Unfair dismissal; how to calculate the high income threshold

The high income threshold for the purposes of the Fair Work Act is calculated by reference to rate of earnings at the relevant time (for unfair dismissal cases the date of dismissal) and not by the earnings in the preceding year (although they may often be the same).

“The high income threshold and award coverage

If I had concluded that Mr Hoosen had been an employee of ISI, I would nevertheless have determined that he was not a person protected from unfair dismissal, because his annual rate of remuneration exceeded the high income threshold and he was not covered by a modern award or enterprise agreement. Section 382 of the Act provides:

“A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of minimum employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) 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.”

Mr Hoosen said in his outline of argument that his annual rate of earnings was the amount of taxable income shown on his personal tax return and that this was an amount of $134,289. I reject this contention. First, s 382(iii) is concerned with the annual rate of earnings, at the time of dismissal, not the amount of earnings earned in the preceding year. The reference to a rate of earnings in this provision stands in contrast to the use in s 392 of the concept of earnings during the 26 week period preceding dismissal. It is also clear that the relevant time at which the rate of earnings must be ascertained is the time of the employee’s dismissal (see Zappia v Universal Music Australia Pty Limited [2012] FWAFB 6108 at [9]).”

Hoosen v ISI Managed Services Pty Ltd  [2021] FWC 3032 delivered 27 May 2021 per Colman DP