Tyson Wood v The Schoolhouse Education Australia Pty Ltd
[2025] FWC 957
•4 APRIL 2025
| [2025] FWC 957 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Tyson Wood
v
The Schoolhouse Education Australia Pty Ltd
(U2024/15024)
| COMMISSIONER SIMPSON | BRISBANE, 4 APRIL 2025 |
Application for an unfair dismissal remedy – jurisdictional objection high income threshold – Jurisdictional objection dismissed.
On 12 December 2024, Mr Tyson Wood (Mr Wood / 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 The Schoolhouse Education Australia Pty Ltd (the Respondent). The Respondent objected to the application as it said the Applicant’s earnings were above the high-income threshold and he was not covered by a Modern Award or Enterprise Agreement.
On 28 February 2025, I issued a Notice of Listing and Directions to the parties regarding the jurisdictional objection. A jurisdictional hearing was held on 21 March 2025.
Ms Eve Lee-Roberts, a Solicitor at Shand Taylor Lawyers was granted leave under s.596(2)(a) to appear on behalf of the Applicant, Ms Kathryn Rundle, a Solicitor at Ballantyne Law was granted leave under s.596(2)(a) to appear on behalf of the Respondent.
Mr Wood provided a witness statement[1] on his own behalf dated 17 March 2025. Mr Geoffrey Lennox[2] and Mr Carl Ramplin,[3] Directors, provided witness statements dated 10 March 2025 for the Respondent. Mr Wood and Mr Ramplin were not required for cross examination and their statements’ evidence was admitted into evidence.
Background
In 2021, the Applicant, Mr Lennox and Mr Ramplin started the Respondent company. The Applicant was a shareholder and for a time a Director in the Respondent through his company Fleetwood Holdings Pty Ltd (Fleetwood). The Applicant was receiving a salary of $190,001 per year.
The Applicant submitted that salary sacrificing was a regular occurrence in the Respondent’s business. In 2021, he submitted that he salary sacrificed about 37% of his annual salary, which was reimbursed by equivalent value of ‘C’ shares in the Respondent through Fleetwood.
The Applicant submitted that between October to December 2022, he salary sacrificed 100% of his salary, and was repaid in February 2023. In 2023, between November and December through to January 2024 the Applicant submitted that he salary sacrificed 100% of his salary again. These amounts were repaid in February or March 2024.
On 29 February 2024, the Applicant emailed the directors of the Respondent notifying that he had advised the Respondent’s accountants to reduce his annual salary by the sum of $30,000 per annum at a rate of $2,500 per month, and to treat this reduction as a loan to be repaid to the Applicant. The Respondent characterised this as a “salary sacrifice/loan.”
On 29 February 2024, Mr Lennox responded “Fine by me Tyson.” On 1 March 2024, Mr Ramplin responded “I’d rather you don’t reduce your salary but if you’re happier doing this way I support as well”.
From 1 March 2024 to June 2024, the Applicant’s annual salary was reduced pro rata to $160,000.00. The pro rata difference between the Applicant’s annual rate of earnings and the Applicant’s reduced salary was treated as a salary sacrifice. These funds were credited to the Respondent as a loan, repayable to the Applicant, as directed by the Applicant.
The Respondent submitted that in June 2024, the Applicant offered to salary sacrifice 100% of his salary to the Respondent as a loan to assist with a company project (Employo), to commence in August 2024 and end in January 2025.
In July 2024, the Applicant directed the Respondent not to pay him any funds for the period of 1 July 2024 to 31 July 2024, and credit the wage payable to the Respondent as a loan to be repaid to the Applicant.
The Respondent submitted that as a Director, the Applicant had control over when he took leave, without approval needed from other parties at the Respondent. The Respondent submitted that from August 2024 to October 2024, the Applicant’s role involved minimal time commitment, and that the Applicant was taking a significant period of leave comprising of both annual leave and unpaid leave but are unclear on exactly how much leave was taken.
On 25 September 2024, the Applicant notified Mr Ramplin and Mr Lennox that he was to commence new employment to supplement his income which had been significantly reduced. He advised he remained committed to the business of the Respondent, and that his intention was this new employment was temporary until he could continue work with the Respondent.
