CATCHWORDS

INDUSTRIAL LAW - termination of employment - jurisdiction of Court - meaning of “relevant wages” - whether commission is included.

Industrial Relations Act 1988, s.170CD, and s.170EE.

Ardino -v- Count Financial Group Pty Ltd (Industrial Relations Court of Australia, Wilcox CJ, 14 November 1994, unreported)

Mutual Acceptance Co. Ltd -v- The Federal Commissioner of Taxation (1944) 69 CLR 389

Commissioner of Payroll Tax -v- Reserve Bank of Australia (1986) 66 ALR 677

Shields -v- Commissioner of Payroll Tax (1989) 98 ALR 559

THOMAS GORDON BROWN -v- LISTAGLEN PTY LTD

NO. VI 1072 of 1994

Before:      MURPHY JR

Place:        MELBOURNE

Date:         21 December 1994

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1072 of 1994

BETWEEN:

THOMAS GORDON BROWN
Applicant

AND

LISTAGLEN PTY LTD
Respondent

REASONS FOR JUDGMENT

21 December 1994                                                                     Judicial Registrar Murphy

In the course of the hearing of this proceeding the Respondent raised a jurisdictional issue namely that the Court had no jurisdiction to hear this matter under s.170CD of the Industrial Relations Act (“the Act”), because the Applicant’s relevant wages for the period of his employment exceeded the amount calculated pursuant to s.170CD(1)(b).  I ruled against the Respondent and stated that I would publish my reasons at a later date.  I now publish those reasons.

Background

The Applicant had been employed by the Respondent as a used car manager, commencing 28 March 1994.  His employment was terminated on 4 July 1994.  His remuneration arrangements were as follows.  He was paid a retainer of $800.00 per week.  In addition he was paid commission at the rate of $25.00 per vehicle sold and 10% of the profits of the used car division.  Over the period that he was employed he was paid a total amount of salary and commissions of $17,521.00.  The Respondent calculated that, based on the number of days that he was employed, if his total earnings exceeded $16,438.36 then he was excluded under s.170CD(1)(b).

The Respondent’s argument depended on characterising the payments to the Applicant of retainer and commissions as being “relevant wages” for the purposes of s.170CD(1).  It was not argued that the retainer did not come within the usual meaning of wages.  The Court was therefore required to rule on the question of whether the commissions were to be included in the meaning of “relevant wages” pursuant to s.170CD(1)(b).

Relevant Cases

I was referred to a number of cases on judicial interpretation of the meaning of the word “wages”.  In Ardino -v- Count Financial Group Pty Ltd (Industrial Relations Court of Australia, Wilcox CJ, 14 November 1994, unreported), the Court dealt with a remuneration package that included a bonus.  At p.11 Wilcox  CJ said:

“it is arguable that a bonus is not ‘wages’ within the meaning of s.170CD.  I need not determine that question.”

At p.14 he said that ... “the definition of ‘relevant wages’ is concerned only with payments that are wages, strictly so-called”.

The Chief Justice, at p.16 noted that “wages” was not defined in the Act and he refers to the definition of “wage” in the Shorter Oxford Dictionary as:

“A payment to a person for service rendered; now esp. the amount paid periodically for the labour or service of a workman or servant.  freq.  pl.”

He also said the Macquarie Dictionary “gives the primary meaning of “wage”, noting that it is often plural, as ‘that which is paid for work or services, as by the day or week; hire; pay.’”

In Mutual Acceptance Co. Ltd -v- The Federal Commissioner of Taxation (1944) 69 CLR 389 the High Court was considering the meaning to be given to a statutory definition of “wages” which read:

“‘Wages’ means any wages, salary, commission, bonuses or allowances paid or payable....”

At 398 Rich J said:

“In ordinary parlance, wages is the term used for the remuneration paid for other than ‘white-collar jobs’”.

At 403 Dixon J. said:

“In the definition of ‘wages’ the first two words ‘wages’ and ‘salary’ refer to ordinary forms of remuneration for work done.  ‘Commission’ covers percentage rewards and ‘bonuses’ occasional or periodical additions whether contracted for or voluntary”.

In Commissioner of Payroll Tax -v- Reserve Bank of Australia (1986) 66 ALR 677, Brooking J at 686, when discussing a definition of “wages” in the Commonwealth Payroll Tax Assessment Act similar to that considered in Mutual Acceptance Co Ltd  (above) said:

“The Commonwealth Pay-roll Tax Assessment Act always reached out far beyond wages in the ordinary sense.  The reference to ‘salary’ made it clear that the tax extended to the remuneration of ‘white-collar workers’ or other persons who might have been thought to receive salary rather than wages ... A bonus, also included in the definition, would not ordinarily be regarded as wages; neither would commission.  Allowances are mentioned.”

In Terry Shields Pty Ltd -v- Chief Commissioner of Payroll Tax (1989) 98 ALR 559 the Court was required to consider whether provision of a motor vehicle came within the definition of wages.  It was held that it was not caught as an “allowance” within the above definition because it was not paid in cash.

From these authorities it can be stated that common law has always recognised the difference between “wages”, “salary” and “commissions”.  For that reason in taxing legislation, such as payroll tax an extended definition of “wages” has been required.

I was referred to the Explanatory Memorandum issued in relation to the Industrial Relations Amendment Bill (No. 2) 1994.  That stated that the provisions of Part V1 are to “be confined to employees who are either employed under an award (federal or state) or have a base wage of no more than $60,000.00 (this amount will be indexed annually to reflect increases in average weekly earnings)”.

I was also referred to the provisions s.170EE of the Act which provides that the Court in granting a remedy may require an employer to pay to the employee “the remuneration lost by the employee because of the termination” (s.170EE(1)(b)) or when awarding compensation “the amount of the remuneration that would have been received by the employee” (s.170EE(3)(a)).

From this specific provision it can be seen that Parliament has distinguished between wages in s.170CD and remuneration in s.170EE.  It was argued that because the definition of “relevant wages” in s.170CD(4) excludes overtime then it can be said that the Parliament had the opportunity to either include or exclude commissions in the definition of wages.  In my opinion the reference to overtime in s.170CD(4) is against the proposition made by the Respondent because it shows that the meaning of “relevant wages” does relate to the ordinary base wage of an employee.

In my opinion s.170(1) was designed to provide a simple mechanism for determining whether or not an employee was covered by the provisions of Part V1.  This was by reference to the base wages of the employee without reference to commissions or other benefits.  Parliament must of been aware of the different characterisation which the common law has given to “wages”, “salary” and “commissions” and had the opportunity to use an all embracing term such as “remuneration” or “earnings” yet it failed to do so.  It can also be inferred that the Parliament must have been aware of the myriad of ways that remuneration is “packaged” in these days of tax minimisation.

It is probably the case however that the terms “wages” and “salary” are in many instances interchangeable, particularly when s.170(1) provides a maximum amount of “relevant wages” of $60,000.  The concepts of commission and bonus have a different meaning in general usage, and that meaning is not encompassed in the ordinary meaning of the term “wages”.

In my opinion therefore in determining whether or not the Court has jurisdiction in this case, the Court looks to the base wage or salary of the Applicant which was stated to be a retainer of $800.00 per week.  For these reasons I rule against the Respondent’s argument that the Court does not have jurisdiction.

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:

Dated:              21 December 1994