Employers should review their dismissal procedures and guarantee of annual earnings arrangements following the annual increase to the Fair Work Act’s high income threshold.

From 1 July 2013, the income cap that determines both access to unfair dismissal applications and eligibility for guarantees of annual earnings will increase to $129,300. The previous limit (effective to 30 June) was $123,300.

What does this change mean for dismissal procedures?

Dismissed employees who have served the minimum employment period and who are covered by a modern award or enterprise agreement have access to unfair dismissal claims regardless of what they earn. The minimum employment period is six months but if the employer is a small business employer, the period is 12 months.

However if there is no award or agreement coverage, employees who earn more than this high income threshold amount are not entitled to bring an unfair dismissal claim.

What does this change mean for guarantees of annual earnings?

Employees who earn more than the high income threshold are known under the Act as “high income employees”.

High income employees who are covered by a modern award may be offered a guarantee of annual earnings (GAE) by their employer. A GAE essentially means the employer guarantees the employee a certain rate of annual earnings over a defined period. A GAE also means the modern award no longer applies to the employee.

Employers who have already entered into GAEs with employees should now review them to ensure that the rate guaranteed to those employees will exceed the new income threshold amount of $129,300 from 1 July. We would be pleased to assist.

Other changes

Also from 1 July 2013, the maximum compensation limit for a successful unfair dismissal claim increases to $64,650 (from $61,650).

The filing fee for dismissal and general protections applications will increase from $64.20 to $65.50.