This is relevant to your business in three ways:

  1. Employees who have been given a written guarantee of annual earnings are not eligible to receive Modern Award entitlements, but only if their income is below the HIT. If the HIT has moved above any employees' earnings (as properly calculated under the Fair Work Act), they will now be entitled to Modern Award entitlements, even though their contract may have been negotiated on the basis that they were exempt.
  2. Employees who earn over the HIT, and who are not covered by a modern award or enterprise agreement, cannot make a claim for unfair dismissal.
  3. The maximum compensation payable for unfair dismissal is capped at either half the HIT (now $61,650), or the equivalent of six months of the dismissed employee's wage, whichever is lower.

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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.