New Employment Law to Limit Unjustified Dismissal Claims for High-Income Workers

“Cabinet has agreed that the income threshold will apply to existing employment agreements following a one-year transition period,” stated Minister van Velden.

Workplace Relations and Safety Minister Brooke van Velden has announced that a new income threshold for unjustified dismissal claims will apply to existing employment agreements after a 12-month transition period. This threshold, set at $180,000, is part of the upcoming amendments to the Employment Relations Act, fulfilling a key commitment of the ACT-National coalition agreement.

“Cabinet has agreed that the income threshold will apply to existing employment agreements following a one-year transition period,” stated Minister van Velden. “This gives both employees and employers time to adjust to the new regulations.”

Key Details of the Policy:

1. Application to Employment Agreements:

   • The $180,000 income threshold will immediately apply to new employment agreements once the Bill is passed.
   • For existing agreements, the threshold will take effect 12 months after the Bill’s passage.

2. Exceptions and Clarifications:

   • An employee will no longer be considered under an existing agreement if they change employers or shift to a new role within the same organization, unless the role change is due to a restructure. In cases of restructure, the 12-month transition period still applies.
   • If an employee is dismissed before the income threshold takes effect, they retain the right to file an unjustified dismissal grievance within 90 days. For example, an employee dismissed 10 days before the end of the transition period can still raise a claim post-transition, provided it is within the 90-day window.

3. Options for Workers and Employers:

   • During the transition period, both parties have the opportunity to amend employment agreements. This includes opting back into unjustified dismissal protections or negotiating custom dismissal procedures.

Minister van Velden emphasized the benefits of this policy, stating, “This reform will enhance labour market flexibility, allowing businesses to recruit and retain the best talent without the risk of costly dismissal disputes. It also empowers high-income workers and employers to negotiate terms that align with their specific needs and preferences.”

The government believes this change will foster a more dynamic and adaptable workforce, benefiting both employers and high-earning employees by reducing legal complexities associated with dismissal procedures.