The Respondent submitted that the Applicant commenced full time employment with the other employer in late October 2024 and intended to be on unpaid leave with the Respondent during this time.
On 22 November 2024 the Applicant was dismissed. At this stage it is not relevant for the alleged reasons for the dismissal to be explored.
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
In his oral evidence Mr Lennox agreed with the proposition that Mr Wood and himself founded the Respondent. Mr Lennox agreed he was a Director of the Respondent and had some control over decisions concerning the Respondent.
Mr Lennox agreed that Mr Wood’s employment was terminated on 22 November 2024 effective immediately. Mr Lennox was referred to the letter of termination where it stated that Mr Wood would be paid notice and his accrued entitlements up to and including the day of termination. Mr Lennox agreed none of these amounts have been paid as at the time of the hearing.
Mr Lennox was referred to a summary of Mr Wood’s payslips and asked whether he agreed that the gross earnings of Mr Wood from the period from November 2023 to November 2024 was $103,833 exclusive of superannuation, and also the earnings from January to November of 2024 of $75,649.96. Mr Lennox agreed these figures were broadly correct.
It was put to Mr Lennox that Mr Wood’s salary was reduced from $190,000 per annum to $160,000 per annum from March 2024. He said he did not agree. Mr Lennox said Mr Wood took a salary sacrifice of $30,000 but the salary remained at $190,000. He agreed that Mr Wood did not receive wages calculated at the rate of $190,000 from March 2024 to June 2024. It was put to Mr Lennox that the amount was to be treated as a loan, and he agreed it was effectively a loan and said it would be repaid at a later date. I asked Mr Lennox why the $30,000 amount had not been repaid, and he said that it was part of an ongoing dispute, and the Respondent had tried as part of without prejudice discussions to settle the matter and had been unsuccessful to date.
Mr Lennox agreed that the loan had not been repaid. Mr Lennox also accepted that from July 2024, Mr Wood’s salary was reduced by 100% salary sacrificing. Mr Lennox agreed that from July 2024 to November 2024, Mr Wood was not paid any wages by the Respondent.
Mr Lennox agreed that the Respondent had indicated the outstanding amounts would be repaid when the Respondent was in a more liquid financial position. Mr Lennox agreed that the repayment of the amount was contingent on the Respondent being in a more liquid position and it now was. He said salary sacrificing arrangements other staff had made, had been repaid in full but this matter was still under negotiation. However if it needed to, the Respondent could repay the amount.
It was put to Mr Lennox that he attended a zoom meeting with Mr Wood and Mr Ramplin in August 2024. He said there were many meetings. It was put to Mr Lennox that he told Mr Wood in one of the zoom meetings around this time that Mr Wood would not be repaid his salary sacrifice for the months of July 2024 to November 2024. Mr Lennox said that he remembered stating clearly that many of the founding partners were so angry at what had been done, that they did not want Mr Wood to be repaid, and had told Mr Wood that specifically. Mr Lennox said he resisted that position, and it was always clear Mr Wood was going to be repaid.
Mr Lennox said all founding partners are shareholders. He said the partners would meet consistently but there has never been a call for a notice for a shareholder meeting. Mr Lennox agreed that Mr Wood has not received his salary sacrifice amounts back or accrued leave or notice, and he has not been paid any amounts since 28 June 2024.
Mr Lennox said he maintained Mr Wood should be repaid at a salary of $190,000. However, his evidence was that Mr Wood is saying his salary was $160,000 and further that there were no records kept concerning holiday pay for example, so there is no factual basis about how the correct amount to be paid out can be agreed. Mr Lennox also said that Mr Wood took a job as a Chief Executive of another business in the relevant period and therefore Mr Lennox said in calculating what is owed, the Respondent doesn’t know whether to calculate the amount based on the difference between what Mr Wood was earning in one job and what he would have earned in the other because he could not have been a Chief Executive 100% of the time to both companies.
