Are Bonuses Included in the Salary Exemption Cap for Unfair Dismissals?

Question – We pay our executives significant bonuses. In fact we pre-pay a significant component to them on the basis they will achieve their targets. Added to their salary, this would take many of them over the $108,300 high income earner exclusion for taking an unfair dismissal case.

Can we include the bonuses in their calculation?

Answer – we have provided a link for you below to the section on what is included or excluded in the salary calculation for the high income salary cap. The relevant passage about whether we include bonuses is –

  • payments the amount of which cannot be determined in advance.

This is interpreted to mean commissions, incentive-based payments and bonuses, and overtime that is not guaranteed. In your case, even though it is pre-paid, it can be asked to be paid back and so would be excluded from the calculation.

Also note that Fair Work Australia may also choose to include any non-monetary benefit for which the parties have not agreed a value, but which it is satisfied can be given a real or notional value. For example, for private use of a car, etc.

Click here for link to Fair Work Act list of inclusions and exclusions.

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