Regular Overtime Counts as Income for Threshold Test

Foster v CBI Constructors Pty Ltd [2014] FWCFB 1976 (24 March 2014)

The total salary paid to an employee is important in certain considerations for the jurisdiction of Fair Work Commission, not least unfair dismissal matters, and it has been decided that regular overtime can and should be counted as earnings to determine an employee’s income.

The case concerned a construction supervisor who, along with all other supervisors, was required to attend pre-work planning and safety meetings starting a half hour before the supervised workforce. This formed part of their on-going contract of employment and never varied.

In the original hearing, FWC found that this half hour each day contributed to the employee’s wages and therefore had to be included in the total earnings for the purposes of the threshold income test, when the employee claimed unfair dismissal.

This decision was appealed, and the appeal bench found that because it was the same every day, and the evidence showed it was to continue, that it should be included in calculating the employee’s annual income for the purposes of the income test. The full bench said the supervisor had an on-going obligation to attend the pre-start meetings, all supervisors did it, it had always been performed and the law is clear that what must not be counted in determining the salary cap is “payments the amount of which cannot be determined in advance” (see s.332 fair Work Act).

In the circumstances, the full bench said the overtime should be included and made the point that very little case law on the relevant legislation existed so it was in the public interest that some guidance be given.

This case is important for employers who wish to rely on the high income threshold in cases involving Fair Work, where there is no award or enterprise agreement applying to the employee concerned, and the employee’s salary is at issue for jurisdictional purposes. If that employee also earns an amount for additional hours that are regular and systematic and can be determined in advance, then this case is relevant.