When determining if an employee’s salary exceeds the Fair Work Act’s high-income threshold, what counts as “earnings”? Discover how base salary, non-monetary benefits like company cars and phones, allowances, and superannuation impact whether an employee can claim unfair dismissal.

Q. Our company recently dismissed a manager whose annual salary exceeded the high-income threshold under the Fair Work Act. He has subsequently made an application to the Fair Work Commission claiming unfair dismissal. We argue that while his base salary is below the threshold, his contract of employment included certain benefits such as superannuation and a company motor vehicle. Would these benefits be included in the employee’s earnings for the purpose of determining whether the employee’s salary exceeds the high-income threshold? 

A. Under unfair dismissal laws, an employee who is not covered by a modern award or enterprise agreement whose annual rate of earnings exceeds the “high income threshold” is excluded from making an application to the Fair Work Commission. 

The high-income threshold is an annually indexed earnings limit used by the Fair Work Commission (FWC) to determine specific statutory protections and entitlements.

As of 1 July 2025, the high-income threshold is $183,100 per annum. Employers should always check for the most up-to-date figure as it’s adjusted annually on 1 July.

The Fair Work Act (s.332) defines earnings to include: 

  • wages 

  • amounts dealt with on the employee’s behalf or as the employee directs, and 

  • agreed money value of non-monetary benefits (estimated by the Fair Work Commission in the absence of agreement) 

Earnings do not include amounts that cannot be determined in advance, such as incentive-based bonuses, overtime (except guaranteed overtime), reimbursements and employer contributions to a superannuation fund.  
 

Examples of benefits 

The following cases have determined whether certain benefits are included, or otherwise, in an employee’s earnings with respect to the high-income threshold: 
 

Fringe benefits tax 

FBT may or may not be counted as earnings depending on the arrangement. If it is an amount dealt with as the employee directs, such as salary sacrificing, then FBT would be included in an employee’s earnings. FBT is omitted where it is the employer’s taxation liability. 


Value of the company car  

Where a fully maintained motor vehicle is provided, use for business purposes is excluded, and only the proportion of private usage can be counted as remuneration. The Fair Work Commission determined an appropriate method of calculating the value of the motor vehicle component of an employee’s remuneration package. The main criteria used by motoring organisations in deriving its cost estimates are depreciation, opportunity cost, vehicle registration and insurance, fuel, vehicle maintenance and FBT.  
 

Car allowance 

Earnings can exceed the high-income threshold if a vehicle allowance was included in the employee’s salary, even if no vehicle expenses were incurred.  
 

Non-monetary benefits 

An employee’s annual rate of earnings for the high-income threshold includes non-monetary benefits.

The Fair Work Commission has a discretion to include a benefit that is not a payment of money and that is not a “non-monetary benefit”, such as benefits that come under this description, would include providing a fully maintained company motor vehicle, private use of a company mobile phone and private use of a company laptop. Where the parties cannot agree on the value of a non-monetary benefit, the Fair Work Commission has the power to determine the value of a particular non-monetary benefit.  
 

Company-supplied housing 

The Fair Work Commission has held that the value of housing provided to an employee should not be included when calculating whether the employee’s earnings exceeded the high-income threshold. The decision might have been different if a house or a car had been provided as part of a salary sacrifice arrangement. 
 

Tax-deductible work-related expenses 

The employee argued that work-related expenses claimed as tax deductions should be deducted from his wages to determine whether the high-income threshold was exceeded, but the (then) Fair Work Australia rejected this argument.  
 

Private use of the company tablet and phone 

Suppose an employee was provided with a phone and tablet at the commencement of their employment with permission for personal use ‘within reason’. The employee accepted they had used the phone for personal calls, and that it was ‘incidental’ to the phone’s primary business purpose. The phone records disclosed that of 659 national direct calls, 412 were direct personal calls (62.5%). 

When the phone and tablet were returned on termination, there were 610 personal photos on the iPad and eight videos, as distinct from 21 work-related entries. The calculated benefit from the employee’s private use of the phone and tablet had caused their earnings to exceed the high-income threshold.  
 

Mobile broadband – personal use 

The personal use of a mobile broadband service, on a laptop computer, for work purposes, was found not to be a ‘non-monetary benefit’. This was because the mobile broadband service was provided as part of equipment essential to the performance of the job, and there was no evidence of any agreement regarding its private use. 
 

Incomplete year 

An employee who completes 7 months of employment with the employer before their dismissal must have received a salary below 7/12ths of the high-income threshold to be eligible to claim unfair dismissal.