On 1 July 2019, the high- income threshold increased and is currently $148,700 per annum.  The threshold operates to limit an employee’s eligibility to be protected from unfair dismissal as defined in the Fair Work Act 2009 (Cth) (FWA) and is adjusted annually. This means that an employee who is not covered by a modern award or an enterprise agreement can only make an application for unfair dismissal if their ‘annual rate of earnings’ is less than the high-income threshold.

What is an employee’s annual rate of earnings?

The FWA provides that earnings include:

  • wages;
  • amounts applied or dealt with in any way on the employee’s behalf or as the employee directs (eg salary sacrificing); and
  • the agreed money value of non-monetary benefits (eg company car).

Earnings do not include:

  • payments which cannot be determined in advance such as commissions, incentive based payments, bonuses, overtime (except guaranteed overtime);
  • reimbursements;
  • compulsory Superannuation Guarantee payments. However any superannuation payments in excess of compulsory contributions may be included in the calculations of the employee’s earnings.

High- income threshold relevant when calculating compensation

Under the FWA compensation for unfair dismissal can be capped at half the amount of the high income threshold immediately before dismissal meaning that the new maximum amount is now $74,350 from 1 July 2019.

If you have any queries in relation to the changes or wish to discuss further please contact Michael Bishop or Amelita Hensman.

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