From 1 July 2014, the high income threshold increases to $133,000.
The high income threshold affects how modern awards apply to employees and affects their ability to access unfair dismissal.
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.