Employers should be alert to changes to worker entitlements effective 1 July 2016:
- Unfair Dismissal High Income Threshold;
- Compensation Cap for Unfair Dismissal;
- Redundancy Tax Free Amount;
- Employment Termination Payments (ETP) Lower Tax Rate Cap; and
- Superannuation Maximum Contribution Base.
Unfair Dismissal High Income Threshold
From 1 July 2016, the High Income Threshold will increase from $136,700.00 to $138,900.00.
Employees earning more than $138,900.00 cannot make unfair dismissal claims unless they are covered by a modern award or an enterprise agreement.
The following are included in the High Income Threshold calculation:
- Wages;
- Superannuation;
- Money paid on behalf of the employee (e.g. salary sacrifice); and
- The agreed monetary value of non-monetary benefits (e.g. company car or mobile phone).
The High Income Threshold calculation does not include:
- Payments which cannot be determined in advance (e.g. commissions, incentive-based payments and bonuses);
- Overtime (unless the overtime is guaranteed); and
- Reimbursements.
Unfair Dismissal Compensation Cap
The maximum compensation for unfair dismissal applications is the lesser of 6 months pay or the equivalent of half the Unfair Dismissal High Income Threshold, $69,450.00.
Redundancy – Tax Free Amount
From 1 July 2016, the Tax Free Amount for genuine redundancy payments will increase from $9,780.00 to $9,936.00. The additional amount per completed year of service will also increase from $4,891.00 to $4,969.00.
Employment Termination Payments (ETP)
The cap for the lower tax rate on ETPs is at $195,000.00 for the 2016-2017 income years.
Superannuation
In 2014-2015, the Superannuation Guarantee Contributions Rate was frozen at 9.5% and will remain at this rate until the 2020-2021 financial year.
The maximum quarterly contribution base will increase from $50,810.00 to $51,620.00 on 1 July 2016; and the maximum annual contribution base will increase from $203,240.00 to $206,480.00.
The maximum contribution bases are the maximum salary amounts for which an employer must contribute superannuation guarantee amounts, unless the employer has agreed to pay superannuation contributions on the total salary paid.