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What's in a name? Unfair dismissal and the high-income threshold

What's in a name? Unfair dismissal and the high-income threshold

A recent Fair Work Commission case found that despite an employee earning a salary over the high-income threshold, an unfair dismissal claim could still be made.

The employee was working as a Regional Manager in Victoria for Jones Lang LaSalle (the employer). He had worked for the employer for more than 27 years when he was terminated and subsequently commenced unfair dismissal proceedings in the Fair Work Commission challenging his termination.

Under the Fair Work Act 2009, for a high-income employee to be eligible to bring an unfair dismissal claim, it must be shown that the employee was covered by a Modern Award (for example, either the Real Estate Industry Award 2010 or the Clerks – Private Sector Award 2010). If an employee is a high income employee but it’s found that a Modern Award does not cover their employment, they are not eligible to make an unfair dismissal claim.

In the case, the employee earned in excess of the high- income threshold (which is currently $139,800 per annum). Therefore, he had to prove to the Fair Work Commission that he was covered by the Real Estate Industry Award. Not surprisingly, the employer objected to the employee’s unfair dismissal claim on the basis that the employee’s senior position as Regional Manager and high-level executive duties excluded him from being an employee cover by the Award.

Despite the employer’s objections to the claim, the Fair Work Commission decided the employee was covered by the Award and was therefore eligible to proceed with his unfair dismissal claim.

The Fair Work Commission came to this decision on the following basis:

  • Despite his senior title, the employee’s duties were similar to those of a Property Sales Representative under the Award. These duties included the listing and sale of properties and businesses, and interacting with sellers and buyers.
  • Where the duties or principal purpose for which an employee is engaged correspond with the coverage provisions of the relevant Award, high remuneration and senior position titles will only demonstrate the employer’s view that the employee is a valuable part of the business.

 

What does this mean for employers?

This case demonstrates that, when determining whether an employee is covered by a Modern Award, the courts will consider the substantive duties performed by the employee and not simply the title of their position.

Employers should be aware that even senior-level employees (e.g. General Managers, Sales Directors etc) may have access to the unfair dismissal regime if they wish to challenge the fairness of their termination.

 

Classifying employees

If you need help classifying an employee or have questions about the case discussed in this article, call the REEF Helpline on 1300 616 170.



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