Removing an electrician’s access to a company car for personal use without compensation after he hit a kangaroo on the way to work was a repudiation of the employment contract with the result that the employee was “dismissed” under the Fair Work Act 2009 (Cth) (FW Act) despite remaining in employment. The dismissal was found to be unfair and the employee was to be reinstated to his previous position.

Company car use unilaterally withdrawn

The employee, Mr Darren Bradley, claimed to have been dismissed while employed as an electrician at Solarig Australia Pty Ltd’s solar farm in regional South Australia. He claimed that Solarig repudiated his employment contract when it unilaterally withdrew his access to a company car for personal use after he hit a kangaroo while driving to work. Solarig particularly took issue with the fact that the employee had not immediately reported the accident, instead driving to work in the damaged car and then reporting it. There was no mobile phone coverage where the accident occurred.

Solarig opposed the claim on the basis that the employee was not dismissed and continued to be employed. It also claimed the employee’s unfair dismissal application was out of time.

Personal use of the car was a term of the employment contract

The Deputy President found that it was a term of the employee’s employment contract that he was entitled to personal use of a company car. The job offer he signed specifically referred to a company car as a benefit, and the handover document for the car contemplated use of the car for personal purposes with authorisation. The Deputy President was satisfied that the employee was told at the time of engagement that he could use the company car to drive himself to and from work with minor deviations, and that he agreed to be employed based on that representation. The conduct of the parties during employment supported this finding, with the employee driving himself to and from work in a company car almost every working day for nearly 2 years.

The benefit had been withdrawn in a manner not permitted by the contract

Although the employee’s personal use of a company car required authorisation, the contract did not give Solarig a unilateral right to withdraw the benefit once it had been established as a term of the employee’s contract.

The withdrawal was a repudiation of the employment contract

The Deputy President considered that where an employee continues in employment and has not been demoted, but claims to have been dismissed on the basis of the employer’s conduct, then they were required to meet the statutory definition of dismissal in s 386(1) of the FW Act.

The Deputy President found that the benefit of the private use of a company car was significant. It constituted around 16% of the employee’s remuneration package and the employee had accepted the offer of employment in part in reliance on the benefit. The withdrawal of the benefit constituted repudiation of the employment contract.

The repudiation resulted in a termination of the employment contract

The Deputy President found that the employee’s subsequent employment was “so fundamentally different as to constitute a new employment relationship”. The benefit was a term of the employee’s contract upon which he had relied, its withdrawal had significant monetary value for which the employee was not compensated, the withdrawal had been unilateral and the employee had only agreed to continue working under protest at his terms.

The employee was “dismissed” and the unfair dismissal application lodged in time

Accordingly, the Deputy President found that the employee’s employment had been terminated and he had been dismissed within the meaning of s 386(1).

The date of the dismissal was not the date on which the company car was withdrawn, but the date on which the employee received his next pay advice which showed that he had not been compensated for the loss of the benefit. On that basis, the application was not filed out of time.

There was no valid reason for the dismissal, and it was otherwise unfair

The Deputy President next found that there was no valid reason for the dismissal. Solarig had acted under the mistaken belief that the benefit was discretionary and that it could be unilaterally withdrawn. It also believed the employee had engaged in misconduct in relation to the kangaroo incident by not immediately reporting it and instead driving to the work site. This contention was rejected.

Solarig also argued that it had a valid reason to dismiss the employee on the basis that he exceeded the 20,000 km per year limit on the car. The Deputy President accepted that the employee was in breach, but this did not warrant complete withdrawal of the use of the company car without compensation.

The employee was notified of the decision to withdraw the benefit when it had already been made and he had no opportunity to respond.

The employee was reinstated

The Deputy President found that the dismissal (being the withdrawal of the benefit and non-compensation) was harsh, unjust and unreasonable. Solarig was ordered to reinstate the employee to the position he was in immediately before the dismissal.

Source: Mr Darren Bradley v Solarig Australia Pty Ltd [2021] FWC 2805, 24 May 2021.