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Limebite 06/23

Compensation cap and high-income threshold for unfair dismissals to increase from 1 July 2023

Joel Zyngier

Employers should be aware of the following important changes to the high-income threshold and compensation caps for unfair dismissal claims, which come into effect this Saturday 1 July 2023:

  • the high-income threshold for unfair dismissal applications will rise from $162,000 to $167,500, and
  • the maximum compensation amount for post-July 1 dismissal claims will increase from $81,000 to $83,750.

The increase to the high-income threshold will mean employees who are not covered by an award or agreement and earn an amount exceeding the threshold (based on their ‘annual rate of earnings’ as defined in the Fair Work Act and excluding superannuation) cannot make unfair dismissal claims.

Employers should remember:

  • it can sometimes be difficult to assess an employee’s annual rate of earnings to determine whether they earn over the high-income threshold
  • even high earning employees can be covered by an award or enterprise agreement, so an employee earning over the high-income threshold may still have unfair dismissal protection
  • any national system employee can make a general protections application, regardless of their rate of earnings or period of service, and
  • there is no compensation cap for a general protections application.

For these reasons, an employer should still obtain suitable advice before dismissing any employee.

The filing fee for unfair dismissal, general protections, and anti-bullying/sexual harassment applications will increase from $77.80 to $83.30, effective 1 July 2023. There is no fee to file a sexual harassment dispute application in the Fair Work Commission’s new sexual harassment jurisdiction.

Additionally, starting this Saturday, the national minimum wage will see an 8.6% increase, and all award rates will receive a boost of 5.75%.

The new weekly minimum wage will be $882.80, or $23.23 per hour.

Employers should take note of these developments and ensure they understand how the changes may affect the risk of potential unfair dismissal claims in their workforce. Employers should also ensure compliance with the increased minimum wage requirements to avoid contraventions of industrial laws.

Please contact our Workplace Law team with any queries about these matters.

This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.