The Federal Court has dismissed an unlawful termination claim by a Melbourne Water Corporation employee, ordering him to pay $12,000 in damages after finding he fraudulently claimed almost $21,000 in vehicle reimbursements – a case that also underscores how weak expense oversight and passive approval processes can expose employers to significant litigation risk.

Background

Mr Spiteri commenced employment with Melbourne Water in July 2021. He later alleged that access to a company vehicle had been discussed during recruitment, although it was common ground that no work vehicle formed part of his contract and none was allocated exclusively to him.

From late 2021, Mr Spiteri raised concerns about accessing shared fleet vehicles, which he was told could be used informally by collecting keys from the office, provided they were not booked out for extended periods. Dissatisfied with this arrangement, he continued to seek a dedicated vehicle.

In July 2022, Mr Spiteri claimed he was authorised to use his personal vehicle and seek reimbursement through the payroll system, although the scope of any instructions was disputed. Over the next 18 months, he submitted travel claims not based on actual kilometres travelled, but by reverse-engineering a cents-per-kilometre calculation to offset personal vehicle costs, including finance payments, fuel, insurance, registration, repairs and cleaning.

In total, Mr Spiteri claimed more than 25,500 kilometres and was reimbursed approximately $21,000. Melbourne Water initially approved the claims without challenge, a fact Mr Spiteri later relied upon to argue he did not knowingly breach policy.

During this period, he was directed to an operational policy limiting company vehicle allocation to employees travelling more than 200 kilometres per week on site. He declined a proposed departmental transfer and later joined the Electrical Trades Union of Victoria.

In late 2023, Melbourne Water undertook a company-wide audit of travel reimbursements. Mr Spiteri’s claims were flagged as anomalous, including claims made on nearly 50 days when access records indicated he had not attended any Melbourne Water sites. Based on site access, leave and attendance records, the Court found he undertook minimal work-related travel and had been overpaid by at least $17,500.

Following an investigation and show cause process, Mr Spiteri was dismissed for serious misconduct in February 2024.

Court finds “manipulation”, penalises $12k

He subsequently commenced proceedings alleging contraventions of the general protections provisions of the Fair Work Act, claiming his dismissal was motivated by workplace complaints, refusal to transfer roles and his union membership. Melbourne Water denied the allegations and counterclaimed, alleging breach of contract and seeking recovery of the overpayments.

On the third day of trial, Mr Spiteri abandoned his general protections claim, leaving only an unlawful termination claim under s 50 of the Act.

Justice Forbes rejected that claim, finding Mr Spiteri had “taken it upon himself” to allocate business and private vehicle use “largely based on guesswork and without any objective supporting evidence”.

His Honour was particularly critical of Mr Spiteri’s failure to disclose that the “personal” vehicle was purchased through Little Latte, his wife’s coffee business, despite ASIC records showing he was the sole director and shareholder.

“It seemed to me that he manipulated what was a fairly straightforward system to derive a particular outcome,” Justice Forbes said.

While the Court calculated the difference between what Mr Spiteri received ($20,600) and what he should have been paid ($3,000), His Honour ordered him to repay $12,000, representing two-thirds of the losses, having regard to evidentiary uncertainties.

Full decision available here.

Implications for employers

For employers, the case underscores the importance of strict expense verification processes and documented vehicle-use authorisations, particularly where discretionary approvals are relied upon and compliance policies may be inconsistently applied.

• AREEA members should ensure reimbursement policies are clear, accessible and consistently communicated. Any departures from standard kilometrage systems should be documented in writing.
• Do not rely on passive approval for employee reimbursements and expenses. Automated or unquestioned sign-off of travel claims can undermine the employer’s position if a dispute arises.
• Conducting periodic audits will identify any major deviances. Regular review of high-value or anomalous claims can detect irregularities early and avoid prolonged overpayments.
• Keep strong record-keeping practices such as access logs, timesheets, GPS data, and leave records. These were decisive evidence in this case.
• Train managers on approval protocols. Verbal or informal “permissions” (real or fabricated) can create risk if not backed by documentation.
• Act promptly on red flags. Patterns such as unusually high claims, inconsistent site attendance or persistent disputes over entitlements should trigger early review.
• Document all instructions regarding vehicle allocation. This helps minimise claims of misunderstanding or unfair treatment.

AREEA works with employers to proactively strengthen expense frameworks and compliance practices, reducing the risk of misconduct disputes and costly litigation. For further information or to discuss your organisation’s policies, please contact [email protected]