Two Fair Work Commission decisions show how non-salary benefits can count as income and affect an employee’s right to make an unfair dismissal claim

Employees earning more than the high income threshold (which increased to $136,700 on 1 July 2015) cannot make an unfair dismissal claim unless they are covered by an award or enterprise agreement.

In Paul Dart v Trade Coast Investments Pty Ltd [2015] FWC 4355, the value of Mr Dart’s personal use of a company car, iPhone and iPad was counted as part of his income. This resulted in Mr Dart’s income exceeding the high income threshold by just $1,470.50. 

Deputy President Sams accepted that Mr Dart’s personal use of a company car was an express benefit of his employment, rather than simply being an incidental use of a car provided for work purposes. In deciding this, the Deputy President took into account that Mr Dart used the car for personal reasons approximately 60% of the time, and his employer paid all toll charges and speeding fines for the car.

The car was therefore considered a non-monetary benefit to be included in the calculation of Mr Dart’s earnings. After considering the annual value of the vehicle and the extent of the employee’s personal use of the vehicle, the Deputy President valued that benefit at $11,454.

Deputy President Sams also accepted that Mr Dart’s personal use of his employer’s iPad and iPhone were non-monetary benefits that counted as part of Mr Dart’s earnings. The Deputy President valued that benefit at 62.5% of the employer’s costs for the iPhone, and 50% of its costs for the iPad. This added a further $1,456 to Mr Dart’s income for the purpose of the threshold.

With these additional amounts included in Mr Dart’s earnings, he was considered to be a high income employee, and his unfair dismissal claim was rejected. 

In Cross v Bechtel Construction (Australia) Pty Ltd [2015] FWC 4355, Mr Cross received a $115,000 base salary, but his contract also guaranteed him 18 hours’ overtime each week (as part of an “Extended Work Week”) and a 5% project allowance. Together, these entitlements resulted in Mr Cross earning over $173,000 per annum.

Mr Cross’ employer challenged the unfair dismissal claim on the basis that Mr Cross was a high income employee.

Ordinarily, payments for overtime are not considered when the Commission applies the high-income threshold because they depend upon the work performed by an employee (which may change from time to time). But in this case Vice President Catanzariti held that Mr Cross’ weekly overtime and allowances were both guaranteed entitlements that counted as part of Mr Cross’ income.

Mr Cross was therefore unable to proceed with his unfair dismissal claim because he earned more than the threshold.

Lessons for employers

Guaranteed benefits to an employee, whether monetary payments or otherwise, can be counted as part of an employee’s income for the purpose of deciding whether an employee earns more than the high income threshold.

Employers responding to an unfair dismissal claim should therefore consider whether such benefits exist, and how they may be valued, before deciding whether to raise the high-income threshold as a preliminary issue.

Employers should also keep detailed records of the non-monetary benefits provided to employees. Where possible, an agreed notional value should be assigned to these benefits at the time they are provided to avoid disputes later on.

However, while a number of benefits are included when calculating an employee’s earnings, statutory superannuation payments are not.