Effective from 1 July 2021, the Fair Work Commission has increased the high income threshold to $158,500 per annum.
The high income threshold affects how modern awards apply to employees and affects their ability to access unfair dismissal.
The high income threshold affects 3 main entitlements:
- Employees who earn more than the high income threshold and who are not covered by a modern award or enterprise agreement, cannot make an unfair dismissal claim;
- Employees who are covered by a modern award and have agreed to a written guarantee of annual earnings that is more than the high income threshold, do not receive modern award entitlements. However, they can make an unfair dismissal claim.
- The maximum amount of compensation payable for unfair dismissal is capped at either half the high income threshold, or 6 months of the dismissed employee’s wage, whichever is less.
What is included in the high income threshold?
An employee is affected if their ‘earnings’ are more than the high income threshold.
To calculate ‘earnings’ the following are included:
- Wages
- Money that is paid by the employer on behalf of the employee (eg superannuation top ups, salary sacrifice, redundancy contributions etc)
- The agreed value of non-monetary benefits (eg. Laptops, mobile phones etc)
An employee’s ‘earnings’ do not include:
- Payments that cannot be set in advance (eg. Commissions, bonuses or overtime)
- Reimbursements; or
- Superannuation contributions that the employer has to make
Employees who cannot access the unfair dismissal provisions of the Fair Work Act may still have other legal options available to them to challenge a dismissal. These other avenues include the general protections provision of the Fair Work Act, anti-discrimination laws and the common law for breach of contract claims.
Members are also advised that the FWC has increased the compensation limit for unfair dismissals from $76,800 to $79,250. This change also commences from 1 July 2021.
More information
Should members have any further enquiries regarding the above matters, please do not hesitate to contact the Association’s Industrial Relations Department – Sydney Office on 02 8586 3555.