High income earners and unfair dismissal
A common misconception among employers and employees alike is that high income earners are not eligible to make unfair dismissal applications in the Fair Work Commission.
The recent case of Hayden Thomas v Hanseatic Marine Engineering Pty Ltd t/a Silver Yachts  FWC 1 has shown that where an employee earns more than the high income threshold, they may still be eligible to make an unfair dismissal application, as long as they are covered by a modern award or enterprise bargaining agreement (and all other requirements for an unfair dismissal application are met).
The current high-income threshold sits at $148,700, and while it is often the case that a high-income earner is not covered by a modern award, the two factors are not mutually exclusive.
In determining whether an employee is covered by a modern award, the Commission will look to the nature of the employee’s work to determine the principal purpose for which the employee was employed. This test is applied to work performed by the employee at the time of their dismissal.
A mere breakdown of hours and work performed is indicative, but not determinative – the Commission must conduct more than a quantitative assessment of the time the employee spends performing certain types of duties.
The Commission may also have regard to both parties’ estimations of the work performed by the employee, but ultimately will consider the circumstances and work performed as a whole to ascertain the primary purpose of the employee’s employment.
In the case of Hayden, the Commission held that the applicant was employed primarily for his technical skill, not his management abilities, despite his position title of “Manager”. The applicant did not have a position description, which would have undoubtedly been helpful in clarifying his role and responsibilities and therefore the primary purpose of his employment. Because the applicant was employed primarily for his technical skill, he was covered by the relevant modern award and therefore eligible to make an unfair dismissal application.
What does this mean for me?
As an employer:
Do not assume that an employee is precluded from making an unfair dismissal application just because they earn above the high-income threshold;
It is imperative that employees are dismissed for valid reasons and proper procedure is adhered to when carrying out the employee’s dismissal. Where you are unclear of how to properly dismiss an employee, seek legal advice to avoid confusion.
Provide employees with clearly-worded position descriptions, to ensure that all parties are on the same page as to the purpose of the employment.
As an employee, if you are unfairly dismissed:
Ensure that you seek adequate legal advice to determine whether you are eligible to make an unfair dismissal application. You should do this:
Regardless of your income, since even high-income earners may be eligible; and
Promptly, to ensure that any relevant claim is lodged on time, within the Commission’s 21-day deadline.
Whether you are an employer or an employee - give us a call on 1300 970 214 if you have any questions.
Sherilynn Ding, Lawyer
James Francis, Principal