Mo’ Money, Mo’ Problems: New High Income Threshold for Unfair Dismissal Eligibility

Where an employee’s annual earnings exceed the high income threshold (HIT), the employee will be jurisdictionally barred from making an unfair dismissal claim.  With the HIT increasing to $145,400 from 1 July 2018, it is timely to refresh ourselves regarding the way in which the Fair Work Commission calculates an employee’s annual earnings for the purposes of determining eligibility to make an unfair dismissal claim.

What is included in the HIT?

For the purposes of the HIT, the below table indicates what entitlements are considered “earnings” pursuant to section 332 of the Fair Work Act 2009 (Cth):

What about salary changes prior to dismissal?

In the recent matter of Benjamin Lindsay v H T Bawden (NSW) Pty Ltd [2018] FWC 1693, the Fair Work Commission was asked to determine the Applicant’s annual salary after a series of  salary changes prior to termination.

The Applicant’s annual salary was reduced from $180,000 to $165,000 2 years after commencing employment with the Respondent as General Manager, and further reduced 3 months later to $120,000. The Respondent submitted that the amount of $156,126.94 should be taken to be the Applicant’s salary at the time of dismissal.  This figure was calculated by reference to the average amount paid to the Applicant in the 12 months prior to the dismissal.

Commissioner Cambridge held that calculation of an employee’s salary must be made at the time of the dismissal, and should not include an averaging for periods prior to the dismissal where the employee was paid different salaries. As the Applicant’s remuneration was less than the HIT immediately prior to the dismissal, the Applicant was eligible to bring his unfair dismissal application.

If you require assistance with defending an unfair dismissal application or in determining whether an employee’s remuneration exceeds the HIT, please contact our Workplace Relations team.

This article was written by Natasha Horvat, Associate – Workplace Relations and Cinzia Pietrolungo, Lawyer – Workplace Relations.