Background

The senior manager was dismissed on the grounds of redundancy in January 2019 and they subsequently lodged an unfair dismissal claim. An objection to the continuation of the application was made by the business, on the grounds the dismissal had been one of genuine redundancy and the employee had earned more than the high-income threshold (currently $145,400, as at 1 July 2018). The Commission has an obligation to determine whether the dismissal was harsh, unjust or unreasonable only if the employee is protected from unfair dismissal. If they earn above the high income threshold and are not covered by an industrial instrument such as an award, they are not protected from unfair dismissal.

The Decision

After establishing the employee was not covered by an award at the time their employment was terminated, the Commission moved to consider their salary. The employee’s salary package, as per their offer of employment, comprised of the annual gross salary, monthly fuel allowance, reallocation cost reimbursement in addition to personal, annual and long service leave entitlements. The business contended the salary package of $146,435.02 should be used to assess the application. The employee’s analysis of his earnings totalled $143,600 per year, and he argued only his salary and parts of the fuel allowance should be included in calculation of total renumeration

Ultimately, the Commission took into consideration the applicant’s salary, annual leave loading and a proportion of the fuel allowance and mobile phone expenses. After analysis of the earnings, a figure totalling $145,715 was produced, placing the applicant over the high-income threshold. As such, the Commission determined the applicant was not protected from unfair dismissal and his application was dismissed.

Lessons for Businesses

It is important for businesses to consider how the high-income threshold and award coverage affect an employee’s access to protection from unfair dismissal. It is always safer to follow a fair process when dismissing employees, however if you receive a claim from an employee you believe would be over the high-income threshold or not award covered, this is worth exploring before responding to their claim.

How we can assist

In our Responding to Fair Work Commission Claims experienced consultants will share some of their secrets and experience to help you understand the process, from initial response to appeals process. Learn more about the types of claims the Fair Work Commission deals with and how to put your best foot forward to defend your business and keep costs down.

Written by Amy Fowlds, Graduate Workplace Relations Advice Line Advisor

Rob Maloney v John Herrod and Associates Pty Ltd (U2019/1038)