Employed directors potentially able to pursue unfair dismissal claim

In brief: The Fair Work Commission has permitted the regional director of a successful real estate business to apply for an unfair dismissal remedy. 

This decision demonstrates that, despite being called a 'director' and earning significant remuneration, an employee may still be eligible to make an unfair dismissal application if aspects of the role they perform falls within the coverage of a modern award.

Argued that duties performed fell within coverage of a modern award  

Mr Kaufman applied to the Commission under s 394 of the Fair Work Act 2009 (Act) for an unfair dismissal remedy relating to the termination of his role as a regional director at Jones Lang Lasalle (Vic) Pty Ltd (Lasalle).

Lasalle made the jurisdictional objection that Mr Kaufman was not a person protected from unfair dismissal under the Act. 

The basis of this objection was that Mr Kaufman's rate of annual earnings at the time of his dismissal was well in excess of the high income threshold. Additionally, Lasalle submitted that Mr Kaufman's role as a regional director did not fall under a modern award.

Fair Work Commission finds regional director protected from unfair dismissal 

The Commission held that Mr Kaufman was covered by the relevant Real Estate Industry Award 2010 (Award), and therefore was protected from unfair dismissal under the Act.

The principal purpose test was applied to determine Mr Kaufman's award coverage. The nature of the work undertaken and the circumstances in which Mr Kaufman was employed to do this work was considered in determining the principal purpose for his employment. This principal purpose was then compared to the coverage provision of the Award.

Mr Kaufman's main role was to source prospective buyers and sellers of property, which is a task indicative of a Property Sales Representative under the Award.  

The Commission emphasised that Mr Kaufman was identified as a leader by his employer based on his performance and promoted. This did not necessarily result in Mr Kaufman being exempt from award coverage.
  
Additionally, the position of Mr Kaufman in the company's hierarchy said little about the constituent elements of his role, other than demonstrating that he was a high performing and successful employee.  

If the duties or principal purpose for employment falls within an award they are eligible to lodge an unfair dismissal claim

This decision demonstrates that when the duties or principal purpose for which an employee is engaged fall within the coverage provisions of a relevant award, high levels of remuneration will not affect eligibility to bring an unfair dismissal claim. 

As such, employees whose duties include award covered duties should be afforded procedural fairness as described by s 387 of the FWA to minimise the risk associated with any claim that the termination of such employees is harsh, unjust or unreasonable.  

It is important companies understand the role of a modern award 

Many directors roles will not fall under an award because of managerial responsibilities and their involvement with key aspects of the company, such as strategy. However, it is important for employers to be aware of the considerations that determine award coverage.