On 1 July, a range of updates to minimum rates of pay, thresholds, and limits came into effect. Below is a summary of some of the key changes that employers and HR professionals should be aware of:
- Minimum wages
As highlighted in our previous alert (here), the national minimum wage and minimum modern award rates of pay have been increased by 3.5%.
- The national minimum wage (which applies to employees whose employment is not covered by a modern award or enterprise agreement) is now $24.95 per hour for full-time and part-time employees, and $31.19 per hour for casual employees (which includes a 25% casual loading).
- Minimum wage rates in modern awards have also been updated to reflect this 3.5% increase.
- High income threshold
The high income threshold has been increased to $183,100, up from the previous amount of $175,000.
- This threshold is important for various purposes, including determining eligibility for unfair dismissal claims. Employees earning above this amount are generally ineligible to bring an unfair dismissal claim, unless their employment is covered by a modern award or enterprise agreement.
- Additionally, the high income threshold can affect the applicability of modern awards when a guarantee of annual earnings is in place.
- Employees earning above this threshold may also be exempt from certain rules related to fixed-term contracts.
- Notably, the same threshold amount of $183,100 applies when determining eligibility for unfair contract claims, as well as claims for unfair deactivation or unfair termination for “employee-like workers.”
- Unfair dismissal compensation cap
The compensation cap for unfair dismissal claims has increased to $91,550, up from the previous cap of $87,500, for claims lodged on or after 1 July 2025.
Notably, the maximum compensation that can be awarded by the Fair Work Commission in a successful unfair dismissal claim is the lesser of half the high income threshold or 26 weeks of the employee’s pay.
- Superannuation Guarantee Rate
The Superannuation Guarantee Rate has increased from 11.5% to 12%. This is the final adjustment under the current legislation.
- Other
There are also various taxation-related changes to be aware of, including an updated maximum superannuation contribution base, revised tax-free limits on genuine redundancy payments, and other related adjustments.
In addition, government funded paid parental leave has been extended from 22 weeks to 24 weeks, as part of a gradual increase aimed at reaching 26 weeks by 2026.
Recommendations
In light of these changes, it is crucial for employers to update their payroll systems and processes to reflect the increased wage and superannuation rates. Additionally, salary and annualised wage arrangements should be reviewed to ensure compliance with the updated underpinning modern award rates. Enterprise agreement rates should also be checked to ensure that any necessary increases are applied appropriately.
If you require assistance with ensuring your systems are up to date, or with any other employment related obligations, please feel free to contact a member of the HMB Law team on (03) 9448 9600.
Firm News – Promotion
Finally, we are delighted to announce that from 1 July 2025, Lucinda Sinclair has been promoted to the position of Senior Associate.
The above is general information and should not be taken as legal advice.
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