respect of his remuneration: 22

Remuneration Summary

Fixed Remuneration ($A) Base Salary

Work Allowance

20% of Base Salary

Total Allowances

$118,500

$23,700

$23,700

Incentive ($A) Short Term Incentive Plan Target – 15%

Indicative value at Target is shown. Please note that your continued participation in the STI Plan is at the discretion at the Company and that your target STI may vary from year to year.

$17,775
Superannuation ($A) Indicative Value – 9.5% $15,198
Total Reward ($A) $175,173

[14] The Applicant’s fixed remuneration as specified in his employment contract included a work allowance equivalent to 20% of his base salary. 23 According to the Respondent, this was a result of being based at the Jimblebar site. The Applicant’s employment contract provided that the work allowance is payable to Pilbara-based employees in consideration of the associated average working hours, hardship of roster arrangement and all aspects of working at site operations.24 Mr Butel gave evidence that the work allowance was a fixed allowance that was payable to the Applicant in his permanent role as a site-based Mining Engineer and in consideration of his roster.25 It was uncontroversial that the Respondent deducted Pay as You Go (PAYG) tax from the work allowance, superannuation is paid on top of the work allowance,26 and the work allowance is paid to an employee as part of their remuneration when the employee takes leave.27

[15] During his employment, the Applicant applied for education assistance, which was provided for in the Respondent’s handbook, referred to as the ‘Oresome Handbook’. The Oresome Handbook was essentially a booklet which was said to contain a number of policies and procedures of the Respondent. 28 Within the Oresome Handbook sat the Education & Memberships Policy. Approval of a course of study for either undergraduate or postgraduate study entitled an employee to an ‘approved student status’ for a calendar year. The Oresome Handbook provided:

Approval of a course of study for both undergraduate and postgraduate studies will entitle you to approved student status for that calendar year.

Approved students will be entitled to claim reimbursement of approved study expenses. These expenses (outlined in the table below) are subject to production of evidence of successful completion of the approved units and payment of the fees…

Should you leave the business within 2 years (either by resignation or termination) or completing your study, you will be required to repay the amount the company spent on your study assistance on pro-rated basis. In exceptional circumstances, repayment may be waived by the Department Manager.

[16] In relation to postgraduate study, the Oresome Handbook provided that employees may apply for approved student status for postgraduate studying using the approved application form available on the ‘Portal’. 29

[17] Annexed to Mr Butel’s witness statement was Annexure NAB-4. This was an email dated 26 January 2021 from the Applicant to Ms Denise Magee, his two-up manager. Attached to the email was the ‘Application Student Status form’ and written submissions. 30

[18] Mr Butel gave evidence that he was informed by his ‘one-up’ that the Applicant raised the prospect of applying for the education assistance during a one-on-one meeting with Ms Magee. 31 On 26 January 2021, the Applicant sent an email to Ms Magee and confirmed that he and Ms Magee had agreed that the Respondent would support and endorse the payment of course fees for a Graduate Certificate of Mining Engineering valued at $17,880.32 Ms Magee agreed, on behalf of the Respondent, to the application and endorsed it on 26 January 2021.33

[19] In support of his application for education assistance, the Applicant provided written submissions. 34 The written submissions included the rationale for undertaking the proposed course of Mining Engineering (Graduate Certificate + option to convert to Masters). The Applicant identified that the additional education would result in a benefit to the Respondent.35

[20] On 3 February 2022, the Applicant applied for further education assistance in relation to a Graduate Diploma of Mining Engineering valued at $9,277.50. 36 Ms Magee again approved and endorsed the application by digital signature dated 7 February 2022.37 Mr Butel said he similarly agreed to and endorsed the application on behalf of the Respondent on 15 February 2022.38

[21] On 21 July 2022, the Applicant sent Mr Butel an email seeking endorsement of a further application for education assistance for a Masters of Mining Engineering valued at $18,555. 39 Attached to the application were the Applicant’s written submissions in support of the application. The Applicant explained that the proposed course of study brought mutual benefits in the form of his professional development and career growth in addition to broader immediate and longer-term benefits to the Production Scheduling function.40 With respect of benefits to the Respondent, the Applicant referred to factors such as raising and maintaining the standard of competency within the team in the long term, taking a deep dive into an operational issues faced by Production Scheduling, and retention of the Applicant in a site-based role due to the liability for costs of the education if the Applicant departed the business within 24 months.41

[22] The Applicant was required to be a permanent employee to receive the education assistance. 42 Mr Butel said at the time of the Applicant’s dismissal, he had been paid $18,140.80 in respect of approved education assistance.

