The Collieries’ Staff and Officials Association division of Professionals Australia argued that clause 13.4(b) of the Black Coal Mining Industry Award 2010 required the company to pay its former employees untaken personal leave when they were made redundant in 2020.

The company disagreed and maintained that the award’s conditions did not apply to the redundant employees since they were all paid well above the high-income threshold of $153,600 at the time.

It was clear it had agreed to pay each of the former employees above the high-income threshold and all employees had subsequently agreed to the terms of their employment.

The primary issue was whether the agreement for a higher salary was sufficient to constitute a ‘guarantee of annual earnings’.

Decision

Ultimately, the Federal Court of Australia held that the terms of the contracts of employment were not sufficient to constitute a ‘guarantee of annual earnings’ as per s 330 of the Fair Work Act 2009 (Cth). It was clear that no undertakings by the company constituted a ‘guarantee of annual earnings’.

The court admitted that while there is a general legislative belief that modern awards do not apply to high-income earners in certain circumstances, those circumstances are defined and include protections for those employees.

The court confirmed that an award would only not apply to an employee who earned a high income if the employee accepted a ‘guarantee of annual earnings’ with the knowledge that, by accepting that guarantee, the applicable modern award would not apply.

As a result, the company’s argument that because its former employees earned a high income and therefore the award provisions did not apply was dismissed.

It was confirmed that none of the redundant employees had a ‘guarantee of annual earnings’ for a guaranteed period nor did they accept any undertakings.

Ultimately, the court held the company breached the Black Coal Mining Industry Award 2010 and compensation would be determined at a later hearing.

Learnings for Business

This case highlights the importance of ensuring that employees are compensated appropriately according to the award provisions that cover them, unless appropriate steps have been taken to ensure the employee understands the award provisions will not apply.

Clearly, a high-income earner is not always excluded from the entitlements and conditions as provided by their applicable award, and this case highlights the technical complexity of providing a valid ‘guarantee of annual earnings’.

How the Victorian Chamber can assist

For assistance on any aspect of your employment obligations, please call the Victorian Chamber Workplace Relations Advice Line on 8662 5222.

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