Workplace threshold changes commenced 1 July 2012

There are some important changes to thresholds in the workplace relations field which have now come into effect on 1 July 2012 from indexation which occurs yearly.

Employees previously excluded from claiming unfair dismissal may now be eligible to make such a claim on termination. Employees previously on a guarantee of annual earnings might have, due to indexation, fallen below the high income guarantee of annual earnings and be entitled to penalty rates, overtime and other Modern Award conditions.

The following table is a useful reference guide summarising changes to key thresholds:

Threshold Last financial year Current financial year (2012/13)
Guarantee of annual earnings and unfair dismissal cap A$118,100 per annum A$123,300 per annum
Maximum compensation for unfair dismissal A$59,050 A$61,650
National minimum wage for award-free employees A$589.30 per week; or
A$15.51 per hour
A$606.40 per week; or
A$15.96 per hour
Tax-free threshold for genuine redundancy payment A$8,435 + A$4,218 for each completed year of service A$8,806 + $A4,404 for each completed year of service
Maximum superannuation contribution base A$43,820 per quarter; or
A$175,280 per annum
A$45,750 per quarter; or
A$183,000 per annum
Concessional superannuation contribution Employees under 50: A$25,000 per annum
Employees over 50: A$50,000 per annum
All employees: A$25,000 per annum

Guarantee of annual earnings and unfair dismissal cap

The guarantee of annual earnings and unfair dismissal cap includes the following:

  • wages
  • money paid on behalf of the employees (eg fringe benefits, salary sacrifice)
  • agreed value of non-monetary benefits (eg vehicle, iPad).

The guarantee of annual earnings and unfair dismissal cap does not include:

  • payments which cannot be agreed or determined in advance
  • superannuation guarantee contributions.

Superannuation

There have been significant changes to concessional superannuation contributions as part of the Federal Government's last budget. Employees over the age of 50 have had their concessional superannuation contributions limits halved. The entitlement to make concessional superannuation contribution occurs where contributions up to the limit is taxed at 15% only. Any contributions over the limit are taxed at the highest marginal tax rate and are included in the calculation of the Medicare Levy. The limit for concessional superannuation contributions is now A$25,000 for all employees.

Employers together with employees may now wish to re-examine concessional superannuation contribution in light of these changes to ensure that any arrangements, such as salary sacrifice, continue to benefit both the employer and employee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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