Unfair dismissal law in Australia can be complex, particularly for high income earners. Employees earning above a certain income level do not automatically have access to unfair dismissal remedies.
Instead, eligibility depends on whether the employee is covered by a Modern Award or an Enterprise Agreement, in addition to meeting other statutory criteria.
In this article, our employment law lawyers explain the rules, the role of the Fair Work Act 2009 (Cth), and what high income earners need to know when considering an unfair dismissal claim.
Note: This article has been updated in September 2025 to reflect the current high income threshold and recent Fair Work Act considerations.
Key Takeaways
High income earners can still access unfair dismissal if covered by a Modern Award or Enterprise Agreement under section 382 of the Fair Work Act 2009 (Cth).
The high income threshold changes annually (as of 1 July 2025, it is $183,100).
Applications for unfair dismissal must be lodged within 21 days of the dismissal taking effect.
The Fair Work Act draws a distinction between Awards that apply and Awards that cover an employee.
Whether unfair dismissal protections apply depends heavily on timing, role classification, and the employee’s earnings guarantee.
Who is a High Income Earner under the Fair Work Act?
Under section 382 of the Fair Work Act 2009 (Cth) a person is protected from unfair dismissal if:
They have completed the minimum employment period; and
One of the following applies:
A Modern Award covers the person;
An Enterprise Agreement applies to them; or
Their annual earnings are less than the high income threshold.
This means a high income earner (above the threshold) must show Award coverage or an Enterprise Agreement to access unfair dismissal remedies.
For a broader overview of employer obligations, see our article on the Fair Work Act: a guide for employers.
The High Income Threshold
The high income threshold is determined by the Fair Work Commission and reviewed annually. From 1 July 2025, the high income threshold is $183,100.
Employees below the threshold automatically have access to unfair dismissal claims, regardless of Award or Agreement status.
Employees above the threshold may still access unfair dismissal only if they are covered by a Modern Award or an Enterprise Agreement.
This threshold is important because it creates a dividing line between employees whose dismissal rights are income-based and those whose rights depend on Award or Agreement coverage.
How High Income Employees Are Defined
Section 329 of the Fair Work Act provides that:
Full-time employees are high income employees if:
They have a guarantee of annual earnings for a defined period; and
The annual earnings exceed the high income threshold at the relevant time.
Part-time employees are assessed as if they were full-time at the same rate of pay. If their projected full-time equivalent income exceeds the threshold, they are considered high income employees.
Modern Awards and Enterprise Agreements
The Difference Between “Apply” and “Cover”
An Award applies when the employee is performing work within the classification and the employer is bound by the Award.
An Award covers an employee when the employee falls within the Award’s coverage clause .
For unfair dismissal, coverage is enough: an Award does not need to formally apply.
Enterprise Agreements
If an Enterprise Agreement applies, the Award may not. However, an employee can still be considered “covered” for the purposes of unfair dismissal.
Case Law on High Income Threshold and Earnings
The Fair Work Commission has considered many cases on what counts as “earnings” for the purpose of the high income threshold. The following examples highlight how different forms of remuneration are treated:
Included in Earnings
Predetermined Overtime: Foster v CBI Constructors Pty Ltd [2014] FWCFB 1976
In this case, the employee attended daily pre-start meetings which were paid as overtime. The Commission held that because the overtime payments could be determined in advance, they were part of the employee’s guaranteed earnings. This reinforced that predictable, contractual overtime can push an employee over the high income threshold.
Company Vehicle: Zappia v Universal Music Australia Pty Ltd [2012] FWA 3208
The employee claimed that a company car was a “tool of the trade” and should not count as earnings. The Commission disagreed, finding that the private use of the vehicle made it a significant non-monetary benefit and therefore part of his remuneration package.
Not included in Earnings
Bonuses: Jenny Craig Weight Loss Centres v Margolina [2011] FWAFB 9137
In this case, the employee earned a base salary of $60,000, a five-year bonus of $100,000, and an annual performance bonus of $42,000. The Commission held that the bonuses could not be included in “earnings” because they were not capable of being determined in advance – the employer retained discretion to change or cancel the bonus schemes. As a result, the employee’s income was assessed as being below the high income threshold.
Travel allowance: Davidson v Adecco Australia Pty Ltd [2012] FWA 8393
The employee received a $16,000 annual travel allowance for using his own car for work. The Commission ruled that the business use component of the allowance was excluded from “earnings” because it was a reimbursement for work expenses, not remuneration. Only the personal use portion could be included.
Frequently Asked Questions
What is the high income threshold for unfair dismissal in 2025?
From 1 July 2025, the threshold is $183,100. It is reviewed annually.
Do high income earners have unfair dismissal rights?
Yes, but only if they are covered by a Modern Award or an Enterprise Agreement.
How long do I have to bring an unfair dismissal claim?
You must lodge an application within 21 days of your dismissal taking effect.
Learn more about the deadline in our article: 21 Day Deadline for Applying for Unfair Dismissal.
What’s the difference between being ‘covered’ by an Award and having an Award ‘apply’?
Covered: the employee’s role falls within the Award’s coverage clause.
Apply: the Award governs the employment unless replaced by an Enterprise Agreement.
Are part-time high income earners treated differently?
Yes. Their income is assessed on a full-time equivalent basis to determine if they exceed the threshold.
When Will a Modern Award Cover a High Income Employee?
A Modern Award will cover a high income employee if:
Their annual earnings are guaranteed over at least 12 months.
They perform work that falls within an Award classification.
The Award is in operation at the time of dismissal.
If these criteria are met, the employee may access unfair dismissal remedies even if their income is above the threshold.
To learn more, see our guide on interpreting coverage clauses in Modern Awards.
About the Author
Farrah Motley
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