FWC finds high earning employee was award covered and could bring unfair dismissal case

Photo: George L Rosario

Photo: George L Rosario

In a decision handed down on 15 May 2017, the FWC found that a former employee of Jones Lang La Salle (Vic) Pty Ltd, who was made redundant, was covered by the Retail Estate Industry Award 2010 (“Award”) notwithstanding the employee’s title as “Regional Director – Capital Markets” and that his income (which was not disclosed) was well in excess of the high income threshold of $138900. The effect of the decision is that the former employee, Mr Kaufman, can proceed with an unfair dismissal application alleging his redundancy was not “genuine” within the terms of the Fair Work Act 2009. 

In finding in favour of Mr Kaufman, that he was covered by the Award, the FWC returned to the “principal purpose test” and found that Mr Kaufman’s principal duty was the selling of real estate which clearly fell within the classification of property salesperson under the Award. The FWC also found that Mr Kaufman had no managerial responsibilities and no direct reports. Further, it was found that though the position was very senior within the organisation, that hierarchy is not “completely or even mostly functionally based.” The Commission found that the fact the applicant had expectations attached to the role relating to leadership, mentoring and development of less experienced employees “would be common of most long serving, experienced and successful property sales representative employed in a real estate business.” Nevertheless as the principal purpose of the role was selling real estate, the applicant’s position was covered under the Award.  

The decision is a useful reminder that:

1.     The payment of a significant salary or senior job title does not necessarily mean that a person’s employment is not covered by a modern award;

2.     Employers should ensure that all positions are scoped against the relevant award and when employing high income employees (those earning above $138,900, noting this amount increases on 1 July each year) who are award covered, enter into  high income guarantees;

3.     Be aware that the payment of a salary above the “high income threshold” does NOT mean that the terms of the modern award will not apply unless there is ALSO a “guarantee of annual earnings” in place; 

4.     Be aware that even where “a guarantee of annual earnings” is in place for a high income employee, the employee can still bring an unfair dismissal claim. There would be one less hurdle to overcome in redundancy circumstances as the consultation term of the modern award will not apply where a “guarantee of annual earnings” is in place.

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