29 Jun HIGH INCOME THRESHOLD INCREASE EFFECTIVE 1 JULY 2017

Do you employ employees paid over the high income threshold?  Do your contracts contain a guarantee of annual earnings?  If so, you need to be aware of the increase to the high income threshold announced today and take action now.

 1.  HIGH INCOME THRESHOLD INCREASES

From 1 July 2017, the income cap that determines both access to the unfair dismissal jurisdiction and eligibility for guarantees of annual earnings (for the high income threshold) will increase from $138,900.00 to $142,000.00.

What is the high income threshold and why should I care we hear you asking?

Well put simply, employees who earns over the high income threshold are considered “high income employees” under the Fair Work Act 2009 and if they receive guarantee of annual earnings by their employer (which must be very clearly and carefully drafted in an employment contract):

(a)  No modern award will apply to that employee; and

(b)  The employee cannot bring unfair dismissal proceedings against their employer following the termination of their employment.

Employers who have already entered into a guarantee of annual earnings with one or more of their employees should use this time before 1 July to undertake a review of their employee/s salary to ensure that their salary exceeds the new high income threshold (i.e. $142,000.00), or will be increased to be in line with, if not more than, the high income threshold.

 2.  CAP ON UNFAIR DISMISSAL

The maximum amount that an employee may recover if their unfair dismissal application is successful, will increase on 1 July 2017 to $71,000.00. This is the upper limit for compensation in this jurisdiction, meaning that an employee will only be entitled to up to six months of their pay capped at $71,000.00.

By way of example, an employee who earns $60,000.00 per annum would only be entitled to compensation of up to $30,000.00 (i.e. six months’ pay) if their unfair dismissal application was successful.   An employee however, who earns $150,000.00 per annum (if still eligible to make an unfair dismissal claim) would only be entitled to compensation up to $71,000.00 rather than six months of their actual pay.

 3.  RATE INCREASES EFFECTIVE 1 JULY

As you may be aware, the Fair Work Commission has announced the minimum wage is increasing from $672.70 per week or $17.70 per hour to $694.90 per week or $18.29 per hour from 1 July 2017. It has also confirmed that reductions in Sunday penalty rates in the retail, pharmacy, hospitality and fast food industries will be phased in over a number of years, starting on 1 July 2017.

Contact the team at HR Law if you have any questions.