Australia: Increases to High-Income Threshold and Compensation Cap


There’s a big change that has recently come into effect in Australia. As of July 1, 2023 income thresholds and compensation caps have increased, leaving a substantial impact on high-income earners across the nation.

We’re going to delve into the intricacies of the recent adjustments, exploring the broader consequences on both individuals and businesses. So, whether you’re an investor, a professional, or simply an interested observer, join us as we unpack the details of Australia’s revised high-income thresholds and compensation caps and their implications.

What is changing?

Effective from Saturday, July 1, 2023, employers should take note of the significant alterations to the high-income threshold and compensation caps concerning unfair dismissal claims, as outlined below:

  1. The high-income threshold for unfair dismissal applications will experience an upward adjustment, escalating from $162,000 to $167,500.
  2. The maximum allowable compensation sum for unfair dismissal claims arising after July 1 will witness an augmentation, growing from $81,000 to $83,750.

Consequently, the elevation of the high-income threshold signifies that individuals not encompassed by an award or agreement, whose earnings surpass the stipulated threshold (calculated based on their ‘annual rate of earnings’ in accordance with the Fair Work Act, excluding superannuation contributions), will be ineligible to lodge unfair dismissal claims.

So, what should employers do about this?

Employers should keep in mind the following points:

  1. Evaluating an employee’s annual rate of earnings to ascertain whether they exceed the high-income threshold can pose challenges at times.
  2. Notably, even employees with substantial earnings could fall under the purview of an award or enterprise agreement. Hence, an employee surpassing the high-income threshold might still retain protection against unfair dismissal.
  3. It’s important to note that any employee within the national system retains the ability to file a general protections application, irrespective of their earnings level or length of service. Furthermore, there exists no compensation ceiling for general protections applications.

What impact could this have on businesses?

Employers should pay attention to these advancements and make sure they grasp the implications of these modifications on the potential for unfair dismissal claims within their workforce. Additionally, employers must guarantee adherence to the escalated minimum wage prerequisites to steer clear of violating industrial regulations.

You should also be aware that…

Effective July 1, 2023, the filing fee for unfair dismissal, general protections, and anti-bullying/sexual harassment applications increased from $77.80 to $83.30. It is important to note that there was no fee to file a sexual harassment dispute application in the Fair Work Commission’s new sexual harassment jurisdiction.

Additionally, starting from July 1, 2023, the national minimum wage saw an 8.6% increase, and all award rates received a boost of 5.75%.

The new weekly minimum wage stood at $882.80, or $23.23 per hour.

If you need any advice on this, or have any questions please get in touch.