Highly paid employee covered by modern award and protected from unfair dismissal

In brief

A recent FWC decision is a reminder to employers that employees who earn more than the high income threshold can still be eligible to bring unfair dismissal claims if they are covered by a modern award¹. Managing Associate Sikeli Ratu and Associate Tom Kavanagh report.

How does it affect you?

• Employers should not assume that an employee is not protected from unfair dismissal simply because they are paid above the relevant high income threshold.
• It is necessary to consider carefully whether or not an employee is covered by a modern award (or an enterprise agreement) to determine whether a claim for unfair dismissal might potentially be made.
• Employers should ensure that employees have a position description that sufficiently and accurately describes the work they are employed to do (and is kept up to date with any alteration to their responsibilities) to minimise any uncertainty.

Background

Mr Thomas was dismissed by his employer, Silver Yachts, from his position as the manager of the internal fitout design team. Mr Thomas' annual rate of earnings was above the high income threshold at the time of his dismissal. Silver Yachts argued that he was not eligible to bring an unfair dismissal claim because he earned over the threshold and was not covered by a modern award. Mr Thomas argued that he was, in fact, covered by one of the classifications under the Manufacturing and Associated Industries and Occupations Award, and therefore was protected from unfair dismissal.

The decision

It is clear from the decision that the parties had very different interpretations of Mr Thomas' role within the company, and of his duties and responsibilities (including supervisory responsibilities). The gulf between the parties was exacerbated by the absence of a position description for his role.

Silver Yachts regarded Mr Thomas as a key management employee of the company, and pointed to factors such as his responsibilities for making resourcing and employment decisions (subject to approval); his annual salary being two-and-a half-times the minimum salary for the classification said to apply under the award; his designation in various iterations of organisational charts; his tertiary qualifications; and other matters, such as the granting of a one-off discretionary retention bonus.

In contrast, Mr Thomas focused on the technical aspects of his role, and submitted that he did not have anywhere near the suggested level of accountability, autonomy or management responsibility.

The FWC adopted the orthodox approach of determining coverage by assessing the principal purpose for which the employee is employed, which requires an examination of the nature of the work and the circumstances in which the employee is employed to do the work (rather than the employee's own estimation of their work).

After considering a range of factors in relation to the nature of Mr Thomas' work, the FWC decided that he was principally employed to use his technical design skills, expertise and experience to create manufacturing drawings, and then ensure the correct and quality manufacture of the internal fitout; that is, not the management of the internal fitout design team. On that basis, the relevant classification under the award was found to apply to Mr Thomas and his unfair dismissal application was allowed to proceed.