[23] Mr Butel noted that the Respondent did not require the courses to be completed or for the Applicant to hold the qualifications, and the approved courses were not requirements of the Applicant’s role. 43

[24] The application form provided that the skill or course was required to provide benefit to both the individual and the Respondent. Mr Butel expressed that he considered that there was some incidental benefit to the Respondent in relation to the Applicant understanding the theory behind engineering, but this was not required to perform the duties of his role. 44

[25] Under his employment contract, the Applicant was permitted to make additional voluntary personal superannuation contributions from his base salary on a salary sacrifice basis, and if he did so the Respondent would increase its contributions. 45 Mr Butel pointed to the Oresome Handbook providing the rate of the contributions.46 He noted that the Applicant elected to make an additional contribution of 4.5% and as a result, the BHP contribution was 14%. This meant, at the time of his dismissal, the Applicant was entitled to an additional 3.5% superannuation on his base salary above the guaranteed rate of 10.5%, amounting to $4,510.45.47

[26] According to the Respondent, the Applicant’s duties in the performance of his role comprised of the following:

  1. a) receiving long term engineering designs that had been prepared by specialist engineers, geotechnical engineers and specialist water planning teams and separating them into smaller tasks for operational execution; that is, to be provided to the execution team for mine operators to complete the item as designed in the next 4 weeks;
    b) preparing basic operational level designs in the 0-4 week horizons (that is for production execution in the next 4 week period). These are basic, short term designs (for items such as simple ramps, basic intersections, sumps, or adding windrows) intended for short-term temporary use. Designs the Applicant produced were reviewed by his manager, who has professional engineering qualifications, and who provided the engineering sign off, before they could be implemented;
    c) preparing the dewatering plan for the 0-4 week horizon. This involves preparing a series of scheduling dates of bore removals and re-equips, which is essentially a task list for the dewatering execution team to perform; and
    d) putting together a mine services pack of all the designs into one presentation document and engaging with the execution team to implement. 48

[27] The Respondent added that the tasks undertaken by the Applicant related to basic design, planning and scheduling of tasks. The Respondent pressed that those tasks did not extend to engineering. In respect of the engineering tasks, the Respondent noted that they were performed separately by professional engineers either prior to the Applicant’s duties being carried out (at the long-term design stage) or subsequent to the Applicant’s duties being carried out (when the Applicant’s output was reviewed and any engineering input was added to ensure the design plan was within the overall design intention and was safe and able to be executed, prior to the plan being provided to the execution team).

[28] It was uncontroversial that the Applicant had completed the minimum period of employment and was not covered by an enterprise agreement.

3 Legislative framework

[29] Section 382 sets out when a person is protected from unfair dismissal. Section 382(b)(iii) provides:

the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[30] A person’s annual rate of earnings, for the purpose of determining whether they exceed the high income threshold, is calculated in accordance with s 332 of the Act, which relevantly defines ‘earnings’ as follows:

(1) [Meaning of earnings]

An employee’s earnings include:

(a) the employee’s wages; and

(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) [Excluded amounts]

However, an employee’s earnings does not include the following:

(a) payments the amount of which cannot be determined in advance;

(b) reimbursements;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

(d) amounts prescribed by the regulations.

(3) [Meaning of non-monetary benefits]

Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money valued has been agreed by the employee and the employer but does not include a benefit prescribed by the regulations.

(4) [Extent to which subsection applied to superannuation contributions]

This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.

[31] Whilst no regulations have been made for the purposes of s 332(1)(d) or s 332(2)(d) of the Act, regulation 3.05(6) of the Fair Work Regulations 2009 (Regulations) has been
made in respect of s 382(b)(iii) of the Act. Regulation 3.05(6) provides:

If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.

