What are the implications on leaseback fees of changes to FBT

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Published: Thursday, 02 June 2011 15:03

The announcement in the Federal Budget that the sliding scale of FBT payments based on the kilometres travelled by the car is to be scrapped and replaced with a standard 20% tax is currently being digested by the industry (May 2011).

It never made any sense to have a tax which reduced if you travel more kilometres. This additional travel increased other costs and its encouragement to emit more carbon.

Already some councils are threatening employees that they will try to recoup the increases in FBT from them as part of leaseback fees but these councils are missing the point that providing employees with private use of cars clearly benefits the Council as well as the employees concerned and that this is not an appropriate course of action. Imagine a council trying to recruit you lot without offering a car.

Clause 15 of the State Award restricts councils to increases of less than 10% anyway.

The new statutory rate will be phased in from 10 May 2011 over four years.

The single rate of 20% will:

• Increase the tax concession provided for cars driven less than 15,000 km a year;

• maintain the current tax concession provided for vehicles driven between 15,000 and 25,000 km a year; and

• decrease the tax concession provided for vehicles driven more than 25,000 km a year.

It will be cars travelling more than 25,000 km per annum that will be the problem.

Discussion is ongoing to monitor the impact of these changes on councils and their fleets so that we can better manage this issue across the industry.

What do I do if the Council starts to review its leaseback policy?

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Published: Tuesday, 31 May 2011 10:44

The 2010 Local Government (State) Award at clause 15 provides significant restrictions on a Council's ability to increase the level unreasonably and to do other things which prejudice your private access to a Council car under leaseback arrangement.

While clause 15 is reproduced below, a significant development in this Award was the acknowledgement that many employees have a car through a leaseback scheme as a condition of their employment - usually arising from the way the Council has advertised access to a car, and/or references in letters of appointment etc.

Make sure when a Council offers you a job that you have the condition of employment acknowledged in the letter of offer.  If the Council really wants you they will agree to having your right acknowledged under clause 15B(i).

Most employees covered by depa will have a car as a condition of employment and the Award now provides that once you've got the car as a condition of employment, the Council can only take it away with your agreement. This is a significant development.

The Award acknowledges that there are some employees for whom access to a leaseback agreement is not a condition of employment. depa’s view is that there will be very few health, environmental, building or planning professionals falling into this category. And while councils may claim the car is not a condition, this is arguable. Even if a Council says it isn’t in the letter of offer doesn’t mean it isn’t - but better to avoid the argument and have your right made clear.

Clause 15 also:

• requires the Council to refer proposals for any variation of leaseback arrangements, including the formula for calculating the lease agreements, to the Consultative Committee - Clause 15C(iv),
• prevents the Council from increasing the leaseback fee by more than 10% or the percentage movement in the Eight Capitals’ private motoring component of the CPI – clause 15C(v), and
• provides a mechanism for employees changing their working hours (in particular, reducing by going to part-time work)or going on extended leave, to agree to a different leaseback fee.  This is particularly relevant for employees who want to reduce their hours to go to part-time work.

How much notice do I have to give to resign?

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Published: Tuesday, 31 May 2011 10:53

It used to be two weeks but Clause 34 Termination of Employment in the 2010 Award provides an obligation equal to that which applies to the employer terminating your employment.

That means:

• Less than two years service                           at least 2 weeks notice
• two years less than three years                      at least 3 weeks
• three years and less than five years               at least 4 weeks
• five years and beyond                                     at least 5 weeks

The increased notice period was provided in response to concern by councils that they were being left in the lurch by departing employees. We thought that would have been balanced out by the need for the new employer to get that employee on board sooner rather than later.

We also know that many councils are happy to reach agreement on a shorter period of notice on the basis that if the employee is going anyway, they are not going to be setting astonishing performance records while they work out the notice period.

Clause 34(ii) allows a Council and an employee to agree to a shorter period of notice.