The high income threshold for unfair dismissal under the Fair Work Act will increase from 1 July 2015 from $133,000 to $136,700.
The threshold affects 3 main entitlements:
• employees who earn more than the high income threshold and who aren’t covered by a modern award or enterprise agreement, can’t make an unfair dismissal claim;
• employees who are covered by a modern award and have agreed to a written guarantee of annual earnings that is more than the high income threshold, don’t get modern award entitlements. However, they can make an unfair dismissal claim;
• the maximum amount of compensation payable for unfair dismissal is capped at either half the high income threshold (ie $65,000), or 6 months of the dismissed employee’s wage – whichever is less.
An employee is eligible to make an application for unfair dismissal if they have completed the minimum employment period of:
• 12 months—where the employer is a small business employer; or
• 6 months—where the employer is not a small business employer.
The Fair Work Act defines a small business employer for unfair dismissal purposes as being one who employs less than 15 employees by individual head count.
For a small business employer to dismiss someone fairly after 12 months the employer will have to comply with the Fair Dismissal Code for Small Business.
