Unfair dismissal threshold under the Fair Work Act to rise from 1 July 2012

Unfair dismissal threshold under the Fair Work Act to rise from 1 July 2012

The previous high income threshold of $118,100 for the unfair dismissal provisions in the Fair Work Act will increase from 1 July 2012 to $123,300. The compensation limit for unfair dismissal will also increase to $61,650.

An employee’s earnings include wages, money that is paid on their behalf (such as superannuation top-ups or salary sacrifice), and the agreed value of non-monetary benefits (such as laptops and mobile phones). They don’t include payments that can’t be set in advance (such as commissions, bonuses or overtime), reimbursements, or compulsory superannuation contributions.

For those employees who earn more than this amount (not including SGC superannuation) and who are not covered by an award or enterprise agreement are excluded from the unfair dismissal regime.

The increase will enable more employees to access the unfair dismissal provisions. This therefore would also have implications on how you manage these employees.

This does not mean an employee who is not on an award or enterprise agreement and earns more than the high income threshold cannot still challenge any dismissal using other mechanisms. There is still the common law that can be used for actions on adverse action and actions for breach of contract.