New high income threshold
Fair Work sets the high income threshold for each year beginning on 1 July, and it has now increased to $145,400 per annum. This amount does not include incentives, bonuses, overtime, employer contributions to a superannuation fund or reimbursements.
Why this is important
For those earning above this amount, who are not covered by an Award or Enterprise Agreement, there is no access to unfair dismissal.
The threshold is also used to determine the maximum amount of compensation for an unfair dismissal matter which is now $72,000.
Those earning above the threshold who are covered by a modern award can agree to avoid or modify the award. The employer must provide a written undertaking guaranteeing annual earnings at least equal to the threshold. However, these employees remain “covered” by the award and may access unfair dismissal provisions.
Annual Wage Review
Part of the Fair Work Commission’s annual wage review decision included:
- minimum wage rates in modern awards have been increased by 3.5% from first full pay period commencing on or after 1 July 2018 (rounded to the nearest 10 cents)
- national minimum wage – increased by 3.5% to $719.20 per week, or $18.93 per hour
What should you do?
Unless you have an Enterprise Agreement in place, you should audit your employment agreements to check:
- You have identified the correct Modern Award that applies for different roles (remember that just giving an employment contract and paying above the Award does NOT automatically exclude that person from Modern Award coverage)
- The Modern Award is available in the workplace for employees to access
- The employee has been notified which Modern Award they are covered by and their classification level within that Modern Award
- If paying a salary, that the employee is “better off” than if you were paying the Modern Award rates
- Provide “guarantee annual earnings” letters to employees who earn above the high-income threshold, but are covered by a Modern Award
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