High Income Earners and Modern Awards

Employees who earn over the high-income threshold (currently $162,000) are generally considered ineligible for protection from unfair dismissal under the Fair Work Act 2009 (Cth) (Act). Additionally, any workers who are above this income threshold are generally considered outside the scope of an award, by virtue of s47 of the Act.

However, as was recently decided in Association of Professional Engineers, Scientists and Managers Australia v Peabody Energy Australia Coal Pty Ltd [2022] FCA 945 a high income is not enough on its own if the employee is otherwise covered by a modern award.

The Employer in this case argued that redundant employees were not entitled to be paid out their personal leave as specified by their award as they were 'high income employees' as defined under the Act. The court found that because the employees were covered by the award, the Employer was required to issue them a 'guarantee of annual earnings' in order for them to be considered a 'high income employee'. Under s 330 of the Act, the requirements and steps for providing a guarantee of annual earnings are very specific. Wigney J stated "none of the employees were given any other document that contained a written undertaking [in accordance with the Act]...When read as a whole, it is readily apparent that a guarantee of annual earnings involves something more than a mere contractual promise to pay an employee a specified salary".

The Employees were found to be covered by the award as they were not 'high income employees' by definition, and were entitled to untaken personal leave/carer’s leave payments as at the date of their termination in accordance with the applicable award.

KEY TAKEAWAY: If you have high income employees that are covered by an award, ensure that your contracts or amendments reflect the requirements under the Act in relation to high income earners and guarantee of earnings. Otherwise, your employees may be entitled to allowances and other benefits under an applicable award.

If you would like to discuss your employee entitlements or seek a review of your contracts, please get in touch.