Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - high income threshold.

[1] Diane Lynch has applied for an unfair dismissal remedy following the cessation of her employment with Allegra Consulting Group Pty Ltd. Allegra Consulting Group denies that Ms Lynch is protected from unfair dismissal and says her annual rate of earnings was above the high income threshold.

[2] For the reasons that follow, I find that Ms Lynch's annual rate of earnings was less than the high income threshold and that she is protected from unfair dismissal in connection with her employment with Allegra Consulting Group.

[3] A person is protected from unfair dismissal at a time if, at that time, they have completed the minimum employment period with their employer, and they are either covered by a modern award, are an employee to whom an enterprise agreement applies, and/or the sum of their annual rate of earnings and certain prescribed benefits is less than the high income threshold.

[4] In this case, the relevant time is 19 June 2020, when it is agreed that the employment came to an end.

[5] There is no dispute that Ms Lynch had completed the minimum employment period as an employee of Allegra Consulting Group. She was not covered by a modern award and no enterprise agreement applied to her employment.

[6] The high income threshold is an amount determined by reference to the Fair Work Regulations 2009. On 19 June 2020, the high income threshold was $148,700.

[7] In Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia[1], a Full Bench observed as follows:

"[9] ... Section 382 of the Act relevantly provides that a person is protected from unfair dismissal at a time if, at that time, the sum of the person's annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold. It is clear that the time at which the annual rate of earnings must be ascertained is at the time of the termination of the person's employment. What needs to be ascertained is the annual rate of earnings at that time, not the annual earnings to that time (the amount earned in the 12 months to that time)."

[8] The term "earnings" is defined in section 332 of the Act and includes wages, amounts applied or dealt with on the employee's behalf or as they direct, the agreed money value of non-monetary benefits and other amounts or benefits prescribed by the regulations. It does not include payments such as bonuses where the amount cannot be determined in advance, or reimbursements, or statutory superannuation contributions.

[9] Ms Lynch was employed in the business of Allegra Consulting Group for at least seven years. With effect from mid-October 2017, her annual rate of earnings was at least $155,251.14. Statutory superannuation contributions were paid on this amount. Ms Lynch was also entitled to a not insignificant discretionary bonus, calculated as a percentage of net revenue. The amount of bonus was not able to be determined in advance. These additional amounts do not count as earnings for the purposes of the high income threshold.

[10] On or about 12 April 2020, in response to the COVID-19 pandemic, Ms Lynch's hours of work and hourly rate of pay were reduced to 20 hours per week and $54.8823 per hour respectively. This equates to an annual rate of earnings of $57,077.59.

[11] By letter dated 29 April 2020, the terms of the contract of employment were further varied in anticipation of Ms Lynch's relocation to the United Kingdom. Her employment was converted to part time, fixed term employment, working 12 hours per week from 29 May 2020 to 27 November 2020 at the salary rate of $54.8823 per hour. This equates to an annual rate of earnings of $34,246.55. This was the annual rate of earnings that applied to Ms Lynch at the time her employment came to an end on 19 June 2020.

[12] It is plain from the factual background in this matter that at the relevant time, Ms Lynch's income was less than the high income threshold. It does not matter that her actual earnings in the preceding 12 month period were above the threshold, because that is not the test.

[13] The jurisdictional objection is dismissed. The matter will now be listed for arbitration on the merits, including on the question of whether Ms Lynch resigned or was dismissed.

H. Erhardt of Erhardt & Associates for the respondent

[1] [2012] FWAFB 6108.

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