On 1 July 2015, the high income threshold under the Fair Work Act 2009 (Cth) increased from $133,000 to $136,700.
An employee will not be protected from unfair dismissal unless they satisfy one of these conditions:
- they earn less than the high income threshold; or
- a modern award covers their employment; or
- an enterprise agreement applies to their employment.
Earnings include:
- wages;
- amounts dealt with on the employee's behalf or as the employee directs; and
- agreed money value of non-monetary benefits.
If the employee and employer have agreed on a reasonable money value for particular benefits, that value will apply. Otherwise, if the amount of earnings is in dispute, the Fair Work Commission (FWC) will apply an estimated monetary value for a non-monetary benefit.
For example, the FWC has recently been required to consider the value of the use of an iPad and iPhone for a year. In this particular case, the values assigned were $431 for the iPad and $960 for the iPhone, applying percentage discounts to take into account a proportion of personal use.
Earnings do not include non-guaranteed earnings such as bonuses or overtime. If however, the bonuses or overtime are legally guaranteed – ie non-discretionary – these will likely form part of the employee's earnings.
For example, an employee with a base salary of $115,500 was recently pushed over the high income threshold (and thus could not pursue an unfair dismissal claim) because he was contractually obliged to work 58 hours overtime and had a 5% project allowance. The FWC did not accept the employee's argument that the overtime should be excluded because it would not occur in the event of inclement weather, nor did it matter that, in fact, the employee had been on sick leave for 12 months and thus not been able to perform the overtime.
Compulsory superannuation payments are not included in earnings.
Where an employee is provided with a fully funded vehicle, it is only counted towards "earnings" to the extent that it is utilised for private use.
The increase also brings the maximum compensation payable in the event of a successful unfair dismissal claim to $68,350.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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