Explore Potential Update – High Income Threshold

Effective from 1 July 2025

As previously advised in our earlier update, the Fair Work Commission has now confirmed changes to the high income threshold, effective from 1 July 2025.

High Income Threshold – Employees

The high income threshold for unfair dismissal has increased to $183,100 per annum.
The maximum compensation cap has increased to $91,550 for dismissals occurring on or after this date.
These adjustments are made annually, based on national earnings data, and determine employee eligibility for unfair dismissal protections under the Fair Work Act 2009.

Employees earning above the threshold, who are not covered by a modern award or enterprise agreement, are generally excluded from lodging unfair dismissal claims.

Action for Employers: Review remuneration arrangements for award-free employees to ensure contract terms and termination processes remain fair, reasonable, and compliant.

High Income Threshold – Contractors

From 1 July 2025, the contractor high income threshold also increased to $183,100.

This is relevant in assessing contractor arrangements, particularly in jurisdictions where high-earning contractors may be deemed employees for certain legal purposes. Businesses engaging independent contractors should consider whether any current agreements could be impacted.

Next Steps for Employers

We recommend that all employers:

Reassess employee and contractor remuneration in light of the new thresholds.
Review contracts for high earners who may no longer qualify for unfair dismissal protections.
Ensure termination procedures uphold procedural fairness standards.
Provide managers with guidance on the practical implications of these changes.

Need Support

Explore Potential can assist you to:

Review and update employee and contractor contracts.
Provide practical training and support for managers.
Develop policies that reflect the latest Fair Work changes.

For tailored advice, contact us at info@explorepotential.com.au