High-income employee not protected from unfair dismissal as not covered by Award

The Fair Work Commission found this former employee, who was the Head of Estimating and Project Controls for Metro Trains Melbourne Pty Ltd, did not have protection from unfair dismissal and accordingly could not bring such a claim.

This former employee exceeded the ‘high income threshold’ for an unfair dismissal claim. The ‘high income threshold’ at the time was $148,700 per annum.

This employee had a gross annual remuneration (including superannuation) of $238,760.05 and also had a company phone plus unlimited free public transport in Victoria.  

Despite the employee’s annual earnings significantly exceeding the ‘high income threshold’ for an unfair dismissal claim, the employee argued that he was covered by an award and therefore able to pursue an unfair dismissal claim regardless of the extent of his remuneration.

The award coverage issue

The former employee argued his employment was covered by the Rail Industry Award 2010 (the Award) at the time of his dismissal, in particular, the ‘Clerical, Administrative and Professional stream’ at ‘Level 9’. The Commission disagreed for reasons including the former employee was part of the Company’s ‘senior management and leadership team’ and had ‘overall responsibility for Metro’s estimating and cost control function.’

What was the nature of the work covered by the Award’?

Although the Company, as a Rail Transport Operator, accepted it is covered by the Award, the issue in this case was whether the former employee in question was covered by the classifications contained in the Award.

The Commissioner considered the different ‘streams’ and ‘levels’ of the Award and found, from looking at the entirety of the classification structure, the Award differentiated between ‘the senior management or overall leadership team of an employer’ for which the ‘classification structure’ was held to be inapplicable; as opposed to ‘the employees in each of the relevant streams’ to which the classification structure applied.

The ‘nature’ of the former employees’ job and ‘the circumstances in which he was employed to do it’

Regarding the level of seniority, the former employee’s role was ‘three steps removed from the CEO’ in a company with ‘approximately 6000 employees’.

The ‘principal purpose of the employment test’ was applied here. This involves not just looking quantitatively at the ‘time’ an employee is involved in a certain task, but rather, also involves a consideration of ‘the nature of the work and the circumstances in which the employee is employed to do the work’.

Based on the evidence, the Commission concluded that:

• the former employee was part of the Company’s ‘senior management and leadership team’;
• the ‘purpose’ of the position was to conduct ‘a strategic analysis of Metro’s estimating and cost control capacity, and then to establish a more cohesive and effective system and drive its adoption across the business’;
• this was ‘not a clerical or administrative function’;
• ‘it was more than a professional estimating or cost controlling role’;
• this role expected the employee ‘to take ownership of and responsibility for a discrete business function and all that it entailed’; and
• instead of ‘liaising with senior managers, he was the senior manager that employees across the business were required to liaise with’.

Having regard to the above factors, the Commission held that the former employee did not fall within the ‘Clerical, Administrative and Professional stream’ at ‘Level 9’ and was not ‘covered by the Award’. His unfair dismissal application therefore failed.

Importantly, the Commission noted that even though the employee’s remuneration, considered against that specified in the Award for the Level 9 classification, ‘may be indicative’ that the employee was not covered by the Award, this did not determine the issue.  

Key take-aways

This case demonstrates that when determining whether an employee is covered by an award, the classification structure needs to be forensically considered and the ‘principal purpose of the employment test’ applied having regard to the context of the employment. Employers should not assume that the award classification will have no application simply on account of the employee’s pay significantly exceeding the rate of pay for the award classification.

Mun Kong Tang v Metro Trains Melbourne Pty Ltd [2020] FWC 2166 (27 April 2020)

National Workplace Lawyers

Note – this article is for information purposes only and does not purport to be comprehensive or to render legal advice.