HealthX Loses Appeal Over $366,405.20 Profit Share
HealthX Group Pty Ltd must pay its former general manager $366,405.20 in unpaid profit share after the Full Federal Court dismissed its contractual appeal on 9 November 2026, ruling that incentive clauses promising access to funds create enforceable obligations rather than discretionary payouts.
The dispute centers on a labor hire business focused on health and aged care operated by HealthX Group Pty Ltd. The respondent managed this unit from 1 July 2016 until her resignation on 26 April 2023, OnNotice reported.
The Four Gates of Item 10
Item 10 of a schedule to her employment contract dictated that general managers would participate in a profit share arrangement. She was slated to access 5 percent of the Gross Contribution, which was defined as earnings before interest and tax for the business unit prior to shared services costs.
Four gates had to be met to allow the profit share to flow. These required top line revenue growth, increased profitability, a staff survey indicating high commitment and engagement, and a client net promoter score that either improved or held steady at its peak.
HealthX Loses Profit Share Claim and Pays Damages
HealthX initiated legal action in January 2024 by seeking a declaration regarding the profit share alongside an injunction to enforce a restrictive covenant. By the time the matter reached a September 2025 trial before Justice Sarah C Derrington, HealthX had dropped its injunction claim.
Justice Derrington dismissed the application by HealthX and upheld a cross-claim for breach of contract covering the period from 1 July 2022 to 26 April 2023. The trial judge assessed the owed profit share at $366,405.20 and ordered HealthX to pay that sum as damages, alongside interest and partial costs.
On 18 November 2025, HealthX filed an appeal spanning eleven grounds. The Full Federal Court heard the arguments on 18 August 2026 before handing down its decision on 9 November 2026 in HealthX Group Pty Ltd v Palling [2026] FCAFC 141, with Justices Snaden, Meagher, and Bennett presiding.
Arguments on Discretion and Revenue
HealthX argued that Item 10 was aspirational, giving it absolute discretion over whether to pay. The company maintained that the gates had to be cleared quarterly and that top line revenue growth required actual EBITDA to exceed budgeted figures.
The appellate court rejected those contentions. The bench noted that the quarterly argument and reliance on an earlier contract with AWX Pty Ltd were never raised at trial. Furthermore, the court found the primary judge’s reasoning compelling, establishing that the verb to access
means to obtain
and confers no unilateral withholding power.
The Restraint of Trade Costs Ruling
The appeal succeeded on a single point regarding legal costs.
The Full Federal Court reversed that specific costs order. It held that Section 570 of the Fair Work Act 2009 requires a direct causal nexus between an unreasonable act and the incurrence of costs. Because those expenses would have accumulated regardless of any delay, the penalty could not stand.
