On 1 July 2016, the national minimum wage, and high income threshold and compensation caps for unfair dismissal claims all increased.

The national minimum wage has risen by 2.4%, equating to AU$672.70 per week or AU$17.70 per hour. Similarly, minimum award rates have increased by 2.4% for award-covered employees. This increase will impact employers who employ staff under a modern award or at the national minimum wage.

The high-income threshold for unfair dismissal applications has also increased, from AU$136,700 to AU$138,900 per annum. This means:

  • A modern award will not apply to an employee who has a guarantee of annual earnings which exceeds AU$138,900.
  • An employee who has a guarantee of annual earnings of AU$138,900 or more cannot bring an unfair dismissal claim, unless he/she is covered by a modern award or enterprise agreement.

It is important to note that a modern award may not apply to an employee by virtue of the high income threshold, but they may nonetheless still be covered by a modern award and be eligible to bring an unfair dismissal claim. A modern award covers an employee, if it is expressed to cover the employee, or if a provision of the Fair Work Act 2009 (Cth), Fair Work (Registered Organisations) Act 2009 (Cth), Fair Work Commission order, or court order, provides (or has the effect) that the award covers the employee.

The maximum compensation cap for unfair dismissal cases has also increased, from AU$68,350 to AU$69,450 for dismissals occurring on or after 1 July 2016.

In light of these changes, employers should:

  • Confirm the current minimum award wages payable by reference to the Fair Work website, as a failure to comply will attract significant penalties.
  • Review the factors applicable when calculating employee "earnings" for the purpose of the high income threshold.