A recent decision of the Fair Work Commission (“FWC”) found that an employer’s withdrawal of an employee’s company allocated vehicle amounted to a repudiation of the employment contract and constituted an unfair dismissal.

Background

The employee, who worked as an electrician at a solar farm, was involved in a road accident when the work vehicle he was driving en route to work collided with a kangaroo. Following the accident, the employee assessed the damage to the vehicle, determined he could still drive the vehicle to work and reported the accident to his employer after he had arrived at work.

Several days later, the employer told the employee that he would no longer be permitted to drive his company allocated vehicle to and from work and that he would not be allocated a replacement vehicle.

The employee claimed that the removal of the vehicle was a breach of the terms of his employment contract and that the benefit of the vehicle amounted to 16% of his total remuneration package. The employer refused to compensate the employee for the loss of the vehicle and the employee brought a claim in the FWC.

Findings

The FWC found that the employee had a contractual right to use of a company vehicle for work and limited private purposes, and that the employer had no right to withdraw the benefit in the circumstances.

The employer argued in its defence that the reason it removed the vehicle was because the employee had breached the terms of his employment by failing to follow accident procedures at the time of the accident. However, the FWC disagreed and accepted on the evidence that the employee had not been reckless and had acted appropriately following the accident. Notably, the FWC said that the employer had taken an “unreasonably critical view of the employee’s conduct” and that none of its concerns had been put to the employee for response before the decision was made to remove his vehicle.

The FWC found that the removal of the vehicle amounted to a repudiation of the employment contract and, in turn, amounted to a dismissal under the Fair Work Act 2009 (deemed an unfair dismissal in the circumstances).

Although the employee had remained in his employment throughout the course of the proceedings, the FWC ordered that he be “reinstated” to his former position, which in the context meant that he be reallocated a company vehicle for reasonable private use.

Key takeaways

• Employers need to exercise caution when contemplating making changes to an employee’s terms and conditions of employment.
• Employment contracts and policies should be drafted carefully to ensure employers retain discretion where appropriate.
• Where there are concerns with conduct, and grounds for potential disciplinary action, those concerns and any potential outcome should first be put to the employee for response.

People + Culture Strategies