[32] In the decision of Sam Technology Engineers Pty Ltd v Bernadou (Sam Technology), the Full Bench concluded that the definition of ‘earnings’ in s 332 is non-exhaustive and as such, ‘earnings’ should be given its ordinary meaning. 49 In the course of its reasoning, the Full Bench qualified that the meaning of ‘earnings’ was subject to the payments and benefits referred to in s 332(1) being included in the meaning of ‘earnings’ and the payment and benefits referred to in s 332(2) being excluded from its meaning.

[33] While the Full Bench in Sam Technology considered the word ‘earnings’ in the context of determining whether a car allowance fell within the scope of the word ‘earnings’, its reasoning remains relevant here. Drawing upon what Lord Davey expressed in Midland Railway Co v Sharpe, 50 the Full Bench stated:

Now what does a man earn? He earns the sum which is the fruit of his labour; whatever he receives by way of remuneration for the services he gives, or as Lord Macnaghten said in Abram Coal Co v Southern [1903] AC 306, a man’s ‘earnings’ are ‘the full sum for which the man is engaged to work’. 51

[34] The Full Bench in Sam Technology observed that Lord Davey’s definition of ‘earnings’ had been applied in a number of Australian cases. It reiterated that in the context of s 382(b)(iii), ‘earnings’ are what an ‘employee receives for the work done by the employee in the course of their employment, rather than an amount paid to an employee to meet an expense incurred by the employee in undertaking such work…’. 52

4 Consideration

[35] It is clear from s 332 that the word ‘earnings’ is limited to those components of s 332(1) and excludes those payment and benefits referred to in s 332(2). Further, the ordinary meaning of ‘earnings’ is to be adopted, and from that meaning it can be concluded that earnings are the fruit of labour, that is, they are whatever is received by way of remuneration for the services provided.

4.1 Education assistance

[36] The Respondent argued that the education assistance provided to the Applicant was a personal benefit provided to him and is properly characterised as part of his earnings for the following reasons. It pressed three alternatives, which can be summarised as follows.

[37] First, the education assistance was a non-monetary benefit the value of which had been agreed and pursuant to s 332(1)(c), one hundred percent of the course fees formed part of the Applicant’s earnings. The Respondent explained that the education assistance was a non-monetary benefit because the benefit was the education. That is, the benefit was the qualification received as a result of completing the approved course and it therefore followed that the benefit was one hundred percent attributable to the Applicant.

[38] Second, the education assistance remains a non-monetary benefit, but the parties had not agreed on the value of the benefit. It followed that it was a non-monetary benefit which ought to be considered in the context of regulation 3.05(6). The Respondent submitted that the Commission had discretion to allow the education assistance as part of earnings and to then appoint a real or notional value. Regarding the value to be attributed, the Respondent contended that the evidence supported a finding that it was of one hundred percent personal value or in the alternative, because the benefit needed to be mutual, being of benefit to the Applicant as well as the Respondent, fifty percent should be afforded as personal benefit.

[39] Third, the education assistance constituted a monetary amount which the Applicant had received in his payslip in respect of the course fees. However, the benefit fell within the definition of ‘earnings’, said the Respondent, because the definition of earnings is non-exhaustive, as was indicated in Sam Technology. It followed that the education assistance did not need to fall within one of the four paragraphs of s 332.

[40] The Respondent continued that the education assistance was properly part of the Applicant’s earnings because it was consideration or compensation for his work performance. In support of this proposition, the Respondent referred to the Applicant’s own evidence that if Mr Butel had not been satisfied with his work performance or study progress, the education assistance may have been terminated or suspended. 53 The Respondent also referred to the Oresome Handbook, which provided under the heading of ‘2.3.11 Education assistance’ the following:

Before approving applications, consideration will be given to whether the proposed course of study is directly related to your present position or career prospects, whether you have completed a minimum of 6 months service with BHP Billiton Iron Ore, and your current performance and career potential. 54

[41] The Applicant submitted that the education assistance was a reimbursement and thus excluded by s 332(2)(b) and also could not be determined in advance.

