A FULL Bench of the Fair Work Commission has held that overtime payments should be combined with salary income for the purpose of calculating annual earnings as they relate to the unfair dismissal income threshold.

In a matter arising between a construction company and a former employee, the Commission was asked to decide whether overtime payments amounting to $7111 per annum, systemically paid to the employee as part of a regular and ongoing arrangement, should be combined with the employee’s annual salary of $122,226.

The employee appealed the decision of a single commissioner, arguing that overtime related to his attendance at pre-start health and safety meetings should not be included in calculations determining if he was over the income threshold of $129,300 for unfair dismissal applications.

The Full Bench reviewed evidence relating to the intention of the construction firm, observing that historically, the firm had not altered its position with regard to the payment of overtime, nor did it intend to, highlighting that the organisation’s requirements to work overtime made the payments foreseeable.

“The explanatory memorandum [of the Acts Interpretation Act 1901] makes it clear that s.332(a) [of the Fair Work Act 2009] is solely concerned with whether or not the payment can be determined in advance,” the Bench said.

“On the evidence before the Commissioner, it is clear that the overtime payments that were made to Mr Foster as a result of the daily pre-start meetings could be determined in advance.

“This is in contrast to overtime work that is not anticipated or agreed to in advance, which Mr Foster may have been directed to undertake from time to time. Thus, Mr Foster’s regular overtime payments for the daily pre-start meetings should not be excluded from the calculation of his earnings by virtue of s.332(2)(a) of the Act.”

It was ruled that the employee’s overtime payments were to be included in the calculation of annual income which amounted to $129,339, placing the employee above the income threshold for unfair dismissal application.

Implications for Employers

This matter has general application to employers working compressed and other rosters in the resource and construction industries. In particular, AMMA members should be aware that payment of systemic and ongoing overtime in a similar quantum each week may contribute to income thresholds determining eligibility for unfair dismissal claims.

However, decisions relating to dismissal are governed by often complex laws and requirements. If you need advice or assistance navigating this field, please contact your local AMMA office and speak to one of our workplace relations experts.

Read the full case decision here: Foster v CBI Constructors Pty Ltd [2014] FWCFB 1976 (24 March 2014)