Pushing it to the limit: new employment related thresholds

From 1 July 2017 the Fair Work Commission (FWC) has altered employment related thresholds relating to unfair dismissal remedies, minimum wage entitlements, and the tax free thresholds for redundancy and superannuation. To ensure compliance with the requirements of superannuation and industrial law, employers and employees need to be aware of these new thresholds.

High income threshold

The FWC has increased the high income threshold (HIT) for employees to access the unfair dismissal remedies available under the Fair Work Act 2009 (Cth) (Act). Employees who earn income in excess of the HIT, and who are not covered by a modern award, are unable to have the benefit of any of the unfair dismissal remedies potentially available under the Act. The new amount of he HIT is set for the 2017/2018 financial year as $142,000.

To calculate if an employee is above the HIT you are required to take into account the employee's salary and any amounts dealt with on the employee's behalf, such as through salary sacrificing. However, the HIT does not include amounts given as reimbursements to employees such as an allowance for meals or travel and other forms of variable income, such as bonuses.

National minimum wage

The FWC has also announced that for the 2017/2018 financial year employers will be required to pay non-award covered employees at least $694.90 per week or $18.29 per hour as a minimum wage.^[1] This is an increase from the previous minimum wage of $672.70, or $17.70 an hour, set in the 2016/2017 financial year.

Tax free threshold for cases of genuine redundancy

Payments made to an employee due to cases of genuine redundancy are made tax free up to a certain limit based on an employee's number of full years of service. For the 2017/2018 financial year, this tax free limit is calculated as $10,155 plus an additional $5,078 for each completed year of service.

Maximum superannuation contribution base

The maximum superannuation contribution base (MSCB) is used to determine the maximum superannuation guarantee contribution (SGC) that an employer is required to make under superannuation law to an employee's superannuation fund. For the 2017/2018 financial year, the MSCB has been increased to $52,760 per quarter or $211,040 annually. This means that the maximum superannuation contribution that an employer is required to make for an employee's superannuation is 9.5% of their salary, calculated against a maximum salary of $52,760 per quarter.

Cap on concessional contributions made to an employee's superannuation fund

Concessional contributions are tax deductible contributions made to an employee's super fund that are made up of:

• employer contributions; and
• personal contributions from self-employed or unemployed persons.

These types of contributions to a super fund have been capped for the 2017/2018 financial year at $25,000. Please note that this cap applies to all age groups. The previous cap for the 2016/2017 financial year was $30,000 for anyone aged 48 and under, and $35,000 for anyone aged 49 and over.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to the Employment Safety and People or Commercial teams.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on HR topics.

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