[42] Regarding his first argument, the Applicant referred to the following extract from the Oresome Handbook at page 57:

Approved students will be entitled to claim reimbursement of approved study expenses.

These expenses…are subject to production of evidence of successful completion of the

approved units and payment of the fees.

[43] The Applicant observed that the employee must first pay the expense themselves and reimbursement will only occur if they successfully complete the units. The Applicant contended that it was not possible to know, at any given time, how much an employee will be entitled to by way of education assistance as it depended on the courses enrolled in (if any), the costs that the university charges for those courses, when the employee finished those units and whether or not the employee passes the units.

[44] The Applicant submitted that payment of the education assistance is therefore entirely at the discretion of the Respondent, conditional upon passing the course and conditional upon still being employed once the course has been passed. According to the Applicant, the education assistance is therefore:

(a) a reimbursement – excluded by s 332(2)(b);

(b) not able to be ‘determined in advance’ – excluded by s 332(2)(a); and

(c) not guaranteed.

[45] The Applicant further submitted that as it is a payment of money, regulation 3.05(6) did not apply and it is therefore irrelevant what he ‘has received’. However, said the Applicant, if the extent to which the course was for his ‘private benefit’ is relevant, then the Commission cannot form a view, on the balance of probabilities, as to this issue – and thus, as the onus is on the Respondent to prove its jurisdictional objection, the argument must fail.

[46] Addressing the Applicant’s two primary arguments that the education assistance was a reimbursement within the meaning of s 332(2)(b) and it was not guaranteed, the Respondent argued the following.

[47] In respect of the reimbursement argument the Respondent relied upon the Zappia v Universal Music Australia Pty Ltd decision, where the Full Bench concluded that the Deputy President at first instance was correct to take into account the value of tolls paid by the respondent in respect of the private portion of the appellant’s travel. 55 The Respondent explained that in Zappia, the toll fees were paid by the applicant and then the cost of those tolls were later reimbursed by the employer. The Respondent submitted that the Full Bench found that it was a payment for personal expenses, that is, a private outlay by the applicant. The Respondent further submitted that the definition of ‘reimbursement’ in s 332(2)(b) referred to the reimbursement of work-related expenses that were properly incurred in the performance of work or in relation to work related matters. The Respondent added that the education assistance provided to the Applicant did not fall within the meaning of ‘reimbursement’ as defined in s 332(2)(b) of the Act.

[48] In support of its argument that the education assistance was not a reimbursement, but was a personal benefit or reimbursement of an outlay incurred for private purposes of the Applicant, the Respondent pointed to the following evidence:

(a) the Applicant approached the Respondent and voluntarily applied for the education assistance on all three occasions;
(b) the Respondent did not require the courses to be completed or for the Applicant to hold the qualifications, and the approved courses were not requirements of the Applicant’s role. The courses were for the personal, professional or self-development of the Applicant;
(c) the education assistance was for university qualifications which were personal to the Applicant; and
(d) the matters that the Applicant learnt in the course were not required to perform the duties of his role.

[49] However, the Respondent acknowledged that if the Commission found that there was in part benefit to the Respondent, then that part may well fall within the definition of reimbursement. The Respondent’s view was that any amount falling within the definition of reimbursement constituted no more than 50%.

[50] Regarding the argument that the education assistance was not guaranteed, the Respondent pressed that at the time the education assistance application form (and the reimbursement form) was approved, the Applicant became entitled under an agreement, a written agreement, to the payment of the amount. The Respondent stated that at that point, the amount was fixed and certain because it was the amount of the course fees.

[51] The Respondent added that the policy in respect of the education assistance provided for reimbursement or repayment if the employee was to resign or have her or his employment terminated. However, observed the Respondent, the Applicant conceded that he was not required to repay any amount and he did not pay any amount. The Respondent submitted that on this basis the full entitlement remained.

