At-risk compensation doesn't count toward the threshold even with predetermined formulas
A $235,000 executive package shrank to $150,000 in a Fair Work ruling that changes how performance bonuses count toward unfair dismissal thresholds.
The Fair Work Commission handed down a decision on January 16, 2026, that should make HR teams rethink how they calculate executive compensation packages. Network RV Pty Ltd learned the hard way that adding up what you actually pay an employee does not necessarily equal their legal earnings.
Jim Moutsias served as the company's Chief Operating Officer from January 2020 until his termination on July 18, 2025. When he filed for unfair dismissal, Network RV immediately objected. The company calculated his total package at $235,729.96, well over the $183,100 high-income threshold that bars workers from pursuing unfair dismissal claims.
The math seemed simple enough. Moutsias earned a $150,000 base salary. He received $40,800 in production bonuses, $20,800 as a car allowance, and the company contributed $24,129.96 to his superannuation. Network RV argued that all those payments combined put him firmly in high-earner territory, beyond the protection of unfair dismissal laws.
Commissioner Connolly saw things differently. The Fair Work Act draws specific lines around what counts as earnings. Payments that cannot be determined in advance do not count. Neither do reimbursements or mandatory superannuation contributions.
The production bonus became the battleground. Network RV insisted the payment was essentially fixed. The formula was clear: when weekly production exceeded a set threshold, Moutsias would receive a predetermined amount for each unit produced above that level. The company knew the rate, the employee knew the rate, and the payment could be calculated the moment production figures came in.
Moutsias argued that knowing the rate meant nothing if he never hit the targets. The bonus depended entirely on performance. Miss the production goals and the money disappeared. The payment was not guaranteed.
The Commission sided with the employee. Commissioner Connolly noted the employer "has not provided me any further information or submission to established that the production bonus payments made to the Applicant were guaranteed to be received by him." Without proof the bonus was locked in regardless of performance, it could not count as earnings.
The superannuation contributions fell away too, as the law requires. The car allowance raised questions about whether any portion covered personal use, but that issue became irrelevant once the bonus was excluded.
Strip those amounts out and Moutsias landed at his $150,000 base salary, safely below the threshold. The company's jurisdictional objection failed. His unfair dismissal case will now proceed.
The ruling clarifies a distinction many employers miss. A performance bonus with a clear formula still fails the "determined in advance" test if the employee must meet conditions to collect it. The question is not whether you know the amount that would be paid if targets are met. The question is whether the payment is guaranteed.
For HR leaders structuring executive offers, the stakes are real. An employee collecting north of $200,000 annually may still access unfair dismissal protections if enough of that money is genuinely at risk. How you structure and document bonuses, commissions, and allowances can determine whether a termination lands you in front of the Fair Work Commission or not.
