From Wednesday this week, 1 July 2015, the national minimum wage will increase to $656.90 per week and the high income threshold for making an unfair dismissal claim will increase to $136,700.

As outlined in our previous article on the annual minimum wage increase (click here), the national minimum wage will increase by 2.5% from $640.90 to $656.90 per week. These changes have been reflected in all modern awards and will come into effect from 1 July 2015.

Each year with the national minimum wage increase, the high income threshold for unfair dismissals is also increased. The high income threshold for 2015 will be increased from $133,000 to $136,700. The high income threshold means that employees who earn more than the threshold amount are not entitled to make an unfair dismissal claim under the Fair Work Act 2009 unless they are covered by a modern award or an enterprise agreement. The high income threshold is the total annual rate of earnings including:

  • wages;
  • amounts dealt with on the employee's behalf or as the employee directs (such as salary sacrifice amounts); and
  • the agreed value of non-monetary benefits.

It will only include amounts that can be determined in advance. Therefore it will not include benefits such as overtime payments or incentive-based bonuses.

The maximum compensation payable in an unfair dismissal claim will also be increased as of 1 July 2015. The maximum compensation payable is half the high income threshold. Therefore the compensation limit will increase from $66,500 to $68,350.

WHAT DOES THIS MEAN FOR EMPLOYERS?

Employers must ensure that all employees are being paid the correct national minimum wage or a modern award rate from 1 July 2015. Failure to pay employees the correct amount may lead to an underpayment of wages claim, which is not only a breach of the legislation but may also result in the employer being fined up to $33,000 per contravention.

The increase in the high income threshold means that more employees will have access to the unfair dismissal jurisdiction under the Fair Work Act 2009 (the FW Act). Employers should be mindful that employees who cannot access the unfair dismissal provisions of the FW Act may still have other legal options available to them such as the general protections provisions of the FW Act, anti-discrimination laws, and breach of contract claims under the common law.