Employees who earn more than the high income threshold (currently $138,900) are not eligible to make an unfair dismissal application unless their role is covered by an enterprise agreement or award.
The recent Fair Work Commission decision in Kaufman v Jones Lang LaSalle (Vic) Pty Ltd is a reminder that employers should not assume that a high income earner cannot claim unfair dismissal.
Mr Kaufman began working for Jones Lang LaSalle (Vic) Pty Ltd (trading as JLL), a global real estate business, in 1989. He was dismissed from his position of Regional Director, Capital Markets due to redundancy in December 2016.
Mr Kaufman lodged an unfair dismissal application with the Fair Work Commission. JLL objected to his application on the basis that Mr Kaufman was earning well in excess of the high income threshold, and he was not covered by an award. At the jurisdictional hearing Mr Kaufman argued that the Regional Director, Capital Markets role was covered by the Real Estate Industry Award 2010, and that the Award classifications of Property Sales Representative and Property Sales Supervisor could cover his role.
In response, JLL argued that Mr Kaufman was not covered by the Award because he held a senior management role that went beyond the classifications in the Award. JLL claimed this was evident from Mr Kaufman’s seniority within the business, his high income and pay structure, his leadership and business development responsibilities as well as the general requirements of his role.
The Commission disagreed with JLL. Deputy President Gostencnik was not convinced that Mr Kaufman’s role as a Regional Director was, in fact, a senior management role. Instead, the Deputy President found that the principal purpose of Mr Kaufman’s role was to sell real estate. His title of Regional Director was simply a “rank or accolade” given to him. There was nothing in Mr Kaufman’s duties that could be described as managerial and he had no direct staff reports. Deputy President Gostencnik made it clear that “the question of award coverage is not determined by the person’s title – it is the duties performed that will be of significance”.
Whilst the Deputy President acknowledged that Mr Kaufman was a high performing employee and that he was part of a leadership team, he held that this alone did not mean that the Award did not cover his employment. The Commission held that Mr Kaufman’s duties fell within the Property Sales Representative classification under the Award. Therefore, Mr Kaufman’s unfair dismissal claim could be heard by the Commission, despite his salary significantly exceeding the high income threshold.
Lessons for Employers
Employers should be mindful that paying an employee above the high income threshold does not automatically mean that unfair dismissal laws will not apply. Whilst an award may not “apply” to a high income employee, it can still “cover” their employment and allow the employee to make an unfair dismissal claim. It is the employee’s duties that determine whether he or she will be covered by an award, rather than the title of their position or the amount they are paid.
While it is unusual for senior managers and high income employees to be covered by an award or enterprise agreement, it is more common in some sectors such as local government, social and community services and disability. It is important to check the coverage and classification provisions of your award or enterprise agreement to determine who is, and who is not, covered (particularly in relation to your managerial staff).
To determine whether an employee is covered by an award or enterprise agreement, you need to consider the nature of the employee’s work, the circumstances in which the employee was employed, and whether the employment falls within the scope of the classifications under the award or agreement.
If you are negotiating a new enterprise agreement, you should always carefully consider the coverage provisions.