Unfair dismissal and the high income threshold

Allowances which constitute an agreed estimate to reimburse an employee an expense incurred in carrying out a job (for example to reimburse an employee telephone costs) are not included as earnings when determining whether an employee’s annual rate of earnings exceed the high income threshold for the purposes of unfair dismissal under the Fair Work Act.

“I note the decision in Florenca, Elvina v Industrial Foundation For Accident Prevention T/A IFAP in which Deputy President Beaumont considered a similar allowance stating:

“I consider it unnecessary to determine whether to include the total amount of $50 a month ($600 annually), or a proportionate amount (reflective of the amount derived for personal benefit), of the mobile phone allowance in the ‘annual rate of earnings’ given my conclusion above. This is because whether it is added or not to Ms Florenca’s annual rate of earnings, those earnings would still remain less than the high income threshold. Nevertheless, for the sake of fulsomeness, I observe there was no evidence before me reflective of the proportion of business or personal use of the phone. In the circumstances, I am satisfied the amount of $600 annually constituted a reimbursement and should not be included in Ms Florenca’s annual rate of earnings.” 2

[26] In the circumstances before me, I echo the interpretation of the relevant authorities, and come to a similar conclusion, as put by the Deputy President. 3

[27] The phone allowance alone would not push the Applicant above the threshold. For completeness, I note that neither party adduced any evidence regarding phone use for professional or private purposes. Accordingly, I am not satisfied that this allowance can be included in the calculation and find the sum should be treated as a reimbursement. 4”

Jambanis v Warrikal Engineering Pty Ltd (2022) FWC 1907 delivered 25 July 2022 per Schneider C