Employment related threshold changes effective
1 July 2012

A number of employment related financial thresholds are indexed annually each 1 July. Below is a summary of some important changes effective 1 July 2012.

High income threshold

Why is the high income threshold important?

Employees who earn more than the high income threshold and who are not covered by a modern award or enterprise agreement are not able to access unfair dismissal. An unfair dismissal claim is the most common form of challenge to a termination of employment.

For employees covered by a modern award, where the employer can guarantee they will earn more than the high income threshold, the employer and employee can enter into a guarantee of annual earnings, excluding that employee from modern award coverage. However, the employee can still make an unfair dismissal claim.

What is included in the high income threshold?

An employee's earnings include:

• Wages
• Money that is paid on their behalf (eg: superannuation top ups or salary sacrifice)
• The agreed value of non-monetary benefits (eg: laptop or mobile phone).

An employee's earnings do not include:

• Payments the amount of which cannot be determined in advance (eg: commissions, bonuses or overtime unless guaranteed)
• Reimbursements
• Superannuation contributions that the employer is required to make.

The compensation limit for unfair dismissal claims increases to $61,650.

National Minimum Wage (before statutory superannuation)

The national minimum wage is the minimum weekly wage payable to employees not covered by an award or enterprise agreement.

For modern award covered employees, minimum wages are increased by 2.9% rounded to the nearest 10 cents.

Tax free threshold for "genuine redundancy" payments

Where the redundancy of an employee is treated by the Australian Tax Office as a 'genuine redundancy' under section 83-175 of the Income Tax Assessment Act 1997, certain tax-free thresholds will apply to the payment (see Taxation Ruling TR 2009/2).

Superannuation - maximum contribution base

Employers must pay into each eligible employee's super account a minimum of 9% of the employee's ordinary time earnings up to the 'maximum contribution base.'

The 'maximum contribution base' is the maximum amount of super each quarter that an employer has to provide for each eligible employee.

Superannuation - concession contribution cap

Employers make concessional contributions (e.g. SG contributions and salary sacrifice contributions) on behalf of their eligible employees.  Concessional contributions up to the cap are taxed at 15% whereas contributions in excess of the cap are taxed at the highest marginal tax rate plus the Medicare Levy. 

If you would like more information in relation to any of the new employment related thresholds and in particular how to determine with certainty whether an employee's earnings exceed the high income threshold and thus whether he or she cannot make an unfair dismissal claim please contact: