The recent case of Mark Evans v Total Essential Services Group Pty Ltd  FWC 1822 reminds employers that award and enterprise agreement coverage is an important consideration when assessing the risk of an employee making an unfair dismissal application.
Key takeaways for employers
When considering terminating the employment of a high income employee, employers should consider the following questions to assess whether the employee will be eligible to make an unfair disimissal application on the basis of Award coverage:
- role classification: What are your employee's duties and responsibilities, and how do they impact coverage under the relevant award or enterprise agreement, regardless of their salary level?
- managerial position: As this case shows, merely having a higher salary or a title with "manager" in it does not automatically exclude an employee from award coverage. Employers must consider whether the role involves predominantly managerial duties or technical/professional responsibilities
- supervisory authority: Does your employee have direct reports or exercise supervisory authority over other staff, and if so, how might this affect their classification under the award?
- employment contract: What do the terms of your employee's employment contract reveal about their intended role and responsibilities, including any specific provisions related to award coverage?
- regular updates: Have there been any changes in award classifications? If so, do these updates affect your employee's coverage?
Employers should bear in mind that even if employees earn above the threshold and cannot file an unfair dismissal application, there may be other legal avenues available to them to challenge their dismissal. This could involve filing a breach of contract claim or lodging a general protections application under the Fair Work Act 2009 (Cth).
Mark Evans was an employee of Total Essential Services Group Pty Ltd (TESG). His employment was terminated and he subsequently filed an unfair dismissal application. The key issue was whether Mr Evans, as a high income employee, was covered by an award and thus eligible to file an unfair dismissal application.
The Commissioner's decision hinged on the classification of Mr Evans' role and whether it qualified as a "wholly or principally managerial position". TESG argued that Mr Evans' position as a "Manager Fire Engineering – NSW" exempted him from award coverage due to its managerial nature. However, the evidence demonstrated that Mr Evans did not hold a managerial position in the traditional sense, as he did not have any direct reports and his role was more technical in nature. As such, the Commissioner concluded that Mr Evans did not occupy a "wholly or principally managerial position." Instead, his role fell within the classification of a Level 4 - Professional under the Professional Employees Award 2020.
Crucially, this classification meant Mr Evans was eligible to lodge an unfair dismissal application, despite his annual earnings totalling $167,794, which exceeded the high income threshold. A decision on the merits of Mr Evans' unfair dismissal application will be made in due course. If Mr Evans' application is successful, he may be entitled to remedies such as reinstatement or compensation.
What are the implications of this decision?
It is a common misconception that employees earning above the high income threshold (currently $167,500) are automatically precluded from filing unfair dismissal applications. However, a high earning employee who is covered by a modern award or to which an enterprise agreement applies will be protected against unfair dismissal, provided that they meet other eligibility criteria.
This decision serves as a vital reminder that remunerating an employee above award rates does not automatically exclude them from unfair dismissal protection. It is crucial to look at an employee's actual duties and responsibilities when assessing if they are covered in order to properly assess the risk of an unfair dismissal application.
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