[52] Section 332(1) of the Act details the relevant remuneration benefits that are included in calculating an employee’s ‘earnings’ for the purposes of s 382(b)(iii) of the Act. Section 332(2) then details those benefits that are excluded from the calculation of ‘earnings’ for the purpose of s 382(b)(iii). Relevantly, for the purpose of the present matter, s 332(2)(a) excludes those amounts that cannot be determined in advance.

[53] It is my view that the education assistance was unable to be determined in advance for the following reasons.

[54] The entitlement to education assistance arose from the policy contained in the Oresome Handbook. As described at paragraph [15], having been granted ‘approved student status’, an employee, such as the Applicant, became entitled to claim reimbursement of approved study expenses. It is uncontroversial that the Applicant had received ‘approved student status’ and that his course of study had been approved for the relevant period.

[55] However, the payment of the education assistance was dependent on a number of factors.

[56] First, the Applicant was required to produce evidence of successfully completing the approved units of study. If the unit of study was not successfully completed, then it appeared the Applicant would not be entitled to claim ‘these expenses’, being the ‘approved study expenses’. It is evident that what could not be determined in advance was whether the Applicant would successfully complete the units of study. The implication of this was that given the entitlement to claim reimbursement was dependent on such evidence, that is evidence of successful completion, it was improbable that the amount could be determined in advance. The scenario was not one analogous to that of the payment of tolls in Zappia. In Zappia, the payment of the toll fees was not dependent on the applicant providing evidence of successful completion of an academic unit of study.

[57] Second, the Oresome Handbook set out the consequence if an approved student left the Respondent business within two years after having received the education assistance payment. The departure covered both resignation and ‘termination’. It provides that the approved student will be required to repay the amount the company spent on their study assistance on a prorated basis. Effectively, the Respondent provided itself with a recovery clause, where the education assistance payment could be clawed back if a termination of employment occurred within a two-year timeframe.

[58] At hearing, the Respondent made mention that it had not sought the recovery of education assistance paid to the Applicant. That well may be the case, however, the Oresome Handbook provides that it is only in ‘exceptional circumstances that repayment may be waived by the Department Manager’. 56 Regarding the exceptional circumstances that existed to warrant waiving the repayment of the education assistance, this is somewhat of an arcana or at least unclear. This is particularly so in circumstances where the Applicant had been dismissed on the ground of disrespectful behaviour that occurred during a one-on-one interaction with a female co-worker in a light vehicle.

[59] However, to return to issue at hand, in circumstances where the Respondent has retained the right to recover monies paid, and such monies – in this case the education assistance payment – can be recovered on a ‘pro-rated basis’, it is evident that the education assistance is a payment which cannot be determined in advance because, dependent on circumstances, it may, in all or part, be recovered at some point.

[60] Further, insofar as it is relevant, in my opinion it would be contrary to an exercise of power in a manner that is fair and just if an employer could, on the termination of its former employee’s employment, decline to recover monies from that employee notwithstanding provision to do so in the relevant policy that gave rise to the entitlement – hence resulting in the employee falling foul of the high income threshold. In the absence of evidence as to why the Respondent did not opt to take this course, that is to recover the payment (in whole or pro-rated), an argument that the education assistance payment should be counted as part of the Applicant’s annual rate of earnings for the purpose of determining if he was protected from unfair dismissal must fail.

[61] At hearing. the Respondent noted that the Applicant had conceded that he was not required to repay any amount and he had not done so. The Respondent further noted that if the Applicant wished to make anything of that then the Respondent requested an opportunity in reply to address the point. The Respondent raised the jurisdictional objection and with that came the responsibility to fulsomely press its case. Ample opportunity was provided to the parties in the lead up to the hearing and during the hearing to do just that.

[62] To conclude, I am not satisfied the whole of the benefit received by the Applicant for education assistance should be included in the sum required by s 382(b)(iii) as I consider that it falls within the exception of s 332(2) of the Act. I have therefore omitted the amount of education assistance when determining the earnings of the Applicant.

4.2 Work Allowance

[63] The Respondent submitted that the work allowance formed part of the Applicant’s ‘Fixed Remuneration’ (as opposed to the incentive component) and clearly fell within the ‘wages’ component in s 332(1)(a) of the Act and did not otherwise fall within any of the exceptions in s 332(2) of the Act.

