The “high income threshold” will be increased on 1 July 2013 from yearly earnings of $123,300 to yearly earnings of $129,300.

The change to the threshold, which takes effect from 1 July 2013, also affects the operation of various provisions of the Fair Work Act 2009 (Cth), which include:

  • Employees who are not covered by an award or an enterprise agreement whose earnings are above the threshold are ineligible to commence unfair dismissal proceedings.
  • For those employees who are eligible to commence unfair dismissal proceedings post 1 July 2013, the maximum compensation available is a maximum of either 26 weeks’ pay, or half the amount of the threshold ($64,650), whichever works out to be lower.
  • The threshold determines which employees may be offered a “guarantee of annual earnings”. For employees whose earnings are above the threshold, employers may offer those employees a guarantee that their earnings will exceed the threshold for a particular period of time, with the result that no modern award will apply to them during that time.

“Earnings” for the purpose of the threshold include:

  • wages
  • money that is paid on an employee’s behalf (e.g. salary sacrifice)
  • the agreed value of non-monetary benefits (e.g. a vehicle or mobile phone).

but does not include:

  • payments that cannot be set in advance (e.g. a bonus or commission, or overtime pay)
  • reimbursements, or
  • compulsory superannuation contributions.