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Allowance tips income over unfair dismissal threshold

A tribunal has rejected a worker's unfair dismissal claim.
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Allowance tips income over unfair dismissal threshold

Allowance tips income over unfair dismissal threshold

26 October 2020

By Mike Toten

A tribunal has rejected a worker's unfair dismissal claim after finding his total remuneration exceeded the high income threshold. While his base salary was below the limit, payment of a Project Uplift Allowance had to be included as earnings, and that took his remuneration above the limit.


Refused to take drug test

The employee was a marijuana smoker. When his employer directed him to take a drug test, he refused to do so, and later allegedly resigned. He told the employer he would not pass the test because of his marijuana use, but handed in a letter citing “personal reasons” for resigning. He then lodged a claim of unfair dismissal.

The employer claimed that his remuneration was above the threshold, and also that he had voluntarily resigned, not been dismissed.

The employee’s base salary was $135,000 at a time when the threshold was $148,700 – it is now $153,600. The employee had been employed for 37 weeks at the time of termination and the FWC calculated that he had earned uplift payments of $19,366 by then. The FWC found that the uplift payments he would receive could be calculated in advance, and therefore future annual earnings could be calculated. On the project that he was to be drug-tested before commencing, the allowance would be 30% of base salary. The drug test was a prerequisite to starting work on that project.

The employee’s package also included a company vehicle valued at $19,500 per year, an employer-supplied laptop and mobile phone, and salary continuance insurance.


Decision

Finding that the project uplift allowance was a component of annual earnings as defined by Reg 3.05(6) of the Fair Work Regulations 2009, and could be calculated in advance, the FWC refused to accept his claim on the grounds that exceeding the remuneration threshold made him ineligible to lodge a claim. Therefore, it did not need to consider whether he resigned or was dismissed.

The bottom line: An employee’s earnings for the purposes of the unfair dismissal claims threshold limit include the monetary value of various employee benefits as well as cash remuneration. The Fair Work Regulations provide a definition of what should be included. Employers are advised to calculate the current monetary value of such benefits so that they have accurate information about an employee’s total earnings if faced with a claim of unfair dismissal.

This judgment did not provide a definition of “project uplift allowance”, but it appears to be an extra cash amount added to base salary while the employee is working on specified projects, and did not apply at other times.


Read the judgment

Stranger v WBHO Infrastructure Pty Ltd [2020] FWC 5468, 14 October 2020

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