Q: Could you please help clarify if taxable car allowances should be included in the calculation of gross wages for AWE?  I understand if this is a taxable non-reimbursing allowance and is a contractual term of the employment agreement, then it should be included?

Could you pls advise if that’s correct or if there are any circumstances where a car allowance would not be included in AWE?

A: A taxable car allowance would be part of AWE but could also be part of OWP depending on how often it is paid, for example taxable car allowance paid weekly.  If an allowance is taxable then it would be included unless it is a one off discretionary payment but doubt it would apply to this situation.

Q: Following on from the below email, our client has further asked the below question in relation to car allowances and AWE:

• Allowances should be included in order to ensure the employee is not disadvantaged, my question is if we pay the car allowance regardless of whether the employee goes on leave or not then surely we should not be including it then in her annual leave payment then as well? It would be doubled up?

Could you please advise?

A: They are totally correct but if this happens is it because they have created the situation through a poorly written employment agreement.  Keep in mind any allowance is an agreed term so it is based on what was agreed between the parties.

For example:

Most poorly written employment agreements have this type of clause (if a clause at all):

• The employee will receive a weekly taxable motor vehicle allowance.

What should be written is something like this:

• The employee will receive a weekly taxable motor vehicle allowance.  This allowance will not be payable on any period of leave taken.

So the above clause will remove the double dipping.