The high income threshold under the Fair Work Act 2009 (Cth) (FW Act) is subject to indexation from 1 July each year.  The Fair Work Ombudsman has confirmed that the high income threshold will increase from $129,300 to $133,000 with effect from 1 July 2014.

The high income threshold under the FW Act is principally relevant to:

  • the ability of an award/agreement free employee to apply for an unfair dismissal remedy;  and
  • an employer providing an employee with a guarantee of annual earnings so that a modern award has no application to the employee.

In addition, from the first pay period on or after July 1, the 3%increase to minimum wages will take effect. This equates to an increase of $18.70 per week, taking the minimum wage from $622.20 to $640.90 per week.

What employers should do

High income employees Employers should carefully review the level of remuneration being provided to more highly paid employees to firstly ascertain whether the employees should be provided with a guarantee of annual earnings and, secondly, to ensure that, if employees are in receipt of a guarantee of annual earnings, the guarantee is still valid.

Minimum wage or award employees With the increase to minimum wages, employers will need to review the level of remuneration being provided to employees who are covered by the national minimum wage and modern awards to ensure that their rates comply with the mandatory increase.   Care should be taken to ensure that this review includes checking work related allowances, penalties and loadings.