Do you know if your employee's are eligible to claim unfair dismissal?

More Tips Regarding Employee Eligibility for Unfair Dismissal

Current Salary Cap and Compensation  

The Fair Work Act sets limits to an employee’s eligibility for unfair dismissal redress where they are not covered by an award or enterprise agreement.  This is called the High-Income Threshold (HIT), which is amended annually.  

The salary cap for higher income earners was increased from $148,700 to $153,600 from 1 July 2020. 

Successful applicants for unfair dismissal claims may receive a maximum of 26 weeks of pay as damages and with the salary cap now increased, the new maximum amount of compensation will be $76,800 as of 1 July 2020 

Non-Monetary Benefits & Assessing the HIT 

In calculating whether an employee’s earnings exceed the cap, the Fair Work Commission has a discretion whether to include any non-monetary benefits for which the parties have not agreed a value, but which it is satisfied can be given a real or notional value in assessing the HIT.  

For example, where the employee has the benefit of a company car, the value of the private use of the vehicle can be included in the annual rate of earnings. Use for business purposes is excluded and only the proportion of private usage may be included to assess whether the employee has reached the HIT.

The better solution is to include an agreed value for non-monetary or other indirect benefits such as fringe benefits in an employee’s contract because they are agreed, they can then be included in the calculation of the salary cap.  

Please note that compulsory SGC employer super contributions, or reimbursements for business expenses, are not included in calculating the HIT.  However, any superannuation paid in excess of the SGC employer super contributions may be included in the calculation of the employee’earnings. 

High Income Earners Covered by Awards Can Still Take Unfair Dismissal Action 

High income earners (i.e. earning more than $153,600) can still take an unfair dismissal action if they are award/agreement covered employees.  

Minimum Service Requirements  

If it is determined that the employee is either award or agreement covered, then the employee must have completed a minimum employment period of at least six months (or one year in the case of a small business employee) in order to make a claim for unfair dismissal.  

‘Small Employers’  

Small employers (less than 15 employees) are also reminded that the definition of small employer is ‘fewer than 15 on a simple headcount. Employees of small employers need to be employed for at least 12 months before they can take an unfair dismissal action. 


Any queries about the issues in this article or if you need help with other employee relations issues? Contact us on 1300 55 66 37. 

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