Unfair Dismissal –The Principal Purpose Test

Pursuant to the Fair Work Act 2009 (Cth) (the Act), a person is protected from unfair dismissal if the person is an employee who has completed the Minimum Period of Employment and either:

• a Modern Award covers the person;
• an Enterprise Agreement applies to the person; or
• the employee’s annual rate or earnings is less than the High Income Threshold.

In the case of Tucker v Digital Diagnostic Imaging Pty Ltd [2011] FWA 1767, Mr Tucker’s annual earnings were above the High Income Threshold and therefore filed an Unfair Dismissal Claim with Fair Work Australia on grounds that he was covered by a Modern Award. Mr Tucker claimed that his employment responsibilities were those of a Level 4 professional in accordance with the Professional Employees Award 2010.

It was stated when determining if an employee is covered by a Modern Award, the principal purpose test must be applied which distinguishes between the substantive role of the position versus examining the actual time that an employee has been occupied performing the tasks of that role. Commission Cambridge went on further to identify notable factors which are often relevant to the principal purpose test being:

• the contents of any job description, person specification or job advertisement;
• the level of remuneration assessed against award levels of remuneration and also the context of remuneration levels within the employing organization;
• the actual time occupied in different duties (a substantive role/function analysis);
• the status and level of the position occupied within the organisational structure;
• possession or absence of particular qualifications and whether such qualifications are necessary to the exercise of the primary functions that are performed;
• the exercise of authority and direction over others including in particular, the extent of such authority;
• the level of importance and relevance of particular duties in the context of the employing organisation’s overall purpose;
• the level of decision making capacity in the context of the employing organisation’s overall operation; and
• the nature and extent of any role as representative of the employing organisation to third parties.

It was held that Mr Tucker’s employment responsibilities were more in line with those of an Information Technology Manager, as opposed to a Level 4 professional as defined by the Professional Employees Award 2010. Consequently, Mr Tucker’s application for an Unfair Dismissal Remedy was dismissed as he did not meet the jurisdictional requirements covered by the Act.

Tips

• If you are an employer and you intend to terminate a member of staff with an income in excess of the High Income Threshold, this does not mean the employee cannot apply for an Unfair Dismissal Remedy if that member of staff is covered by a Modern Award.
• If you are an employee with an income in excess of the High Income Threshold, you may still have a claim if you are covered by a Modern Award or pursuant to a claim for wrongful dismissal on grounds of breach of contract.

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This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.