Employers should be alert to changes to worker entitlements effective 1 July 2017:
- Unfair Dismissal High Income Threshold
- Compensation Cap for Unfair Dismissal
- Redundancy Tax Free Amount
- Employment Termination Payments (ETP) Lower Tax Rate Cap
- Superannuation Maximum Contribution Base
- Increases in Civil Penalties for Breaches of the Fair Work Act
Unfair Dismissal High Income Threshold
From 1 July 2017, the High Income Threshold will increase from $138,900.00 to $142,000.00.
Employees earning more than $142,000.00 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:
- 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
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, $71,000.00.
Redundancy – Tax Free Amount
From 1 July 2017, the Tax Free Amount for genuine redundancy payments will increase from $9,936.00 to $10,155.00. The additional amount per completed year of service will also increase from $4,969.00 to $5,078.00.
Employment Termination Payments (ETP)
The cap for the lower tax rate on ETPs is at $200,000.00 for the 2017-18 financial year. This amount is indexed annually.
In 2014-15, the Superannuation Guarantee Contributions Rate was frozen at 9.5% and will likely remain at this rate until the 2020-21 financial year.
The maximum quarterly contribution base will increase from $51,620.00 to $52,760.00 on 1 July 2017; and the maximum annual contribution base increases from $206,480.00 to $211,040.00.
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.
Civil Penalties for Breaches of the Fair Work Act
From the 1 July 2017, the civil penalty unit for single breaches of the Fair Work Act will increase from $180.00 to $210.00. The maximum penalty for a company will increase from $54,000.00 to $63,000.00 and the maximum penalty for an individual will increase from $10,800.00 to $12,600.00.
Multiple breaches can result in multiple penalties being imposed. The next Commonwealth penalty units increase is scheduled for 2020.
Contact Peter McNamara today for your workplace law advice.