Unfair dismissal threshold increases from 1 July 2013

The high income threshold under the Fair Work Act will increase on 1 July 2013 to $129,300.

The high income 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 $64,650), 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.

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