Australian Unfair Dismissal Laws

In Australia, unfair dismissal laws are primarily governed by the Fair Work Act 2009. However, there are specific rules and exemptions for high-income employees, particularly those earning above the high-income threshold. As of July 1, 2023, the high-income threshold is $167,500 per year (indexed annually). Employees earning above this threshold may have limited access to unfair dismissal protections, depending on their employment arrangements.

Key Points for Employees Earning Over $170,000:

  1. Unfair Dismissal Protections:
    • Employees earning above the high-income threshold ($167,500 as of 2023) are generally not eligible to make an unfair dismissal claim under the Fair Work Act unless:
      • They are covered by a modern award or enterprise agreement, regardless of their income level.
      • Their employment contract guarantees them access to unfair dismissal protections (this is rare but possible).
  2. High-Income Threshold Exemption:
    • If an employee earns above the high-income threshold and is not covered by an award or enterprise agreement, they are excluded from unfair dismissal protections.
    • Employers can terminate their employment without risking an unfair dismissal claim, provided the termination is not in breach of the employment contract or other laws (e.g., discrimination or adverse action under the Fair Work Act).
  3. General Protections (Adverse Action):
    • Even if high-income employees are excluded from unfair dismissal protections, they are still covered by the general protections under the Fair Work Act. This means they cannot be dismissed for unlawful reasons, such as:
      • Exercising a workplace right (e.g., making a complaint or inquiry).
      • Discrimination based on race, gender, age, disability, etc.
      • Temporary absence due to illness or injury.
    • If an employee believes they were dismissed for an unlawful reason, they can file a general protections claim.
  4. Breach of Contract:
    • High-income employees may still pursue a claim for breach of contract if their dismissal violates the terms of their employment agreement. This is a civil matter and would be handled in a court (e.g., Federal Court or Supreme Court) rather than the Fair Work Commission.
  5. Redundancy Pay:
    • High-income employees may still be entitled to redundancy pay if their role is made redundant, unless their employment contract explicitly states otherwise.

Practical Implications:

  • Employers should ensure that termination of high-income employees is handled in accordance with the employment contract and general protections laws.
  • Employees earning above the high-income threshold should review their employment contract and seek legal advice if they believe their dismissal was unlawful or in breach of contract.

Summary:

Employees earning over $170,000 per year in Australia are generally excluded from unfair dismissal protections unless they are covered by an award or enterprise agreement. However, they retain rights under general protections and can pursue claims for breach of contract if applicable. Employers must still ensure dismissals are lawful and not in breach of other workplace laws.

For specific advice, employees and employers should consult a workplace relations lawyer or contact the Fair Work Ombudsman.

Benefits to Employers and Employees

No one is saying that these arrangements are not a good thing. Why they are being touted as some sort of major reform, is the point of mystery.

Local Shire Council not a constitutional corporation.

We now have conflicting rulings as to whether a local Council is a corporation for the purposes of Federal Employment legislation, although this is the most senior court so far. Eventually, the High Court will have to rule on the point. 20 August 2008, the Federal Court found that a Local Shire Council in Queensland was not a constitutional corporation under section 51(xx) of the Constitution. Consequently, this put it out of reach of federal industrial relations laws,
which are based on the Constitution’s corporations power and so the Council could not lodge an employee collective agreement with the Employment Advocate.

The Etheridge Shire Council entered into a collective agreement with some of its employees. It subsequently lodged the agreement with the Employment Advocate, asserting that it was entitled to enter into and lodge such an agreement, and held itself out as an “employer” as defined in the Workplace Relations Act 1996 (Cth). This was effectively the Councils attempt to move into the federal Industrial Relations sphere.

As a result of this, the Australian Workers Union and the Queensland Services Industrial Union commenced proceedings against the Council in the Federal Court, seeking declarations that the Council was not an employer within the meaning of the Act. They sought a consequential declaration from the Court that the Shire Council had not been entitled to lodge the agreement with the Employment Advocate.

The Unions argued that the Council was not an employer under the Act, because it did not come within the power granted to the Commonwealth in Section 51(xx) of the Constitution. It was not a trading corporation or a financial corporation within the meaning of that term due to the fact that it was a municipal corporation.

The Council provided evidence of its trading activities. These included: the operation of a visitors centre; the provision of hostel accommodation and a childcare centre; office space and residential property rental; sale of land and water; hire of halls; and the provision of services to the Commonwealth Government. The Council claimed that the diversity of these activities, clearly demonstrated that they were not simply a municipal corporation.

Spender J then provided a thorough analysis on the relevant case law in regards to constitutional corporations. On the basis of his findings, His Honour determined that there were two tests for establishing whether a particular corporation fell within the terms of section 51(xx).
1. A determination of the purpose for which the corporation was formed.
2. A consideration of whether the activities of the corporation were such as to bring it within the terms of section
51(xx).
His Honour then examined the High Court “Workchoices” decision in New South Wales v Commonwealth (2006) 229 CLR 1, which found that the activities test was to be determinative.
In applying the tests to the Council, his Honour determined that the Council was clearly not a trading corporation, primarily due to the fact that all of its “trading” activities were conducted at a loss. Thus the activities were carried out for the public benefit rather than in the course of trade.

Consequently, the Council was therefore neither a trading nor a financial corporation. Because of this, it was not entitled to seek registration of the Etheridge Agreement with the Employment Advocate.