Inspire Success

The high income threshold increased from 1 July 2011, along with modern award and minimum wages. The high income threshold affects how a modern award applies to an employee, and affects their ability to access unfair dismissal.
From 1 July 2011:

• the high income threshold increased to $118,100
• the compensation limit under unfair dismissal increased to $59,050.

The high income threshold is indexed annually on 1 July.

Why is the high income threshold important?

The high income threshold affects three main entitlements:

• employees who earn over the high income threshold, and who are not usually covered by a modern award or enterprise agreement, cannot make a claim for unfair dismissal
• employees who have agreed to a written guarantee of annual earnings by their employer, that is more than the high income threshold, no longer receive their modern award entitlements. However, they are still entitled to unfair dismissal.
• the maximum compensation payable for unfair dismissal is capped at either half the high income threshold, or the equivalent of six months of the dismissed employee’s wage, whichever is lower.

So, it is important to calculate exactly how much employees are earning from 1 July 2011. The increase in the high income threshold could mean a major change to an employee’s workplace entitlements.

What’s counted under the high income threshold?

To find out whether an employee is earning above this threshold, the following are included in any calculation:

• wages
• amounts applied or dealt with in any way on the employee's behalf or as the employee directs (e.g. superannuation top-ups, salary sacrifice)
• the agreed monetary value of non-monetary benefits (e.g. personal use of a company car, mobile phone or laptop).

The following are not counted:

• commissions, bonuses, overtime, and any other payment where the amount can’t be determined in advance
• reimbursements
• employer contributions to superannuation.

Employers and employees should review their wages to determine if the change affects them.
For further information you can review the Fair Work Act website http://www.fairwork.gov.au/media-centre/latest-news/2011/06/pages/20110627-high-income-threshold-rises-to-118100.aspx  Contact Inspire Success if you would like to discuss how this affects your business.