Calculating Earnings for the unfair dismissal high income threshold


Accurately determining an employee’s annual earnings is an important task for employers. As a general rule, employees are not protected from unfair dismissal if their annual income exceeds the high-income threshold (currently $142,000) and they aren’t covered by an award/ enterprise agreement.


However, at times calculating annual income is not as straight forward as it appears. In a recent case,[1] the FWC shed some light on what is included in an employee’s annual rate of earnings for the purposes of determining whether they are protected by unfair dismissal laws.

In this case, the employee’s wages were $136,700 at the time of his dismissal and he was not covered by an award or enterprise agreement. While this is clearly lower than the high-income threshold, the employee also received additional ‘Toll’ and ‘Petrol’ benefits.

This was part of an oral agreement where the employer paid for the employee’s petrol for driving to and from his home to the office and other business-related travel. It was also agreed that road tolls for his regular home-office-home daily commute would be paid by the company E-tag account. It was submitted that no dollar values for the petrol/road tolls were calculated in advance, rather payment would be made by the company credit card.

The employer argued that once the private component of these additional benefits is added, the high-income threshold would be exceeded. The FWC accepted evidence which indicated that the employer paid $6,449.88 for the employee’s fuel consumption in the last 12 months of his employment. This appeared to be in line with the 36,000-kilometre odometer reading for his vehicle in the year 2016/17. The toll value was $1,914.00 in the 11 months leading up to the dismissal.

The FWC agreed with the employer’s submission that the benefit afforded to the employee was of a real and substantial kind and was provided on an ongoing basis as part of an agreement between the employee and employer. The FWC did not accept the employee’s claim that the payments were reimbursements and that “on occasions” the credit card was refused. He suggested that he had to pay in cash and then be reimbursed by the employer.

Ultimately, the FWC concluded that the petrol and toll benefits were included in the employee’s earnings, which totalled $143,128.91. Therefore, the employee was pushed over the high-income threshold, resulting in dismissal of his unfair dismissal application.

Lessons for Employers

  • Under the FWA, payments included when calculating an employee’s ‘annual rate of earnings’ include figures such as wages, agreed money value of non-monetary benefits and any amounts applied or dealt with on the employee’s behalf (e.g. salary sacrifice).
  • At the outset of the employment relationship, employers must consider how remuneration packages are to be structured. Employment contracts should contain clear and specific clauses.
  • When employers are faced with an unfair dismissal claim, the first step is to determine whether a jurisdictional objection exists due to the high-income threshold (note that this figure increases on 1 July each year).
  • Before deciding to dismiss a senior employee, consider whether your employee is covered by an award or enterprise agreement. High income earners are still eligible to make an unfair dismissal application if they are covered by an award or enterprise agreement.




[1] Roger Maybury v Canterbury Trading Pty Ltd T/A Canterbury Sink & Tap (U2017/10677) 1 March 2018.

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