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Unfair Dismissal High-Income Threshold & Car Allowance


The Full Bench of the Fair Work Commission has provided guidance on how a car allowance should be treated for the purpose of calculating an employee’s annual rate of earnings.

An employee who is not covered by an award or does not have an enterprise agreement that applies to them is excluded from protection against unfair dismissal if their annual rate of earnings exceeds the high-income threshold ($142,000 since 1 July 2017).

The Full Bench endorsed the following general propositions:

a) if a car allowance is paid to an employee in circumstances in which there is no requirement or expectation that the employee will use his or her car for work purposes, then the whole of the car allowance is part of the employee's wages and is therefore included in their "earnings"; and

b) if a car allowance is paid to an employee in circumstances in which there is a requirement or expectation that the employee will have to use his or her car for work purposes, then it will be necessary to determine and calculate the private benefit, if any, derived by the employee from the car allowance.

The Full Bench then set out an extensive methodology for calculating the private benefit of the car allowance for the purposes of the high-income threshold in the case of the latter.

Read the full text of the Commission’s decision here: Sam Technology Engineers Pty Ltd v Bernadou [2018] FWCFB 1767.

For more information, see Unfair dismissal high income threshold.


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