Employees earning over a certain amount are not able to bring an
unfair dismissal claim against an employer. However,
determining whether an employee earns above the cap is not always
an easy task. The Fair Work Act 2009 (Cth) helps
shed light on this issue.
The FW Act affords "national system" employers, that
is "constitutional corporations", protection from unfair
dismissal claims if an employee is not covered by an award or
enterprise agreement and earns more than the high income threshold
and certain additional amounts. The high income threshold is
currently $108,300. In assessing whether an employee is
earning above this threshold, the FW Act further defines what is
and is not included in "earnings". What is included
in the definition of "earnings" are:
amounts applied or dealt with in any way on the employee's
behalf or as the employee directs (this could include amounts which
an employee elects to salary sacrifice)
the agreed value of non-monetary benefits which the employee is
entitled to for the performance of work (for example, personal use
of a company car or mobile phone).
However, "earnings" does not include:
payments the amount of which cannot be determined in advance
(for example, commissions, incentive-based payments and bonuses,
and overtime (unless the overtime is guaranteed))
employer contributions to a superannuation fund.
The FW Act also requires an employer, when considering an
employee's earnings for the purposes of bringing an unfair
dismissal claim, to add to an employee's earnings the average
over the previous 12 months, of any amounts which the employee
has received which are set by reference to a quantifiable output or
task, such as commissions which are calculated in a fixed
Accordingly, although these amounts (including commissions) are
generally not considered to be earnings under the FW Act, in
circumstances where they are calculated by reference to a
quantifiable output or task, they will be considered when assessing
whether an employee can bring an unfair dismissal claim in Fair
Implications For Employers
The FW Act clarifies what amounts and benefits are regarded as
"earnings" making it easier for employers to assess
whether an employee can bring an unfair dismissal application and
therefore what termination process they should follow taking into
account this exposure. In certain circumstances, commissions
will be taken into account in determining whether an employee is
excluded from bringing an unfair dismissal claim.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Treasurer Scott Morrison recently announced changes to a number of 2016 Budget superannuation contribution measures.
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