The Respondent submitted that, in summary:
· The Applicant was not covered by a modern award
· The Applicant was not covered by an enterprise agreement
· There is no dispute that the high income threshold is $175,000
· The Applicant’s annual rate of earnings at the time of the dismissal was $190,000 and this amount is higher than the high income threshold
· There is no dispute that salary sacrificing is common and salary sacrifice amounts are repaid
· On or about 29 February 2024 the Applicant independently determined to reduce his annual rate of earnings by $30,000 (to $160,000)
· The Applicant directed that the sum of $30,000 of his earnings be loaned from him to the Employer
· The Applicant’s earnings include the $30,000 and the Applicant’s annual rate of earnings remained as $190,000 per annum
· The Applicant does not have standing pursuant to s.382 of the Act
· There is no dispute that the Applicant salary sacrificed 100% of his earnings from July 2024 until his termination
· Irrespective of the actual monies received by the Applicant, his annual rate of earnings was $190,000.00 for the 12 months prior to his termination
· The salary sacrifice / loan are funds “applied or dealt with” on behalf of the Applicant, and accordingly are to be included in the calculation of his earnings pursuant to s.332 of the Act
· Any unpaid leave the Applicant took during the period from August 2024 until his termination, does not lessen his annual rate of earnings for the relevant period for the purposes of s.332 of the Act.
· The Applicant says in his submissions he will seek these payments
· Leave without pay also does not affect the rate of earnings, and the evidence of Mr Lennox concerning the Applicant obtaining other employment whilst still employed by the Respondent, raised whether he was taking leave without pay
· The evidence of the Applicant that Mr Lennox said to him in a meeting whilst still employed that he would not be repaid the salary sacrifice amounts should be rejected
· In relation to salary sacrifice being regarded as earnings dealt with on an employee’s behalf, the Respondent relies on the decision in Robinson v AJ Gandel[4]
· In closing oral submissions the Respondent submitted it was relying on the words “or as the employee directs;” in s.332(1)(b).
The Applicant submitted that, in summary:
· The Applicant was not covered by a modern award
· The Applicant was not covered by an enterprise agreement
· Between November 2023 and February 2024, the Applicant’s salary was listed as $190,000 per annum, inclusive of superannuation
· From March 2024, the Applicant’s salary was reduced to $160,000 per annum, inclusive of superannuation, by agreement between the parties. It was at or around this time that the Applicant ceased his role as a Director of the Respondent
· As such, the Applicant’s earnings under s.332 of the Act are limited to his wages exclusive of compulsory superannuation contributions
· The Applicant did not receive consistent wages from the Respondent in 2024
· The dispute is about whether the loan amounts form part of his salary pursuant to s.332(1)(b) and if so whether they should be accepted as forming part of his earnings for the purposes of s.332
· The amounts of the wage loans are crystalised debts
· If the Respondent intended to repay the wage loans this would have occurred at the time of termination and even if there was some dispute as to the exact amount, the Respondent could have paid at least the amount from March to June 2024 and/or the payment in lieu of notice
· The Respondent did not intend to repay the wage loans or at least the wage loan from July to November 2024.
Total earnings for the 12 months prior to dismissal
The Applicant submitted that his total earnings received in the 12-month period prior to his dismissal, were as follows:
| Month | Annual Salary | Gross Wages (exclusive of superannuation) | Running Total |
| November 2023 | $190,001 | $14,091.66 | $14,091.66 |
| December 2023 | $190,001 | $14,091.66 | $28,183.32 |
| January 2024 | $190,001 | $14,091.66 | $42,274.98 |
| February 2024 | $190,001 | $14,091.66 | $56,366.64 |
| March 2024 | $160,000 | $11,866.66 | $68,233.30 |
| April 2024 | $160,000 | $11,866.66 | $80,099.96 |
| May 2024 | $160,000 | $11,866.66 | $91,966.62 |
| June 2024 | $160,000 | $11,866.66 | $103,833.28 |
| July 2024 | $160,000 | NIL | $103,833.28 |
| August 2024 | $160,000 | NIL | $103,833.28 |
| September 2024 | $160,000 | NIL | $103,833.28 |
| October 2024 | $160,000 | NIL | $103,833.28 |
| November 2024 | $160,000 | NIL | $103,833.28 |
The Applicant referred to the case of ablett v Gemco Rail Pty Ltd T/A Gemco Rail Pty Ltd[5] where Commissioner Williams found:
“[31] Compulsory superannuation contributions made by an employer as required by the Superannuation Guarantee Charge Act 1992 are expressly excluded from the calculation of an employee’s earnings by virtue of s.332(2)(c). I note that the amount in question here is $9,000 which of course is 9% of the Applicant’s annual salary of $100,000. This percentage is consistent with an employer’s obligation under the Superannuation Guarantee Charge Act 1992.
