New high income threshold

The Fair Work Commission has increased the high income threshold for unfair dismissals from $136,700 to $138,900 per annum, with effect from 1 July 2016.

Under the Fair Work Act 2009, employees who exceed earnings above the high income threshold are not entitled to make an unfair dismissal claim against their employer, unless they are covered by an award or enterprise agreement.

The Fair Work Act 2009 deems an employee’s annual rate of earnings as employee wages, any amounts applied or dealt with on the employee’s behalf, such as salary sacrificing, and the agreed value of any non-monetary benefits i.e. a car, mobile phone, laptop, etc.

Reimbursements, superannuation contributions and payments which cannot be determined in advance, such as overtime and bonuses, are not considered when calculating the high income threshold. Employees are eligible to claim for unfair dismissal if they have completed the minimum employment period of:

• 12 months – where the employer employs fewer than 15 people, or

• 6 months – where the employer employs more than 15 people.

When considering an employee’s dismissal, employers need to be aware of the new threshold and whether a modern award or enterprise agreement applies to an employee. Small business owners must comply with the Small Business Fair Dismissal Code to ensure they have grounds to object an unfair dismissal application, in the case where a matter goes to a hearing.