Unfair dismissal – 2018 – Updated Threshold in the Fair Work Jurisdiction
As we settle into the 2018-2019 financial year, employers need to be aware of increases to key thresholds effective from 1 July, and how these impact on employees’ entitlements and unfair dismissal eligibility.
From 1 July 2018, the high-income threshold increased from $142,000 to $145,400 meaning that if an employee’s annual earnings exceed $145,400 and their employment is not covered by a modern award or enterprise agreement, that employee is excluded from the unfair dismissal provisions of the Fair Work Act 2009 (Cth).
The annual increase should act as a timely reminder to bear in mind employees’ remuneration level when undertaking any disciplinary process or performance management that may lead to termination of employment. Notwithstanding, it is best practice to adopt a procedurally fair process regardless of an employees’ eligibility for unfair dismissal.
Employees should be aware that “annual rate and earnings” for purposes of calculating the high-income threshold includes: wages; amounts applied for or dealt with on employees’ behalf (e.g. salary sacrifice); and the agreed monetary value of non-monetary benefits (for example, in some circumstances, motor vehicles).
Again, it is important that employers do not conflate high income with non-award coverage – it is possible that an employee paid in excess of the high-income threshold (and accordingly paid well above modern award minimum) may still be covered by a modern award and eligible for unfair dismissal.
From 1 July 2018 there was also a corresponding increase to the maximum cap for unfair dismissal compensation of 26 weeks’ pay from $71,000 to $72,700.
National Minimum Wage
From 1 July 2018, the previous minimum wage rate of $18.29 per hour or $694.90 per week was increased to $18.93 per hour or $719.20 per week. It is important to bear in mind the national minimum wage for employees that are not modern award covered.
Sunday Penalty Rates for Retail/Hospitality
From 1 July 2018, reduced penalty rates came into effect in a number of modern awards as per the following table:
|Modern Award||Sunday hourly rate
1 July 2018 – 1 July 2019
|Retail||Full-time and Part-time||195% down to 180%|
|Casual employees||195% down to 185%|
|Hospitality||Full-time and Part-time||170% down to 160%|
|Casual employees||No Change|
|Fast-food (Level 1)||Full-time and Part-time||145% down to 135%|
|Casual employees||170% down to 160%|
|Full-time and Part-time||195% down to 180%|
|Casual employees||220% down to 205%|
The 2018-2019 reductions form part of a broader scheme of reductions which will see the rates drop successively until 1 July 2019 (Hospitality and Fast-food) and 1 July 2020 (Pharmacy and Retail).
Changes to Long Service Leave in Victoria
In Victoria, new long service leave legislation, Long Service Leave Act 2018 (Vic) (New Act), will come into effect on 1 November 2018, repealing and replacing the Long Service Leave Act 1992 (Vic) (1992 Act). The following table summarises the key changes:
When is long service leave entitlement invoked?
|10 years’ continuous service with one employer.
7 years’ continuous service with one employer – paid pro-rata in circumstances of termination.
7 years’ continuous service with one employer.
|How can it be taken?||To be taken in one period, unless both parties agree to separate periods.
Separate periods can only be taken as follows:
First 13 weeks – 2 or 3 periods.
Subsequent – 2 periods.
|Employers and employees may agree for long service leave to be taken one day at a time.
Request must be granted as soon as practicable unless it can be refused on reasonable business grounds.
|How does unpaid parental leave affect long service leave?||Unpaid paternal leave does not count towards service for long service leave purposes.
Unpaid parental leave exceeding 52 weeks breaks continuity of employment.
|Unpaid parental leave up to 52 weeks will count as service for long service leave purposes.
Unpaid parental leave exceeding 52 weeks does not break continuity of service but is not counted as service.
|Changes to Working Hours||Where an employee changes their hours within 52 weeks immediately prior to a period of long service leave, normal weekly hours are ascertained by averaging the previous:
· 5 years; or
· 12 months (whichever is greatest).
|Where an employee changes their hours within 104 weeks of taking a period of long service leave, the weekly hours will be ascertained by averaging the previous:
· 5 years;
· 12 months; or
· The period of continuous employment (whichever is greatest).
|How does means of termination affect Long Service Leave?||Employment is deemed to be continuous even if dismissed at the initiative of the employer if the employee is re-hired within 12 weeks of dismissal.||Employment is deemed continuous notwithstanding absence from work because of termination at employer or employee’s initiative (e.g. resignation) if re-hired within 12 weeks.|
|Penalties||Certain breaches attract civil penalties||Certain offences under the Act now attract criminal penalties.
Employers found guilty of an offence may receive a criminal record.
The New Act will not be applied retrospectively, however, employers can do the following to prepare for its implementation:
- Update and revise payroll systems to ensure periods of parental leave are included in long service leave accruals;
- Ensure appropriate response to requests for long service leave by training managers on the updates; and
- Audit long service leave records to guarantee compliance.
If you have any questions pertaining to the impact that the 2018-19 workplace updates may have on you, please do not hesitate to contact Nick Stevens, Jane Murray or Angharad Owens-Strauss.