The “High Income Threshold” and why some employees are shut out of Unfair dismissal claims

In many industries, a six-figure salary doesn’t always mean seniority, security, or power. It might just mean you’ve worked your way up into a specialist role, taken on more responsibility, or finally made it to middle management. But in the eyes of the law, if your annual earnings are above a certain figure, you may be considered too well-paid to access unfair dismissal protections.

That’s the reality of the high income threshold—a rule in the Fair Work Act that excludes some employees from bringing an unfair dismissal claim, simply because of how much they earn.

Many only find out about this rule after they’ve been let go—often suddenly, sometimes unfairly—only to be told their income is “too high” for the Commission to hear their case. It’s a frustrating and often confusing barrier for workers who assumed, like most Australians, that there was a basic legal safety net beneath them.

What Is the High Income Threshold?

The high income threshold is currently set at $175,000 per year (not including superannuation) and is updated each year (around 1 July). If you are not covered by a modern award or enterprise agreement, and your earnings exceed that threshold, you are not eligible to make an unfair dismissal claim—no matter how abrupt, unjustified, or unreasonable the dismissal may have been.

The original intent behind this rule is that high-income earners are more likely to have bargaining power—that they can negotiate favourable contract terms, influence the conditions of their departure, or seek compensation in ways lower-income workers cannot.

But that assumption doesn’t always reflect reality.

In some sectors, $175,000 might be executive pay. In others, it might just be the going rate for a mid-level professional with 15 years' experience. It’s a blunt instrument—a one-size-fits-all rule in a labour market that’s anything but uniform.

And the figure itself is controversial. It’s adjusted annually but still doesn’t account for industry or location. For some employees, it can effectively shut the door on legal recourse—even when the dismissal process was clearly flawed.

What Counts as “Earnings”?

Here’s where it gets more complex. The Commission doesn’t just look at your base salary when calculating whether you exceed the high income threshold.

Earnings can include:

• Your base wage or salary

• Guaranteed or contractual overtime

• The agreed monetary value of non-cash benefits (like vehicles, accommodation, or insurance)

• Any amount paid or dealt with on your behalf (such as salary sacrifice arrangements)

But certain things are excluded—such as:

• Bonuses or commissions that aren’t guaranteed or can’t be calculated in advance

• Reimbursements or per diems

• Compulsory superannuation contributions

If you’ve received non-cash benefits, allowances, or extra payments, it’s not always obvious whether they count toward the threshold. That’s where the Fair Work Commission often has to step in and assess the true value of your total remuneration package.

Case Examples: How the Threshold Has Played Out in Real Disputes

These past decisions offer insight into how the Commission interprets what should and shouldn’t be included when assessing if someone has crossed the high income line.

1. Predictable overtime? It counts.
In Foster v CBI Constructors, the employee was required to attend daily pre-start meetings—adding 2.5 hours of overtime per week. Because the arrangement was consistent and predictable, the Commission ruled that the overtime had to be included in the earnings calculation.

Likewise, in Cross v Bechtel Construction, the employee’s contract required a 58-hour work week, including 18 hours of overtime. As this was clearly fixed and unavoidable, the entire arrangement was included in determining annual income.

2. A company car isn’t always “just for work.”
In Zappia v Universal Music Australia, the employee argued their company vehicle was a work tool, not a benefit. But the Commission found the car was used mostly for personal purposes. As a result, the private use component was assigned a value and added to the employee’s total remuneration.

3. Employer-provided tech can tip the balance.
In Dart v Trade Coast Investments, the employer had supplied the employee with a company iPhone and iPad. Although officially for work, records showed extensive personal use—over 60% of phone calls were private, and the iPad was full of personal photos. That private benefit had value, and it pushed the employee’s earnings over the line.

4. Insurance paid by the employer? It counts too.
In Savannah Nickel Mines v Crowley, the employer had paid for a life insurance policy as part of the employee’s package. The Commission found this was a benefit provided in return for work and included its value in the earnings total.

5. Not everything is included—especially if it’s uncertain or business-related.
In Jenny Craig Weight Loss Centres v Margolina, the employee had received a large performance bonus and a five-year bonus in the prior year. However, the employer reserved the right to alter or cancel the bonus scheme, so the Commission ruled these were too uncertain to be considered part of annual earnings.

In Davidson v Adecco, the employee received a $16,000 annual travel allowance to use their own vehicle for work. The Commission ruled that only the private use portion of that allowance could be counted—the business use component was excluded.

In Rofin v Newton, fringe benefit tax on a company car was not included as earnings, because it was a tax liability borne by the employer, not a benefit controlled or directed by the employee.

And in Maturu v Leica Geosystems, the employee had a work laptop with mobile broadband. As there was no evidence of private use and it was clearly essential for work, the Commission found no personal benefit, and excluded it from the threshold calculation.

Why This Matters for Employees

The high income threshold is often used by employers as a jurisdictional objection—an early argument to have your unfair dismissal claim thrown out. It has nothing to do with whether your dismissal was fair, harsh, or unreasonable. It’s a technicality, but a powerful one.

And it’s often misunderstood. Many employees don’t know what counts as earnings, or whether they’re covered by an award, until after they’ve already lodged their application—and by then, they may be facing a strike-out before the substance of their case is even heard.

But there’s a crucial point here: the threshold only applies to unfair dismissal claims.

If you’ve been dismissed for a discriminatory reason, for raising a workplace concern, for taking leave, or for any other reason protected under the Fair Work Act, you may still have grounds for a general protections application—which has no income cap at all.

What You Can Do

If you’ve been dismissed and you’re not sure whether the high income threshold applies to you, take these steps:

• Check if you’re covered by a modern award or enterprise agreement. If you are, the threshold may not apply.

• Work out your total earnings. Consider salary, overtime, and any benefits used privately or as part of your package.

• If your dismissal involved a protected reason, consider a general protections claim.