8 July 2016 Employment law changes from 1 July 2016

By Simon Obee, Associate and Richard Ottley, Partner

It is a constant challenge for employers to remain up date with changes in the dynamic environment of employment law. This article looks at a number of important changes in this area which came into effect on 1 July 2016.
As well as increases to minimum wages and the "high income threshold" there is now a new Fair Work Information Statement that must be provided to new employees – a fact that has not been widely publicised.  

Increase to minimum wage rates under modern awards, enterprise agreements and for award-free employees

From the 1 July 2016 the minimum hourly and weekly pay rates under modern awards have increased by 2.4%.

Employers should check that rates of pay of employees covered by modern awards do not fall below the new minimum rates set out in the modern awards.

Employers with enterprise agreements should note that the Fair Work Act 2009 stipulates that an employee's base rate of pay can never be below that which it would be if the employee were instead covered by an applicable modern award, so employers may wish to review current levels of remuneration in enterprise agreements.

It sometimes forgotten that for award-free employees there is also a minimum wage. For employees of 21 years or over this figure has now risen to $17.70 per hour, up from $17.29. Junior employees (those 20 years of younger) are entitled to a percentage of this figure, set on a sliding scale, dependent on their age. Details are available on the Fair Work Commission's website.

The above changes are effective from the first full pay period after 1 July 2016.

Employers should note that there is usually no obligation on them to increase employees' pay rates if they are already equal to or greater than the new minimum wage or award rates as the case may be (subject to any relevant terms in a contract of employment or an enterprise agreement). 

A change to the high income threshold

The rules that determine whether an employee is entitled to bring a claim for unfair dismissal under the Fair Work Act 2009 state that they may only do so, where their annual earnings are less than the "high income threshold" prescribed by regulations from time to time unless a modern award or an enterprise agreement applies to the employee's employment (in which case their earnings are not relevant).

Whether an employee has a potential remedy for unfair dismissal may significantly impact on an employer's ability to dismiss an employee and the potential risks of doing so (and the process it must follow to dismiss the employee).

From 1 July 2016, the high income threshold has risen from $136,700 to $138,900. This also has an impact on the maximum compensation that can be awarded for an unfair dismissal claim. This is calculated on half of the high income threshold or 6 months' of an employee's salary, whichever is the lesser figure.

This means that the maximum award of damages for unfair dismissal cases (where reinstatement is not ordered) is now $69,450 (up from $68,350).

In calculating an employee's earnings for the purpose of the ascertaining whether they fall below the high income threshold, compulsory superannuation contributions are not included nor are non-guaranteed earnings such as overtime, commission or bonuses.

Non-monetary benefits may be included, such as the value attached to the use of a company car for personal use.

A new Fair Work Information Statement

Section 125 of the Fair Work Act 2009 provides that employers must give all new employees a copy of the Fair Work Information Statement as published by the Fair Work Ombudsman before they start employment or as soon as practicable after their employment commences.

The statement provides employees with information on their rights under the Fair Work Act 2009.

The Ombudsman has recently published a new Fair Work Information Statement (which deals with the increase to the high income threshold) and employers should ensure that they issue the current statement to new employees.

Failure to give employees the correct statement would technically be a breach of a civil remedy provision under the Fair Work Act 2009 for which an employer could face a fine – up to $54,000 for a corporation and $10,800 for an individual (ie director or HR Manager).

Employers will be glad to note that maximum penalties are one thing that has not increased from 1 July 2016!

Richard Ottley, Partner  |  Phone: +61 2 9233 5544  |  Email:
Simon Obee, Senior Associate  |  Phone: +61 2 9233 5544  |  Email:

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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