We are considering dismissing a high-earning salaried employee. What is the income threshold that entitles him to lodge an unfair dismissal case? If he meets the high-income threshold – meaning he cannot lodge an unfair dismissal claim – do we still need to justify reasons for dismissal?
If an employee is not covered by a modern award or an enterprise agreement, they must have an annual rate of earnings less than the high-income threshold to be protected from unfair dismissal claims under the Fair Work Act 2009 (Cth). The high-income threshold that limits an employee’s eligibility for unfair dismissal claims is currently $158,500 (until July 2022). This figure is adjusted annually and comprises:
- salary sacrifices;
- other amounts worked out in accordance with the Regulations;
- amounts dealt with on the employee’s behalf or as directed by the employee; and
- the agreed monetary value of non-monetary benefits.
An employee’s earnings do not include payments of which you cannot determine the amount in advance, e.g. commissions, reimbursements or compulsory contributions to a superannuation fund.
Unfair dismissal claims are not the only available avenue for employees to dispute the termination of their employment. An employer must ensure they dismiss an employee lawfully, otherwise they may be liable for claims of unlawful termination or general protections claims through the Fair Work Commission. Additionally, an employer may be liable for claims of breach of contract, discrimination or WorkCover, depending on the circumstances of the dismissal. Providing an employee with valid reasons for their dismissal may assist to mitigate any risk of the employee bringing a claim following the termination of their employment.