Mark Duffy v Enermech Pty Limited
[2025] FWC 1670
•17 JUNE 2025
| [2025] FWC 1670 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Mark Duffy
v
Enermech Pty Limited
(U2025/4134)
| COMMISSIONER SIMPSON | BRISBANE, 17 JUNE 2025 |
Application for an unfair dismissal remedy – jurisdictional objection - Applicant earned over the high income threshold – retention payment not earnings as is discretionary – objection dismissed – application to proceed.
On 4 April 2025, Mr Mark Duffy (Duffy / the Applicant) applied to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy, alleging he was unfairly dismissed from his employment with Enermech Pty Limited (the Respondent). The Respondent objected to the application on the basis that the Applicant’s earnings were above the high-income threshold, and he was not covered by a Modern Award or Enterprise Agreement and that the termination of Mr Duffy’s employment was by way of genuine redundancy.
On 17 April 2025, I issued a Notice of Listing and Directions to the parties regarding the jurisdictional objections. The matter was listed for a jurisdictional hearing on 21 May 2025.
On 15 May 2025, the Respondent’s Solicitor, Ms Jill Hignett, a Solicitor at HR Law suggested that I determine the matter on the papers to save costs. On that same date, the Applicant emailed a reply, whereby he objected to the Respondent’s legal representation and submitted that he believed the Respondent’s factual assertions regarding him working in a part time capacity were incorrect. On the same date, my Chambers sent a reply email to parties, seeking the Respondent to confirm their position on the part time issue and asking if the Applicant consented to the matter being determined on the papers if the Respondent conceded the part time issue.
On 16 May 2025, via email, the Respondent’s solicitor confirmed that the Respondent did not rely on an argument that the Applicant was employed on a part time basis. On that same date, via email, the Applicant confirmed that he was content for the high income threshold jurisdictional matter to be determined on the papers based on the Respondent’s concession.
Relevant legislation
Section 382 of the Act defines when a person is protected from unfair dismissal:
382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i)a modern award covers the person;
(ii)an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
Section 332 of the Act outlines what ‘earnings’ include:
332 Earnings
(1) An employee’s earnings include:
(a) the employee’s wages; and
(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and
(c) the agreed money value of non - monetary benefits; and
(d) amounts or benefits prescribed by the regulations.
(2) However, an employee’s earnings do not include the following:
(a) payments the amount of which cannot be determined in advance;
(b) reimbursements;
(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;
(d) amounts prescribed by the regulations.
Note: Some examples of payments covered by paragraph (a) are commissions, incentive - based payments and bonuses, and overtime (unless the overtime is guaranteed).
(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:
(a) to which the employee is entitled in return for the performance of work; and
(b) for which a reasonable money value has been agreed by the employee and the employer;
but does not include a benefit prescribed by the regulations.
(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:
(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;
(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;
(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.
Submissions and Evidence
On 8 November 2022, the Applicant started his employment in the Respondent’s company in the position of Project Manager – Nitrogen Services, completing projects across the east coast of Australia for the Respondent’s East Coast Team.
The Respondent submitted that due to the nature and seniority of the position, no Modern Award applied to the Applicant’s employment. Further, no Enterprise Agreement applied to the Applicant’s employment. I accept that the Applicant was not covered by a Modern Award or Enterprise Agreement.
The Applicant submitted that he was receiving a base salary (excluding superannuation) of $168,096 per year, which with mobile phone, site and meal allowances, would rise to the total annual remuneration (excluding superannuation) of $172,248 per year (without the retention bonus). The Respondent agreed with the value of the base salary (excluding superannuation) and allowances submitted by the Applicant.
However, the Respondent submitted that there were additional retention payments in the full 12 months prior to the Applicant’s dismissal. These payments took effect in accordance with the Retention Payment letter (Retention Letter) issued to the Applicant and that there was no unilateral right to alter or discontinue the payments at any time. The Retention Letter[1] outlined the following conditions:
“Eligibility for Payment
You will be eligible to receive a retention payment (“Retention Payment”) if
a)you remain actively employed by EnerMech until the end of your Retention Period (as defined below) and
b)you maintain or exceed your current levels of performance and proficiency in the skills required to complete your job activities, and
c)You achieve timely completion of the objectives attached hereto as Exhibit A, and
d)you conduct yourself, to the reasonable satisfaction of the Company, in accordance with EnerMech’s values, policies, and procedures.”
…
“Amount of Your Retention Payment
If you satisfy the eligibility criteria set forth above, you will receive a cash Retention Payment equal to £12000 (twelve thousand British Pounds). Except to the extent otherwise specifically set forth in this Agreement, no pro rata Retention Payment will be payable under the Program or this Agreement. The Retention Payments is expressed in British Pounds and will be paid in your normal payroll currency, converted at the appropriate budget rate.”
