Questions & Answers - High income threshold

Question:

Could you please clarify what the high income threshold earning figure is. I have seen it stated that it is $100K and will change to $108,300 July 2010. I have also seen it written that the figure on commencement will be $108,300 and it will be adjusted July 2010?

Answer:

The figure is $108,300 and it applies from 1 July 2009. It will be adjusted according to CPI in July 2010.

Question:

I understand that a person will not be able to bring an unfair dismissal claim if the sum of the person's annual rate of earnings is greater than the high income threshold. Does "annual rate of earnings" mean that the person must have served in the role and received those earnings over a 12 month period before they are protected? For example, what happens where an employee is appointed to a position in a large business on a base salary of $110,000 pa and the employee completes their minimum employment period (6 months), but has their employment terminated, say 8 months after commencement. Given that the employee has not completed 12 months, is their "annual rate of earnings" still taken to be $110,000 thereby ousting them from the unfair dismissal jurisdiction? Or is some pro-rate calculation performed?

Answer:

This issue is not expressly dealt with in the relevant legislation and regulations and no cases have yet dealt with the issue. This means that if the employee in your example filed an unfair dismissal claim, you would need to argue that Fair Work Australia (FWA) did not have the jurisdiction to deal with the matter and have FWA come to a decision in that regard.

In our view, it is highly likely that FWA would conclude that it did not have the jurisdiction to deal with the claim on the basis that a person's annual rate of earnings should be determined by reference to what they would have earned if his or her employment was not terminated before the conclusion of a year's service. This approach is consistent with how the regulations prescribe an employee's earnings should be calculated where the employee is paid on the basis of piece rates and is employed for less than a year.

Question:

The high income threshold of $108,300: is that base rate or total salary package and does it include super?

Answer:

For the purposes of calculating whether an employee's annual earnings exceed the high income threshold, the following amounts are to be included pursuant to section 332(1) of the Fair Work Act (FW Act):

• the employee's wages;
• amounts paid on behalf of the employee or at the employee's direction; and
• the agreed money value of non-monetary benefits - these are benefits provided to the employee in a form other than money in return for the performance of work. Non-monetary benefits must have an agreed, reasonable monetary value.

Under section 332(2) of the FW Act, an employee's earnings do not include the following:

• payments the amount of which cannot be determined in advance - such as variable performance bonuses, overtime (unless it is guaranteed), commissions and incentive based payments;
• reimbursements; and
• the statutory superannuation contributions set out in section 332(4) of the FW Act. These are as follows:
  • contributions which could attract a superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 if they are not paid by an employer in respect of an employee;
  • payments in relation to a defined benefit interest (as defined in section 292-175 of the Income Tax Assessment Act 1977); and
  • payments under a Commonwealth, a State or a Territory law that requires an employer to contribute to a superannuation fund for the employee's benefit.