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With the commencement of a new financial year, it brings with it important changes to employment law and new rates which will apply from 1 July 2016.

NEW! High Income Threshold (HIT)

With the HIT:

  • it increases to $138,900
  • it impacts:

(a)       who can make a claim for unfair dismissal under employment law (for those not covered by a Modern Award or to whom an enterprise agreement does not apply)

(b)       the maximum amount of compensation payable in an unfair dismissal claim under employment law

(c)       those on a ‘guarantee of annual earnings’ (a Modern Award does not apply to an employee whilstever this guarantee is in place provided it continues to meet the relevant employment law requirements)

NEW! Modern Award Increases

With Modern Awards (including enterprise awards):

  • minimum wages increase by 2.4% (starting on the first full pay period on or after 1 July 2016)
  • absorption of wage increases into over-award payments is permissible (subject to the terms of the relevant employment agreement and what other amounts are being absorbed into any annualised salary)
  • increases to the minimum wages of junior workers, apprentices, trainees, piece workers and employees on the supported wage system will occur
  • expense-related allowances in Modern Awards will increase as set out in the Modern Award (eg, by the applicable CPI index figure)
  • annualised salaries will need to be checked to ensure they can still properly absorb/include all relevant minimum Modern Award amounts and that they continue to meet the technical requirements of the Modern Award

NEW! National Minimum Wage (NMW)

With the NMW:

  • this is applicable to employees to whom neither a Modern Award or enterprise agreement applies
  • the NMW increases by 2.4% to become $672.70 per week or $17.70 per hour
  • in addition:

(a) two special NMW orders exist (relating to those with a disability)

(b) the minimum casual loading remains unchanged at 25%

(c) minimum rates of pay for juniors and those on training arrangements apply

NEW! Impact on Enterprise Agreements

With enterprise agreements:

  • they must always meet or exceed the minimum wage of:

(a)       the relevant Modern Award (ie, the Modern Award that would have applied had the enterprise agreement not been in existence)

(b)       the NMW (ie, where a Modern Award would not apply even if the enterprise agreement was not in existence)

  • thus, pay rates in enterprise agreements may need to be increased under employment law (even if the enterprise agreement has its own wage increase regime)

NEW! The Sting

Be mindful that wage increases have flow-on effects such as increasing:

  • the value of leave loading, penalty rates, overtime and superannuation contributions
  • the value of accrued leave entitlements
  • the cost of wage related expenses such as payroll tax and workers compensation premiums

NEW! Redundancy

The tax-free component of a genuine redundancy payment increases to be:

  • base limit of $9,936
  • additional amount for each completed year of service of $4,969

NEW! Superannuation Contributions Base

With superannuation:

  • the maximum superannuation contribution base increases to $51,620 per quarter ($206,480 per annum)
  • an employer is not required under employment law to make superannuation contributions on behalf of employees on earnings in excess of that maximum contribution base


If you have any questions in relation to this article or if you would like advice in other employment law matters including employment contracts or if you have a matter before the Fair Work Commission, please feel free to speak with or email one of our specialist employment lawyers on (02) 9635 7966 or


DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.