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High Income Employees & Unfair Dismissal

The high income threshold has been increased to $113,800 effective 1 July 2010. Some groups of employees earning above the threshold may still be able to access unfair dismissal protections.

A high income employee is an employee who has guaranteed annual earnings above the high income threshold. This threshold was updated on 1 July, 2010 to $113,800 pa. What is included in the high income threshold?

In calculating what is considered ‘earnings' under the 'high income threshold', the following payments will be taken into account:

  • the employees' wages;
  • additional amounts applied or dealt with in any way on the employee's behalf (for example, through a salary sacrifice arrangement);
  • the agreed monetary value of any non-monetary benefit (such as the use of a company car, laptop or mobile phone).

The following amounts cannot be taken into account when calculating an employee's earnings for the purposes of determining the 'high income threshold':

  • payments in which the amount cannot be determined in advance;
  • reimbursements for business expenses;
  • contributions made on behalf of an employee for superannuation which are prescribed by a law of the Commonwealth, State or Territory.

Employees who earn over the high income threshold, and who are not covered by a modern award or enterprise agreement, are not entitled to the unfair dismissal protections in the Fair Work Act 2009.

If an employee is covered by a modern award or enterprise agreement, then the fact that the employee earns more than the high income threshold will not prevent the employee from accessing the unfair dismissal jurisdiction.

An example of this is a Salesperson, “covered” by the Commercial Sales Award 2010”, who receives guaranteed earnings of $110,000, comprising salary and the value for personal use of a company supplied car and phone. (incentive or bonus payments are not included unless the amounts can be determined in advance.)

If you are unsure about whether your employees earnings are included in the high income threshold calculation or have questions regarding dismissal please contact us.