How a Car Allowance Cost One Employee the Right to Challenge His Dismissal

Mr Afzal believed he’d been unfairly dismissed. He brought his case to the Fair Work Commission hoping for a fair chance to be heard. But before the Commission could consider whether the dismissal was harsh or unjust, it had to answer whether Mr Afzal was even eligible to make the claim.

The Fair Work Act sets a high income threshold, which updates every year. If an employee’s annual rate of earnings is above that threshold—and they’re not covered by a modern award or enterprise agreement—they are excluded from accessing unfair dismissal protections. Mr Afzal’s salary alone didn’t take him over the limit. But a standard car allowance did.

This catches many employees off guard. “Earnings” aren’t limited to wages. The Commission can include non-salary benefits like allowances if they provide a private benefit. If you rarely use your work vehicle for actual work purposes, for example, the allowance becomes a personal gain. That’s exactly what happened to Mr Afzal.

He was asked at hearing how often he used his car for work. He answered honestly—“very infrequently.” Based on that, the Commission applied a legal test from earlier case law and concluded that most of the allowance should be treated as private benefit. It didn’t even need to put an exact dollar figure on it. It was enough to find that his total earnings exceeded the high income threshold.

That meant Mr Afzal couldn’t proceed. His unfair dismissal application had to be dismissed, regardless of whether the dismissal itself might have been unreasonable or unfair.

This outcome is a stark reminder for employees: it’s not just your base pay that matters. If you're earning close to the high income threshold and receiving extras like a car allowance, housing benefit, or other perks, they could count against you later.