[32] I agree with the submissions of the Applicant that the amount of $9,000 paid to him as superannuation is not to be included in the calculation of his annual rate of earnings.”
The Respondent submitted that the annual rate of earnings the Applicant was entitled to for the relevant period was $190,000.00, comprised of:
a)Monthly payments of $15,833.33 for the period of November 2023 to February 2024;
b)Monthly payments of $13,333.33 and a salary sacrifice of $2,500.00 for the period of March 2024 to June 2024;
c)An entitlement to payment of $13,333.33, amount to be paid to the Applicant to be determined dependent on leave and leave entitlements, and a salary sacrifice of $2,500.00 for the period of July 2024 to September 2024;
d)An entitlement to payment of $13,333.33, amount to be paid to the Applicant to be determined dependent on leave and leave entitlements, and a salary sacrifice of $2,500.00, to be calculated pro rata for part of October 2024, until the Applicant commenced full time work with Charterhouse; and
e)An entitlement to payment of $15,833.33, with no wage to be paid as a result of unpaid leave, from a date to be confirmed in October 2024 to 22 November 2024.
The Respondent referred to the case of Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia[6] which affirmed the position that:
“[8] His Honour dealt with the annual rate of earnings aspect thus:
[9] ... The most natural way of construing the expression annual rate of earnings in s.382 is by reference to the annual rate of earnings at the time of the applicant’s dismissal. If Parliament had wished to refer to the average amount earned over the previous 12 months it could easily have done so. I note, for example, that in setting the compensation cap in relation to unfair dismissal, s.392 specifically refers to the amount that the employee received (or was entitled to) during the 26 week period immediately before the dismissal.
[9] …What needs to be ascertained is the annual rate of earnings at that time, not the annual earnings to that time (the amount earned in the 12 months to that time).”
Wage loan
The Respondent submitted the Applicant’s salary reduction of $30,000 per annum for the period of March 2024 to November 2024 is a loan from the Applicant to the Respondent. And between July 2024 and his dismissal, 100% of the Applicant’s salary was loaned to the Respondent.
The Applicant submitted that there is an expectation that the Respondent will repay the $30,000 ‘wage loan’ to the Applicant.
The Respondent referred to the case of Cross v Bechtel Construction (Australia) Pty Ltd[7] where it was stated:
“The correct test for determining the annual rate of earnings for the purposes of s. 332 of the Act, is to determine the rate of earnings at the time of termination of employment, not the actual earnings up to that time…”[8]
“Prior to being off sick, the Applicant worked 18 hours paid overtime each week. He now contends that he was not entitled to overtime while on unpaid leave. On that analysis it would mean that if a person is on unpaid leave for a year, their earnings for the purposes of s. 332 of the Act would be zero and therefore they would fall under the high income threshold. I am not persuaded that this is the correct construction of the legislation. It is clear on the material before me that but for the sick leave, the Applicant would have been obliged to work 58 hours and would have been paid the regular overtime.... Nor can the argument that the Applicant was on unpaid sick leave be relied upon to form the view that his earnings for the purposes of the legislation did not include overtime.”[9]
The Respondent also referred to the case of Batley v Cocos Islands Cooperative Society Ltd,[10] where Cloghan C considered:
“[32] To better understand the construction of s.332(1)(b), I have divided the sub-section into two parts; the first part being:
“Other amounts applied or dealt with in any way on the employee’s behalf”.
