The Significance of Modern Awards in Unfair Dismissal Cases for High-Income Earners – the recent case of Oliver Walsh v Indesco Pty Limited
The Fair Work Act and Employee Protections
The Fair Work Act 2009 (Cth) (“Fair Work Act”) governs and provides protections and remedies for most of Australia’s private workforce. The Act established the Fair Work Commission which enforces the Act and resolves some disputes between employers and employees.
Employees who believe they have been unfairly dismissed can bring an application to the Fair Work Commission. One key determinant in assessing eligibility for such an application is whether an employee is above the high-income threshold.
It is not, however, a blanket rule that high-income earners are not eligible to bring an unfair dismissal claim. This article provides some general guidance on the issue, though if you require advice specific to your circumstances you should reach out for legal advice.
Related Article: Unfair Dismissal Applications
What is the high-income threshold?
The high-income threshold is the jurisdictional limit to an employee’s entitlement to protection from unfair dismissal under the Fair Work Act. The amount is adjusted annually on 1 July. So, if the employee‘s annual earnings rate is more than the high-income threshold they cannot bring a claim for unfair dismissal, though they might still be protected if a Modern Award or Enterprise Agreement covers their employment.
For high income employees, this critical factor is often overlooked. The case of Oliver Walsh v Indesco Pty Limited [2023] FWC 2523 demonstrates the importance of considering Award coverage for high income earners.
A brief overview of the Case
Mr. Oliver Walsh, a Principal Civil Engineer with Indesco, filed an application with the Fair Work Commission (FWC) alleging unfair dismissal by his former employer, Indesco Pty Limited. This Australian-based engineering consultancy terminated Mr. Walsh’s employment on 30 June 2023, leading him to seek an unfair dismissal remedy through the FWC.
Indesco raised a jurisdictional objection on the basis that Mr. Walsh earned more than the high-income threshold and was not covered by an enterprise agreement or award, and was therefore not eligible for protection from unfair dismissal under Section 382 of the Fair Work Act.
Whilst it was uncontested that Mr. Walsh earned more than the high-income threshold, Mr Walsh contended that at the time of his dismissal, he was covered by the Professional Employees Award (PE Award).
Mr. Walsh joined Indesco as a Principal Civil Engineer on 20 July 2020 and had worked for almost three years before his termination.
In determining whether Mr Walsh was covered by the PE Award, Commissioner Lim who presided over the case noted that he must ascertain the provisions of the PE Award and apply them to the objective facts rather than being “…decided by reference to the subjective intention or beliefs of the parties involved.”
A key factor to be determined was whether Mr Walsh’s duties were principally managerial. This was because the PE Award specifically carves out managerial duties.
The Commissioner accepted that at the time of Mr Walsh’s dismissal, he was a senior employer of Indesco and his role did involve functions that were managerial in nature, such as forecasting and planning for the Sydney Civil unit’s business strategy. However, he found that the role was not principally managerial “by definition, performance or even by expectation”.
In coming to his decision, the Commissioner considered the specific responsibilities and duties performed by Mr. Walsh at the time of his termination from Indesco making the following observations at [118]:
- Mr Walsh’s position description sets out as essential to the role: a minimum of 10 years’ experience in a relevant engineering field, tertiary degree admitting to Engineers Australia and Chartered Engineer status.
- The position description sets out a series of responsibilities that were a mix of professional engineering and managerial in nature.
- Mr Walsh was a senior member of the Indesco team; however, seniority does not automatically translate to a role being managerial.
- Mr Walsh did not manage any staff outside of a project management setting. He did not perform any HR functions such as the employment of staff, or approving leave.
- Whilst strict adherence to Indesco’s utilisation rate wasn’t required, it clearly sets out the expectations of how much time is to be spent on project-related tasks. Mr Walsh’s target utilisation rate was 70%, which he met at the time of dismissal. This means that the majority of Mr Walsh’s time was expected to be spent on project work.
What was decided?
After reviewing the evidence presented during the hearing and considering the arguments of both parties, the Commissioner dismissed Indesco’s jurisdictional objection. Although Mr. Walsh earned above the high-income threshold and was not covered by an enterprise agreement, he was able to demonstrate that his role fell under the scope of the PE Award, thereby granting him protection from unfair dismissal.
What does this mean?
The case highlights the importance of understanding one’s rights and obligations under relevant employment laws.
Jurisdictional objections with respect to the high-income threshold may be overcome following a thorough examination of the employee’s specific role and coverage under any relevant awards or enterprise agreements.
TLB Law & Co’s lawyers can provide a range of employment law advice including examining whether an employee might be covered by a modern award and whether an employee has a right to bring an unfair dismissal claim.