Unfair Dismissal Changes from 1 July 2025: What High Earners Need to Know
Starting 1 July 2025, the Fair Work Commission (FWC) will implement important updates that could affect your eligibility to lodge an unfair dismissal claim and the compensation you might receive. These changes may impact your ability to claim unfair dismissal and the amount you could receive if successful.
1. High-Income Threshold Increasing to $183,100
The high-income threshold will rise from $175,000 to $183,100. This threshold determines whether certain employees are protected from unfair dismissal under the Fair Work Act.
If you earn more than $183,100 annually and are not covered by a modern award or enterprise agreement, you will generally be excluded from making an unfair dismissal application. This means high-earning employees in award-free roles may not be eligible for unfair dismissal protection.
This change applies to dismissals that occur on or after 1 July 2025.
2. Compensation Cap Increasing to $91,550
The maximum compensation the FWC can award for unfair dismissal will increase to $91,550, up from $87,500. This cap is the lesser of:
Half of the high-income threshold (i.e., $91,550), or
Six months of your annual remuneration prior to dismissal
For example, if you earned $100,000 per year, your compensation cap would be $50,000 (half of your annual salary), even though the statutory maximum is $91,550.
