The high income threshold for unfair dismissals refers to the highest possible income an employee can have, unless they are covered by an award or enterprise agreement, before they are excluded from making an unfair dismissal claim against their organisation. This threshold applies under the Fair Work Act 2009 (Cth) and changes every year on July 1st. The following shows how much the threshold has increased every year:

  • 2010 - $113,800
  • 2011 - $118,100
  • 2012 - $123,100The Unfair Dismissal High Income Threshold Explained: 2013
  • 2013 – This will be announced on 01/07/2013. It is expected to exceed $125,000.

If an unfirm dismissal claimant is not covered by an award or enterprise agreement, and was earning greater than the high income threshold at the time of dismissal, then the employer may have a defence as to jurisdiction to the claim However, any such defence must still be heard and argued before a representative of Fair Work Commission (formerly known as Fair Work Australia). In any case, it is recommended organisations immediately seek legal advice once being served with a Unfair Dismissal Claim so the lawyer can assess if any defences are available.

In most cases, it is very easy for all parties involved to determine the employee’s income, and thus determine whether or not it exceeds the high income threshold. However, if the employee’s situation requires bonuses, overtime and salary sacrifices to be factored into the calculation, things can become complicated.

This issue was somewhat resolved in the recent case of Lesley Mallows v Touch Base Asia Pacific Pty Ltd t/a Touch Base Asia Pacific [2011] FWA 1695 (18/03/2011). In this particular case, FWC had to consider whether overtime and performance-based bonuses, that increased an employee’s base salary to the degree that it exceeded the threshold, excluded the employee from making an unfair dismissal claim against their organisation.

FWC determined that overtime and performance-based bonuses could not be included as part of the overall calculation of income because they could not be determined in advance. In this particular case, the bonuses (commission) were based on whether the employee reached their targets. Therefore, it was impossible to determine whether the employee would actually reach them, which means it did not suit the ‘determinative income’ that is required under section 332(2)(a) of the Fair Work Act 2009 (Cth).

Overall, in any unfair dismissal claim, the first thing to consider is whether the employee’s claim is outside the unfair dismissal jurisdiction, and therefore barred. This could be due to the High Income Threshold, the employee not having serve the “minimum employment period” (6 or 12 months depending on employers size), the employee’s contract being for a fixed term or fixed task etc.