The Fair Work Act 2009 (Cth) impose a high-income threshold to limit access to unfair dismissal remedies for some employees. As of 1 July 2025, that threshold is $183,100.
But earning above that figure does not automatically disqualify someone from brining a claim in unfair dismissal.
Bilbie Faraday Harrison recently represented a high-income earner in a claim for unfair dismissal and successfully argued that the high-income jurisdictional threshold did not bar a claim. Here is what employees and employers, should know prior to terminating an employee they construe as being a high income earner.
What is the High Income Threshold?
Under s 382(b)(iii) of the Fair Work Act, an employee is excluded from bringing an unfair dismissal claim if:
• They are not covered by a modern award,
• No enterprise agreement applies, and
• They earn more than $183,100 annually (as of 1 July 2025).
However, if any one of those three factors does not apply, the threshold may not be a jurisdictional bar to commencing an unfair dismissal claim. Each of those exceptions are examined in greater detail below.
Exception 1: Coverage by a Modern Award
Even if you earn above the threshold, you can bring a claim if you are covered by a modern award.
In our recent case, we represented an individual with managerial duties and sector-specific expertise. Despite being above the high income threshold, the position descriptions contained in the higher levels of the relevant Award’s schedule applied, meaning that despite an Award not being identified in the relevant employment contract, the descriptors of applicable duties fell squarely within the scope of Award coverage.
It is crucial to note that Award coverage is determined by an individual’s duties, not job titles, rates or pay, nor if an Award is mentioned in an employment agreement.
Exception 2: No Valid Guarantee of Annual Earnings
Where no Award or Enterprise Agreement applies, employers must rely on a guarantee of annual earnings under ss 329 and 330 of the Fair Work Act to exclude an employee from protection from unfair dismissal provisions.
Such guarantees must meet the following requirements:
1) Be in writing;
2) Applying for at least 12 months;
3) Being accepted by the employee;
4) Being provided before the guaranteed period begins;
5) Being issued within 14 days of employment commencing or varying;
6) And being accompanied by a notice under s 328(3) advising the employee that a modern award no longer applies.
Relevance of what the Federal Court Said in Peabody Energy
The leading case on this issue is Association of Professional Engineers, Scientists and Managers Australia v Peabody Energy Australia Coal Pty Ltd (2022) 318 IR 113; [2022] FCA 945.
At [48], Wigney J made clear that a mere salary reference does not create a valid guarantee of annual earnings:
“It would be erroneous to read and construe the terms of s 330 of the Fair Work Act in isolation. Rather, s 330 must be read in the context of the entire scheme… which allows an employer to offer, and an employee to accept, a guarantee… with the result that a modern award that would otherwise apply… no longer applies. Importantly, the scheme includes protections to ensure that the guarantee is identifiable, enforceable and voluntarily accepted by the employee with knowledge that the result will be that the modern award will no longer apply to them. When read as a whole, it is readily apparent that a guarantee of annual earnings involves something more than a mere contractual promise to pay an employee a specified salary.”
In our case, the employer failed to meet these requirements. There was no written guarantee, no notice under s 328(3) FWA and the contract expressly disclaimed reliance on any undertakings. That meant the employee could still rely on award coverage and proceed with an unfair dismissal claim.
Understanding what counts as ‘Earnings’
Under s 332 of the Act, the calculation of “earnings” is nuanced. For instance:
Included:
• Base wages/salary
• Agreed non-monetary benefits (e.g. housing, car, technology)
• Private use of company vehicle (Zappia v Universal Music [2012])
• Guaranteed overtime (Cross v Bechtel [2015])
• Salary-sacrificed life insurance (Savannah Nickel Mines v Crowley [2016])
Excluded:
• Discretionary or uncertain bonuses (Jenny Craig v Margolina [2011])
• Non-guaranteed incentive payments or commissions
• Reimbursements or travel allowances (Davidson v Adecco [2012])
• Compulsory superannuation contributions
• Fringe benefit tax unless part of a genuine salary sacrifice (Rofin Australia v Newton [1997])
If an employer includes excluded or indeterminate components when assessing your salary, you may fall below the high income threshold, and be able to pursue an unfair dismissal claim.
Other Commentary from the Fair Work Commission
The Fair Work Commission regularly deals with cases where the threshold is incorrectly applied by employers. Common errors include:
• Assuming any six-figure salary means exclusion;
• Failing to issue a valid written earnings guarantee;
• Ignoring Award coverage based on duties.
Relevant cases include:
• Jenny Craig v Margolina: discretionary bonuses excluded from earnings
• Dart v Trade Coast Investments: personal use of tech devices counted
• Rofin v Newton: fringe benefit tax not included unless employee-directed
Concluding Thoughts: High Income ≠ Automatic Disqualification
Even if your income is above $183,100, you may still be entitled to pursue an Unfair Dismissal Claim, where:
• A modern award applies to your duties;
• Your employer never issued a valid s 330 earnings guarantee;
• Or they miscalculated your earnings under s 332.
Get in Touch
Bilbie Faraday Harrison regularly assists both employers and employees in dealing with appropriate termination processes and resulting disputes. If you are a high income earner who was recently terminated, we can assist.
If you are an employer who is unsure about proper termination processes, whether your employees might be entitled to bring an unfair dismissal claim, or are unsure about the jurisdictional aspects of the Fair Work Commission, contact our team.
The information provided on this website is intended for general informational purposes only. It does not constitute legal advice and should not be relied upon as a substitute for professional legal consultation. We do not accept any liability for loss or damage arising from reliance on the material contained on this site.
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