[64] The Respondent submitted that the Commission had previously accepted on many occasions that an allowance for location, role, work and being project-based, formed part of an employee’s earnings. 57

[65] Referring to the decision in Brittain v BHP Iron Ore Pty Ltd (Brittain), the Respondent identified that I had found that a work allowance given by BHP, identical to the work allowance in this case, was characterised as part of the employee’s earnings. 58 Observing that the same work allowance appeared in this case on the exact same terms and conditions, the Respondent submitted that in accordance with Brittain and the general case law, the work allowance in this case should be included in the calculation of the Applicant’s earnings.

[66] The Respondent further observed that the work allowance was treated by the Respondent as part of the Applicant’s remuneration, PAYG tax was withheld from the amount, and it was included in the amount in respect of which superannuation was calculated. The Applicant was also entitled to be paid the allowance while on leave.

[67] In respect of the Applicant’s contention that the higher duties allowance in the case of Kininmonth v Boom Logistics Ltd (Kininmonth) 59 is analogous and supportive of the proposition that the site allowance in this case should not be considered as part of earnings,60 the Respondent submitted that in Kininmonth, the employee also received a location allowance in consideration for working in Karratha, which was found to be a ‘guaranteed payment in the contract of employment’ that was ‘payable whilst the contract was in place’ and therefore part of the employee’s earnings.61 The relevant part of Kininmonth is extracted as follows:

…guaranteed payments the amount of which was known in advance. I am also satisfied that these payments were not reimbursements. The contract of employment was for a position in Karratha and the location allowance was therefore payable whilst the contract was in place. The job allowance was a guaranteed payment in the contract of employment. 62

[68] The Respondent emphasised that it was the location allowance in Kininmonth which was comparable, not the higher duties allowance, which was a temporary allowance while an employee is not carrying out their permanent role.

[69] The Applicant pressed that the work allowance was payable to Pilbara-based employees in consideration of certain factors, such as associated average working hours and so on. However, at paragraph 4(a) of the Applicant’s employment contract was a mobility clause that provided:

Organisational requirements may require you to transfer to another position, operation, or location, on a temporary or permanent basis (including interstate and overseas). In these circumstances, the Company will provide you with reasonable notice of the transfer and will review any benefits if there is a change in responsibilities.

[70] The Respondent pointed out that the Applicant’s contentions are very similar to those that were addressed by the Deputy President in Priddis v Komatsu Australia Pty Ltd (Priddis), where it was said:

Mr Priddis submitted that the site allowance should not be included in his earnings because it is not expressed to be part of his base salary and is only paid because of the location of the position. He submitted that he would not get paid this allowance if he did not work in the Pilbara Region. This submission misses the point. Mr Priddis was employed to work at Port Hedland. The allowance is not discretionary. His contract expressly provides for a zone allowance. There is no capacity for the allowance to be removed whilst Mr Priddis is employed in that position at that location. While a site allowance may be paid to compensate the employee for the disabilities associated with working away from home, it is not a living away from home allowance. Nor is it a discretionary bonus. 63

[71] In Priddis, the Deputy President found the site allowance to be part of the employee’s wages and therefore part of his earnings in accordance with section 332 of the Act.

[72] The Applicant’s employment contract provided for the ‘Base Salary’, as noted, and then a ‘Work Allowance’ which was comprised of 20% of the ‘Base Salary’. The ‘Work Allowance’ was defined as:

Work Allowance

Work Allowance is payable to Pilbara based employees in consideration of the associated average working hours, hardship of roster arrangement and all aspects of working at site operations. Work Allowance is calculated as a percentage of Base Salary.

[73] In my view, the work allowance was consideration for the matters expressly referred to in the definition, including the working hours associated with the Applicant’s role and roster, and all other aspects of working at a (remote) mine site. That is, the work allowance was directly made in consideration for the Applicant performing his role.

[74] Further, the work allowance was referred to in the employment contract as forming part of the Applicant’s ‘Fixed Remuneration’ (as opposed to a variable component, such as the ‘Short Term Incentive Plan Target,’ which provided an indicative value). Therefore, the work allowance was able to be determined in advance.

