Subject to limited exclusions, employees will have access to the unfair dismissal regime under the Fair Work Act 2009 (Cth) (FW Act) if their annual rate of earnings is less than the high income threshold. Currently the high income threshold is $138,900.

For the purpose of assessing whether the high income threshold applies in relation to the dismissal of an employee at a particular time, certain payments applied or dealt with on behalf of the employee are included.

A recent full bench decision of the Fair Work Commission in Savannah Nickel Mines Pty Ltd v Crowley [2016] FWCFB 2630 held that an employer’s payment of a death cover insurance premium was included for the purpose of assessing whether the high income threshold applied to the employee involved.

First instance decision

In reaching this decision, the full bench overturned the finding at first instance

that the death cover insurance premium was not part of the employee’s earnings. At first instance the Fair Work Commission took the view that the premium payment was not an amount ‘applied or dealt’ with in any way on the employee’s behalf (and therefore not earnings as defined under section 332 of the FW Act) because the:

  • insurance was taken out in the employer’s name not in the name of the employee;
  • premium was paid on the employer’s behalf for its insurance cover; and
  • premium was more akin to the provision of other forms of insurance such as workers’ compensation and work-related travel insurance.

The Full Bench decision

The full bench found the Commissioner at first instance had erred in concluding the death cover insurance premium was not an amount applied or dealt with on the employee’s behalf under section 332 of the FW Act.

The full bench held the beneficiary of the policy was the employee (or the employee’s estate in the event of his death) and, as such, it was an amount ‘applied or dealt’ with on behalf of the employee. The full bench also held that the fact that the policy was in the employer’s name was an irrelevant consideration. As a result, the full bench found that the cost of the premium should be taken into account in calculating whether the employee earned more than the high income threshold

This full bench decision serves as a useful reminder that the determination of what amounts will be included for the purpose of assessing whether the ‘high income threshold’ applies in relation to the dismissal of an employee is not necessarily a straightforward exercise.

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