Rebecca Best

New financial year, new Fair Work Act rates: increased minimum wages and high income threshold from 1 July 2016

Rebecca Best

5 July 2016

Award Conditions

The new financial year brings important changes to the national minimum wage, minimum wage rates in modern awards and the high income threshold for unfair dismissal access and for high income guarantees. Stay up to date with this handy reference sheet.

The below table outlines the pre 1 July 2016 and post 1 July 2016 changes in a nutshell.

Benefit Pre 1 July 2016 From 1 July 2016
Minimum wage $656.90 per week or
$17.29 per hour
$672.70 per week or
$17.70 per hour
Unfair dismissal salary cap / High income guarantee $136,700 per annum $138,900 per annum
Maximum compensation award for unfair dismissal The lesser of:
– $68,350; and
– 26 week’s pay,
for dismissals after 30 June 2015 and before 1 July 2016
The lesser of:
– $69,450; and
– 26 week’s pay,
for dismissals after 30 June 2016

Minimum Wages

As at 1 July 2016, the national minimum wage increased from $656.90 per week to $672.70 per week, calculated on the basis of a 38 hour week; or from $17.29 per hour to $17.70 per hour. The minimum casual loading remains at 25%, in addition to the national minimum wage.

All employees in Australia must receive at least the national minimum wage. Award-covered employees must receive at least the Award minimum rates, which will also increase from 1 July 2016 in line with the 2.4% increase to the national minimum wage.

Reduced rates continue to apply to junior employees and employees engaged under a training arrangement, or with a disability which affects their productivity.

If you employ staff under a modern award or at the national minimum wage, you should check the Fair Work Commission’s website, for the current minimum rates of pay – and seek legal advice if you are unsure what modern award rate applies to your employees, as significant financial penalties apply for failure to comply.

Unfair dismissal

From 1 July 2016, the high income threshold for unfair dismissal access increased from $136,700 to $138,900 per annum. Employees who are not covered by a modern award or an enterprise agreement are not entitled to make an unfair dismissal claim if their annual rate of earnings is more than the high income threshold.

The maximum compensation limit in unfair dismissal cases also increased from $68,350 to $69,450 (or 26 week’s pay, whichever is the lesser) for dismissals occurring on or after 1 July 2016.

High Income Guarantees

The new high income threshold of $138,900 per annum is also the amount that employers must pay employees to engage them on the basis of a high income guarantee, whereby an employer and an employee may agree in writing that a modern award will not apply to the employee while they receive a guarantee of annual earnings that exceeds the high income threshold.