Firstly, the word “other” is indicative of an amount different to what has already been mentioned – that is, the employee’s salary or wages in s.332(1)(a). Secondly, the amount “applied or dealt with” has a context, and that context is that it must be “on the employee’s behalf”; in other words, the amount is not any other amount, but an amount which is expended on the employee’s behalf and part of their “cashable” salary or wages.
By a process of elimination, an amount which is not applied or dealt with on behalf of the employee and within their “cashable” salaries or wages, must be excluded from the definition of earnings.”
Consideration
It is not in dispute, and I accept that the Applicant was not covered by a Modern Award or Enterprise Agreement.
It is common ground that the salary sacrifice amount from March to 28 June 2024 was to a value in the order of $10,000 and from July 2024 until 22 November 2024 it was 100% of Mr Wood’s salary. The question for determination is whether Mr Wood’s salary sacrifice wage loan amounts from March until his termination falls under s.332(1)(b).
In respect of s.332(1)(a) it is clear the Applicant was earning no wages at the time of termination.
I agree with the Applicant that to the extent there are amounts outstanding in relation to the wage loans, they are a ‘debt’ rather than ‘earnings’ for the purposes of s.332. I do not accept that the wage loans were amounts applied or dealt with in any way on the employee’s behalf. Firstly, the wage loans were not applied or dealt with on the employee’s behalf as they were not for the benefit of the employee, but for the purpose of assisting the Respondent to support the Respondent’s financial position, not on the employee’s behalf.
I also do not accept that the wage loan was an amount applied or dealt with as the employee directs. The evidence supports the conclusion that it was an arrangement entered into by the Applicant as a director of the Respondent, and as a shareholder in the Respondent through his company (Fleetwood), again to assist the financial position of the Respondent.
The fact that no amounts have been paid to the Applicant for the period from July 2024 to November 2024, and no work has been performed by the Applicant for the Respondent during that time, raises the question of how the amount, whatever the amount is that is owed, could be regarded as earnings if no work was performed.
The “work-wages bargain” operates on the basis that employers pay employees for work performed, and the Applicant performed no work for the Respondent from July 2024 to November 2024 as an employee. He ultimately obtained other work in October 2024 as he was earning no income from the Respondent. He was not on paid leave during this time.
The appropriate time to determine the Applicant’s rate of earnings is the time of termination. I accept the Respondent’s submission that the rate of earnings at the time of termination is different to the earnings in the previous calendar year, which can be influenced by factors that may not change the proper assessment of the rate of earnings at the relevant time. However, in this case, because the wage loan amounts do not fall within the meaning of ‘earnings,’ the Applicant’s rate of earnings at the time of termination fall below the high-income threshold.
The Respondent has referred to the decision in Robinson v Gandel[11]. The facts in that case are distinguishable and turned on whether certain amounts were amounts worked out in accordance with the Fair Work Regulations2009 (Cth) and not s.332(1)(b).
It is also my view that the wage loan amounts are an excluded amount by force of s.332(2)(a) as the loans fall within the meaning of ‘payments,’ the amount of which cannot be determined in advance. That is because it was clear from the evidence of Mr Lennox that they were to be repaid when the Respondent returned to a position of having sufficient liquidity to repay the loan amounts. That contingency on the repayment of the sum introduced an element of uncertainty about when, and if, the amounts would be repaid. It relied on an unknown, being the future financial position of the Respondent, meaning the timing of the repayment could not be determined in advance.
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
Appearances:
E Lee-Roberts, Solicitor for the Applicant,
K Rundle, Solicitor for the Respondent
Hearing details:
2025
21 March (by video)
Brisbane.
[1] Exhibit 1 statement of Mr Tyson Wood dated 17 March 2025
[2] Exhibit 3 statement of Mr Geoffrey Lennox dated 10 March 2025
[3] Exhibit 2 statement of Mr Carl Ramplin dated 10 March 2025
[4] [2013] FWC 4583
[5] [2010] FWA 8124.
[6] [2012] FWAFB 6108.
[7] [2015] FWC 3639.
[8] Ibid, [16].
[9] Ibid, [15].
[10] [2010] FWA 2289.
[11] [2013] FWC 4583
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