The limit on non-award employees commencing unfair dismissal
proceedings is an income of under $136,700 (effective 1 July 2015),
which includes guaranteed salary (not statutory superannuation),
and other guaranteed benefits. It sounds simple, but sometimes
calculating the settlements of salary which come within this
definition, and which may take a particular employee outside the
unfair dismissal jurisdiction, can be difficult.
As a couple of examples:
An employee on $115,500 base salary for a 40 hour week was
contractually obliged to work 58 hours a week with overtime paid at
$56.00 per hour plus a 5% project allowance. This totalled $173,250
per annum, exceeding the salary cap. The employee argued that
the overtime component was not guaranteed, because it was not paid
if inclement weather interrupted his work or if he took sick
The Fair Work Commission (FWC) decided that the overtime was to
be included in his annual earnings, because events outside the
control of the employer did not indicate that the overtime was not
guaranteed. The overtime expected to be received, all things being
equal, could be determined in advance and was therefore part of
guaranteed income, even though traditional overtime is not
anticipated or agreed in advance
Guaranteed income can also include non-monetary items, if a
"personal use" value can be calculated for work-related
For example, with a car allowance, the FWC applies a formula
based on work-related use and private use to establish a dollar
value for private use, and then considers whether that takes the
employee outside the salary cap. In a recent case concerning a work
provided iPad, although the employee claimed that he used it only
for work purposes, the contents of the ipad showed numerous
personal photos and videos. In addition 62.5% of his iPhone use
($1,220 conservatively, 412 out of 659 calls identified as private)
and 60% personal use of a car ($11,454 conservatively since it
didn't include tolls and speeding fines paid by the employer)
took the employee over the salary threshold.
If you're faced with an unfair dismissal claim, it's
worth considering whether additional cash or non-cash benefits take
pay above the threshold, potentially putting the application
outside the jurisdiction of the Commission.
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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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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