[75] In short, the Applicant seeks to attribute to the term ‘Work Allowance’ a meaning that is simply not open on a plain reading of the clause. First, the definition of ‘Work Allowance’ informs that it is consideration for associated average working hours and hardship of the roster arrangement. The average working hours and hardship of the roster arrangement pertain directly to the work done by the Applicant during the course of his employment. Second, the work allowance is a guaranteed entitlement. Third the Applicant’s employment contract stipulates that his work location is ‘Jimblebar on a FIFO basis’. There is no capacity for the allowance to be removed whilst the Applicant is employed in that position at that location

[76] Based on the abovementioned reasons, I have found that the work allowance forms part of the Applicant’s ‘earnings’, as that term is understood for the purposes of the Act (see s 332(1)).

4.3 Superannuation

[77] It is uncontroversial that the Applicant received payments of $4,510 above the superannuation guarantee.

[78] The Applicant noted that clause 16.1 of his employment contract refers to the employee ‘mak[ing] additional voluntary personal contributions’ and ‘choos[ing] to make these additional contributions’. The Applicant continued that none of the contributions described in s 332(4) apply to such payments.

[79] The Oresome Handbook describes the superannuation policy by which the additional payments were made. The policy states inter alia:

The BHP Billiton Superannuation Plan (Plan) was established for the benefit of members of the BHP Group in Australia. Superannuation is provided in accordance with company policy, rules of the Plan and relevant legislation, all of which change from time to time.

[80] According to the Applicant, the superannuation policy is not an entitlement but rather the result of a policy and a ‘Plan’ that can be changed from time to time at the absolute discretion of the Respondent. It follows, said the Applicant, it does not form a part of the Applicant’s earnings.

[81] In its submissions, the Respondent extracted clause 16.1 in full:

16.1 Contributions

(a) You may:

(i) make additional voluntary personal contributions from your Base Salary or

Defined Salary to the Fund or your choice of fund; and

(ii) choose to make these additional contributions on a salary sacrifice (pre-tax) basis or after-tax basis.

(b) If you decide to make personal contributions, the Company will increase its contributions. Please refer to the Superannuation Contribution Form for more information.

[82] The Respondent referred the Commission to Post v QSuper Ltd (Post) 64 and Johnson v Benex Civil Pty Ltd (Johnson)65, where in Post, the Commission held that a higher contribution is a contribution from income which is properly considered income to be taken into account in assessing whether or not the high income threshold is exceeded, and in Johnson, the Commissioner expressed that any superannuation contributions that exceeded the compulsory contributions, as required under the relevant Act, were to be included (as earnings for the purposes of the high income threshold).

[83] In Zappia v Universal Music Australia Pty Ltd, the Deputy President expressed the following:

[10] Section 332(2)(c) excludes from the definition of annual rate of earnings contributions

paid to a superannuation fund that are required by legislation. However in addition to

statutory superannuation, the respondent contributed an additional amount of 1 per cent of

salary (that is, $925) to a superannuation fund on behalf of the applicant. This is an amount

applied or dealt with on the applicant’s behalf, and must therefore, in accordance with

s.332(1)(b) be included in calculating the applicant’s earnings. 66

[84] The Applicant’s employment contract required the Respondent to make the contribution once the election had been made. The clause uses the language ‘will increase its contributions’. In my view, the use of the word ‘will’ unequivocally provides for a mandatory entitlement. It follows that the payment of $4,510 is considered in earnings.

5 Conclusion

[85] Having determined that the base salary, work allowance and superannuation payments constitute ‘earnings’ for the purposes of s 332 of the Act, the Applicant’s earnings amounted to $159,154.

[86] It follows that the jurisdictional objection of the Respondent on the ground that the Applicant’s annual rate of earnings exceeded the high income threshold is dismissed and an Order 67 to that effect will issue with this decision. Further directions will shortly issue in respect of the Applicant’s application.”

Davey v BHP Minerals Pty Ltd (2022) FWC 3128 delivered 21 December 2022 per Beaumont DP