Connor McClymont and Dominique Hartfield

In the recent decision of Kaufman v. Jones Lang LaSalle (Vic) Pty Ltd. t/a JLL [2017] FWC 2623 (Kaufman), the Fair Work Commission (FWC) found a successful real estate professional was covered by the Real Estate Industry Award 2010 (the "Award") for the purposes of unfair dismissal despite his title being "Regional Director" and his salary being well in excess of the high-income threshold.

It is a common misconception that once an employee is remunerated in excess of the high-income threshold (currently AU$138,900) or carries a managerial or directorial title that employers can automatically disregard the application of unfair dismissal laws.

An eligible employee is protected from unfair dismissal if the employee is found to satisfy one of three criteria, namely, the employee is covered by an award, an enterprise agreement applies to them or that the employee earns less than the high-income threshold.

Kaufman v. Jones Lang LaSalle (Vic) Pty Ltd.

In Kaufman, when determining whether a modern award covered the employee at the time of his dismissal, Deputy President Gostencnik (DP) used the "principal purpose test". This involved a factual examination of the nature of work undertaken by the employee and the circumstances in which he was employed to determine whether he was covered by the Award. The employer's primary submission was that the employee held a "senior management position" as a "Regional Director" and, as such, he held a position well beyond the classifications of property sales professionals in the Award.

These submissions were rejected by the DP who found that the employee's role contained no managerial functions and that the title of "Regional Director", while showing seniority and excellence, did not alter the employee's employment duties, which were primarily the same as a property sales representative under the Award. The DP also rejected submissions that the employee's remuneration levels, being in significant excess of the minimum weekly rate paid to a property sales representative under the Award, indicated the employee's position was different in character to that of the Award classification. He stated that this reasoning was incorrect and that the employee's high level of remuneration was only evidence of the individual's success and value to the business and said nothing about whether the individual was covered by the Award.

This decision highlights that it is not an employee's title that determines their award coverage, but rather it is the duties performed by the employee. In Kaufman, the employee's "fundamental or principal purpose" was the selling of real estate and, as such, he was covered by the Real Estate Industry Award 2010.

Other Decisions in This Area

This will not always be found to be the case. The FWC has considered this type of application before. In Baldock v. Squiz Pty Ltd. [2012] FWA 6223 and Hehir v. Schweitzer Engineering Laboratories Pty Ltd. [2011] FWA 3763, industry professionals who had been promoted to managerial and project management roles were found not to be covered by their respective awards. While the individuals still held the expertise and experience of professionals in their field, they were found not to be exercising the duties of the relevant classifications of the Professional Employees Award 2010. Similarly, in Fry v. BHP Billiton Minerals Pty Ltd. t/a BHP Billiton [2011] FWA 6927, a supervisor was found not to be covered by the Mining Industry Award 2010, as his duties as supervisor did not fall within the scope of classifications under the Award, which were limited to technical performance positions.

Implications for Employers

In affecting a dismissal and the related dismissal process, it is important for employers to consider whether an employee has access to unfair dismissal laws. For employees who earn above the high-income threshold (and are not otherwise covered by a registered agreement), this means looking beyond the mere title of a position and examining, as a matter of fact, the employee's duties in that position and whether those duties fall under a classification in any applicable modern award. Where an employee's day-today duties fall within the scope of an award classification, as they did in Kaufman, the employee will be entitled to protection from unfair dismissal.