…
“Timing of Payment
If you satisfy the eligibility criteria set forth herein, you shall receive your Retention Payment in accordance with the following schedule:
Instalment 1: £1200 will be paid in the first available payroll following 30th April 2024.
Instalment 2: £4200 will be paid in the first available payroll following 31st August 2024.
Instalment 3: £6600 will be paid in the first available payroll following one year from the effective date of
this Agreement, unless specified otherwise in Exhibit A.”The Applicant was employed until 18 March 2025, a little more than a year after the Retention Letter was issued.
The Performance Objectives in ‘Exhibit A’ of the Retention Letter were as follows:
“EXHIBIT A – PERFORMANCE OBJECTIVES
The following general performance objectives apply to all participants in the Program:
1. Maintain or exceed your current personal performance levels.
2. Continue to demonstrate the EnerMech values and leadership competencies at a level appropriate for your role.
3. Conduct yourself, to the reasonable satisfaction of the Company, in accordance with EnerMech’s policies and procedures.
4. Abide by the EnerMech code of Business Conduct at all times.
5. Fully engage and support the delivery of the 2024 budget.
Further specific performance objectives may be provided to you through the central program management office, and objective setting sessions held between the senior leadership team of the Company, the Board, and their appointed advisors. These objectives will be confirmed no later than 30th April 2024 and may be amended from time to time.”
The Respondent submitted that the parameters upon which the Retention Payment would be paid to Mr Duffy were within his control and would be considered the ordinary requirements for ongoing employment. The Respondent submitted that the eligibility criteria in the Retention Letter did not include any materially new obligations, nor did they impose any heightened or exceptional performance benchmarks.
The Respondent submitted that including the additional retention payments in the annual earnings was consistent with s.332 of the Act and cited, paragraph [1327] of the explanatory memorandum of the Fair Work Bill 2008 (Cth) which outlined:
“1327. An employee’s earnings do not include payments for which a is not ascertainable in advance (such as variable performance bonuses). This means that payments made, but which were not anticipated or agreed to in advance (either because the type of payment was not anticipated, or the value of the payment was not agreed), will not be included. A legislative note provides examples of payments that cannot be determined in advance. These payments include overtime (unless the overtime is guaranteed), commissions and incentive-based payments and bonuses.”
(Respondent emphasis added)
The Respondent submitted that if the $23,077.31 (AUD Equivalent) in retention payments were accepted in addition to undisputed base salary and allowances, then the total annual remuneration (excluding superannuation) for the Applicant at the time of his termination was $191,533.36. The high-income threshold for the 2024-2025 financial year was $175,000 (excluding superannuation) gross per annum.
The Applicant submitted that while he completed the conditions for the retention payment, given the non-guaranteed nature of this bonus and the fact that it was tied to a fixed term, the retention payments should not be considered as part of his annual remuneration for the purpose of determining eligibility for an unfair dismissal claim.
Consideration
As stated above it is not in dispute, and I accept that the Applicant was not covered by a Modern Award or Enterprise Agreement. Section 332(2)(a) provides that an employee’s earnings do not include “payments the amount of which cannot be determined in advance.” The legislative note under s.332(2) refers to “commissions, incentive based payments and bonuses…”.
It is apparent from the submissions filed, that the payment of the Retention Payment was contingent on the Applicant maintaining or exceeding levels of performance and proficiency in the skills required to complete his job activities. It appears from the documentation, his success or failure in that regard would ultimately be determined, to some extent, at the discretion of the Respondent.
The requirements included that he had to maintain or exceed his current personal performance levels, continue to demonstrate the EnerMech values and leadership competencies at a level appropriate for his role, to conduct himself to the reasonable satisfaction of the Company, in accordance with EnerMech’s policies and procedures, abide by the EnerMech code of Business Conduct at all times and fully engage and support the delivery of the 2024 budget.
The payment of the Retention Payment was also contingent on the Respondent reserving the right to provide to the Applicant further specific performance objectives, through the central program management office, and objective setting sessions held between the senior leadership team of the Company, the Board, and their appointed advisors. The objectives to be confirmed no later than 30 April 2024 and may be amended from time to time. It is clear from the language attached to the Retention Payment that the Respondent reserved the right to modify the arrangements that may be required to be met in order to receive the Retention Payment. In the circumstances, despite there being a formula for the Retention Payment, it is not a payment the amount of which can be determined in advance, because the amount payable is contingent on certain things happening which are not certain.
On the basis of the submissions, it is clear that when the Retention Payment is excluded, the Applicant’s earnings do not exceed the high income threshold.
Conclusion
For the reasons set out above, the jurisdictional objection that the Applicant’s earnings exceeded the high income threshold at the time of termination of $175,000 is dismissed. The matter will be listed for further directions.
COMMISSIONER
[1] Retention Letter dated 24 March 2025.
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