The high income threshold increased from 1 July 2012, along with modern award and minimum wages. The high income threshold affects how modern awards apply to employees and affects their ability to access unfair dismissal.
From 1 July 2012 the high income threshold increases to $123,300.
Why is the high income threshold important?
The high income threshold affects 3 main entitlements:
- Employees who earn more than the high income threshold and who aren’t covered by a modern award or enterprise agreement, can’t 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, don’t get 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’s counted under the high income threshold?
An employee is affected by this if their ‘earnings’ are more than the high income threshold. To calculate ‘earnings’, include:
- Wages
- Money that is paid on their behalf (e.g. superannuation top-ups or salary sacrifice)
- The agreed value of non-monetary benefits (e.g. laptops and mobile phones).
An employee’s earnings don’t include:
- Payments that can’t be set in advance (e.g. commissions, bonuses or overtime)
- Reimbursements
- Superannuation contributions that the employer has to make.
If you need assistance understanding the impact of the high income threshold on your employees please contact us.