The high income threshold changed on 1 July 2026: Here’s what it means for employment decisions

On 1 July 2026, the high income threshold rose to $190,100 per annum, up from $183,100.

For employers, this figure sets the boundary for a range of rights and obligations, including who can bring an unfair dismissal claim, how contracts can be structured and which entitlements apply to high-earning staff. The eight areas below outline where it applies.

1. Guarantees of annual earnings and award coverage

An employer can give an employee earning at or above the high income threshold a written guarantee of annual earnings. Once this is in place, the modern award that would otherwise cover the employee stops applying.

Without a signed guarantee, a high-earning employee may still be covered by the award, meaning conditions such as overtime and break entitlements continue to apply regardless of salary.

2. Access to unfair dismissal claims

Employees earning at or above the high income threshold generally cannot bring an unfair dismissal claim.

There is one exception. If the employee is covered by a modern award or enterprise agreement, they retain the right to bring an unfair dismissal claim regardless of their earnings, even with a written guarantee of annual earnings in place.

Employees above the threshold still retain access to other claims, including general protections claims and discrimination claims under the Fair Work Act.

3. Compensation cap in unfair dismissal proceedings

Where an unfair dismissal claim proceeds, the Fair Work Commission’s maximum compensation order is the lower of six months’ pay or half the high income threshold.

From 1 July 2026, that cap is $95,050, up from $91,550.

The Fair Work Commission can also order non-financial remedies, including reinstatement, which are not subject to this cap.

4. Fixed-term contract limits

Under the Fair Work Act, fixed-term contracts generally cannot run for more than two years or be extended more than once, unless a statutory exemption applies.

One exemption applies to employees earning at or above the high income threshold.

5. Contractor opt-out of the “whole of relationship” test

A separate figure, the contractor high income threshold, is also set at $190,100 from 1 July 2026.

Contractors earning at or above this threshold can opt out of the “whole of relationship” test used to assess whether they are genuinely a contractor or, in substance, an employee. 

Opting out means the previous test, based on the contract terms rather than the conduct of the parties, applies instead. This opt-out affects which test is used; it does not allow a person to elect to be classified as a contractor without any test applying.

6. Regulated contractors and unfair termination claims

Contractors in the road transport industry (mainly “owner/drivers”) and employee-like workers engaged through digital platforms have a right to challenge unfair termination, similar to unfair dismissal rights for employees.

This right does not apply to contractors earning at or above the contractor high income threshold.

7. Unfair contract terms

Contractors generally have the ability to challenge unfair contract terms through the Fair Work Commission.

This does not apply to contractors earning at or above the contractor high income threshold.

8. Long service leave payments in NSW

In NSW, employees are generally entitled to have an average of their bonus and commission payments included when long service leave is taken or paid out.

This does not apply to employees whose base rate of pay is at or above the high income threshold.

Summary of key figures from 1 July 2026

Employment Hero’s HR Advisory can help you navigate these changes

Understanding what these changes mean for your business can be challenging, especially when new obligations arrive faster than most HR teams can track them. Employment Hero’s HR Advisory Service gives businesses access to HR and employment specialists who can explain what these changes mean in practice.

Want to learn more about our HR Advisory service? Get in touch with our business specialists today. 

The information in this article is current as at 3 July 2026 and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.