Although the Fair Work Act 2009 (Cth) (FW Act) incarnation of the unfair dismissal jurisdiction has been operative since 2010, there remains some confusion over whether high earning employees are eligible to make a claim. Many employers assume the high income threshold operates as an automatic exemption from the jurisdiction; in fact it does not.

A recent decision of the Fair Work Commission (FWC) serves as a timely reminder to employers that employees earning over the high income threshold aren't necessarily excluded from the unfair dismissal jurisdiction.

Background Mr James Kaufman was employed by Jones Lang LaSalle (JLL) as a Regional Director, Capital Markets when he was dismissed for reasons of redundancy. Mr Kaufman filed an unfair dismissal application with the FWC alleging that the termination of his employment was unfair.

Threshold Issue – Eligibility to Bring a Claim Mr Kaufman earned in excess of the high income threshold (currently AUD138,900 per annum, indexed annually). JLL raised a jurisdictional objection to Mr Kaufman's application on the basis that he was not a person protected from unfair dismissal within the meaning of Section 382 of the FW Act.

However, employees who earn in excess of the high income threshold may be eligible to bring a claim if they are covered by a modern award or enterprise agreement.

Mr Kaufman identified the Real Estate Industry Award 2010 (Award) as covering his position at the time of dismissal. Clause 4 'Coverage' provides that the Award covers employers engaged in the 'real estate industry' in respect of their employees engaged in the classifications specified in the Award. There was no dispute that JLL was relevantly engaged in the real estate industry within the meaning of the Award.

The question was whether Mr Kaufman's position fell within the classifications within the Award which specifically included 'Property Sales Representative' and 'Property Sales Supervisor'.

JLL explained that the Regional Director, Capital Markets role was a senior management position and that, in the context of JLL's business, went well beyond the classifications in the Award. JLL maintained this was evident from Mr Kaufman's seniority, his remuneration, the significant leadership and business development responsibilities and the general requirements and accountabilities of his position. This position was understandable given the nature of JLL's business involves transactions which are higher in value and more complex than the typical real estate agent.

The FWC examined the nature of the work undertaken and the circumstances of Mr Kaufman's employment in order to ascertain the 'principal purpose' for which Mr Kaufman was employed.

Although Mr Kaufman's title indicated a senior role, the FWC was not satisfied that the duties inherent in the role could be properly described as 'managerial'. To the extent Mr Kaufman was responsible for achieving revenue targets, maintaining client relationships and bringing in new business opportunities, the FWC held that the principal purpose of Mr Kaufman's role was to sell real estate. Consistent with the 'principal purpose' of Mr Kaufman's role, a number of his duties were consistent with the indicative tasks for a Property Sales Representative classification in the Award including those relating to listing and sale of properties or businesses, market appraisals, interactions with buyers and sellers of properties, advertising campaigns and liaising with third parties to ensure completion of deals.

Remuneration not Determinative JLL pointed to the remuneration paid to Mr Kaufman compared to the minimum weekly rate paid under the highest paid position prescribed by the Award as an indication that Mr Kaufman's position was a different character to that contemplated by the Award.

On this point the FWC commented that this may be correct where the duties otherwise do not align with the corresponding duties set out in an award classification. However, where the duties performed by the employee do correspond with those in an award classification, high levels of remuneration paid are indicative only of an employer's view that the employee is valuable to the business and the employee's success in performing the role. That is, high levels of remuneration say nothing about whether such a person is award covered.

Conclusion The FWC was satisfied Mr Kaufman was covered by the Award and protected from unfair dismissal pursuant to Section 382 of the FW Act. The matter was reallocated for hearing on a second jurisdictional objection on grounds of 'genuine redundancy'.

Lessons for Employers

  • Do not assume that an employee earning in excess of the high income threshold is ineligible to bring an unfair dismissal claim. Consider whether the employee is covered by a modern award (or enterprise agreement)
  • When considering modern award (or enterprise agreement) coverage, look beyond the title to the employee's actual duties and responsibilities
  • Modern award coverage can be difficult to predict. If the decision is a 'line ball call' the decision usually lands on the side of 'inclusion' rather than 'exclusion' from coverage
  • If modern award coverage is not clear, err on the side of caution. Ensure you have a valid reason for dismissal and afford procedural fairness before dismissing an employee. That way, in the event the employee is eligible to bring an unfair dismissal claim, your business is protected.