The High Income Threshold for former employees claiming unfair
dismissal under the Fair Work Act 2009 (Cth) will increase
from $136,700 to $138,900 on 1 July 2016. Under section 382, a
person cannot bring a claim for unfair dismissal against a former
employer where the sum of their annual rate of earnings exceeds the
High Income Threshold, unless that employee is covered by a modern
award or an enterprise agreement.
The following payments are included when determining an
employee's earnings: (i) wages; (ii) amounts dealt with on the
employee's behalf or as they direct; and (iii) the agreed value
of non-monetary benefits. However, payments that cannot be
determined in advance (e.g. incentive-based bonuses or
non-guaranteed overtime), reimbursements and compulsory
superannuation contributions by an employer are not included when
calculating an employee's earnings.
The annual rate of earnings of an employee is calculated in
accordance with regulation 3.05 of the Fair Work Regulations
2009 (Cth). Where an employee is continuously employed by the
employer (and was not on leave without full pay at any time during
the 12 months immediately before their dismissal), their annual
rate of earnings will be the amount paid to the person in respect
of the 12 months immediately before their dismissal.
Therefore, while an employee's current annual salary may exceed
the High Income Threshold, they may in fact fall under the
threshold where they received a lower annual salary at any point
during the 12 months immediately before their dismissal.
For example, an employee receives an annual salary of $140,000
at the time of their dismissal on 1 July 2016, having received a
pay increase on 1 January 2016 from $130,000 to $140,000. This
employee still will be under the new High Income Threshold because
the employee earned $65,000 for the first six months and $70,000
for the remaining six months, bringing their annual rate of
earnings for the 12 months immediately before their dismissal to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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