The high income threshold for the unfair dismissal provisions in the Fair Work Act has increased, effective from 1 July 2012.
The previous threshold was set at $118,100, but has now been increased to $123,300. Alongside these changes, the compensation limit for unfair dismissal has also increased to $61,650.
According to employment law experts at Clayton Utz, the workplace arbitrator considers an employee’s earnings as including wages, money that is paid on their behalf (such as superannuation top-ups or salary sacrifice), and the agreed value of non-monetary benefits (such as laptops and mobile phones). Importantly, Fair Work does not include payments that can’t be set in advance (such as commissions, bonuses or overtime), reimbursements, or compulsory superannuation contributions as ‘earnings.’
Employees who earn above this amount (not including SGC superannuation) and who are not covered by an award or enterprise agreement are excluded from the unfair dismissal regime.
Why does it matter?
The increase will enable more employees to access the unfair dismissal provisions. This will also have implications for how HR manages these employees. “Of course, even if an employee is award/enterprise agreement free and earns more than the high income threshold, he or she could still challenge any dismissal using other mechanisms, including adverse action and actions for breach of contract,” a statement from Clayton Utz read.