The AUD 190,100 high income threshold and the rights that change around it

The high income threshold is an earnings figure in the Fair Work Act that marks the point above which an employee without award or enterprise agreement coverage loses access to unfair dismissal protection. For 2026-27 it stands at AUD 190,100, against AUD 183,100 a year earlier, as recorded in the Fair Work Ombudsman library.

The figure moves each July, so any decision that relies on it has a one-year shelf life. A salary that sat above the line in 2025-26 can fall below it in 2026-27 without any change to the employee’s pay: an employee on AUD 186,000, for example, was above the AUD 183,100 threshold last year and is below the new one now.

It is easy to confuse the threshold with nearby tax figures. The 45% resident income tax rate starts above AUD 190,000 in 2026-27, which is a separate number set by tax law, not the Fair Work threshold. Treat the two as unrelated, even though they happen to sit close together this year.

What counts as earnings for the threshold is defined in the Fair Work rules, and the Fair Work Commission (FWC) publishes guidance on it. Check that guidance for any package that mixes base salary with other amounts before concluding which side of the line a person sits on.

An employee can generally bring an unfair dismissal claim if they have completed the minimum employment period and either earn below AUD 190,100 or work under a modern award or enterprise agreement. The two routes are alternatives, so award coverage keeps a high earner inside the regime. The salary test only decides the question for employees who have no award or agreement coverage at all.

Three short cases show how it works for dismissals from 1 July 2026:

• A product manager on AUD 175,000 with no award coverage can claim, because the salary is under the threshold.
• A head of engineering on AUD 240,000 with no award or agreement coverage cannot claim unfair dismissal.
• A senior technician on AUD 200,000 who is covered by an enterprise agreement can claim, because coverage is an independent route.

Falling outside the unfair dismissal regime does not mean falling outside the Fair Work Act. Employees above the threshold still receive NES notice and redundancy pay, and other protections in the Act continue to apply. For how these rules compare with US practice, see at-will vs Fair Work dismissal.

The minimum employment period differs for small business employers, and the time limit to lodge an application is short. Both should be checked with the FWC for the case at hand.

Compensation for unfair dismissal cannot exceed 26 weeks’ pay or half the high income threshold, whichever is less, according to the FWC’s compensation cap page. Half the threshold works out at AUD 95,050 for a dismissal on or after 1 July 2026; a year earlier it was AUD 91,550.

The lesser-of rule means the cap only reaches AUD 95,050 for employees earning at least AUD 190,100, which in practice means high earners covered by an award or agreement. For everyone else, 26 weeks’ pay is the binding limit.

Two examples on 2026-27 figures: an employee on AUD 150,000 has a cap of AUD 75,000, which is 26 weeks of that salary; an employee on AUD 220,000 who is covered by an enterprise agreement has a cap of AUD 95,050, because half the threshold is lower than 26 weeks of pay (AUD 110,000).

The cap is a ceiling, not a typical outcome. The FWC decides the amount case by case, within that limit, so employers budgeting for risk should treat the cap as the worst case for this claim type only.

The cap does not include notice or redundancy pay the employer already owes under the NES, which are separate entitlements. When modelling the cost of an exit, keep the statutory payments, any contractual extras and the possible compensation in distinct lines.

Beyond unfair dismissal, the threshold appears in Queensland labour hire licensing and is relevant to other Fair Work rules, which is why a salary near AUD 190,100 deserves a second look.

In Queensland, the Labour Hire Licensing Act 2017 exempts an arrangement if all supplied workers are paid above the Fair Work Act threshold. The exemption is all or nothing: one supplied worker under AUD 190,100 brings the arrangement back into scope. The state-by-state position is set out in labour hire licensing by state.

Fixed-term contracts are another area to check. Since 6 December 2023, a fixed-term contract generally cannot run beyond 2 years including renewals, and a run of more than two successive contracts for essentially the same work is generally barred. The FWC’s fixed-term contract page describes the rules and the exceptions; confirm whether any exception applies to a particular high-earning role before relying on it.

Pay reviews can move people across the line in either direction. A rise that takes someone over AUD 190,100 changes their unfair dismissal position if they have no award or agreement coverage, and a July threshold increase can move them back under it. Keep a note of which employees sit near the figure and review it each year, ideally in the same cycle as the 1 July pay review so both changes are seen together.

The proposed ban would prohibit non-compete clauses for workers earning below the high income threshold, but it is only an exposure draft and is not law. Treasury put the draft Bill to ban unfair non-competes out on 7 September 2026, and the consultation window shuts on 2 October 2026.

As drafted, the Bill would also cover co-worker non-solicitation clauses and so-called cascading clauses, which offer several alternative restraint periods in the hope that a court will enforce one of them. It would also target no-poach and wage-fixing agreements between businesses.

Applied to a typical team, the draft would draw a sharp line. A software engineer on AUD 150,000 could not be bound by a post-employment non-compete if the Bill passed as drafted, while a sales director on AUD 210,000 would fall outside that particular ban. Because the threshold moves each July, the line would shift for everyone near it every year.

No start date has been fixed in law, and the text may change after consultation. Employers should not remove or rewrite existing restraints on the assumption that the ban is in force, nor draft new ones on the assumption that it will never arrive.

For an overseas company hiring its first Australian staff, the practical step is to keep restraint clauses narrow and tied to a real business interest, and to diarise a review once the Bill’s final form is known. Confidentiality and IP assignment clauses are separate from non-competes and should be drafted carefully regardless.

For an overseas company, the threshold usually matters first when it hires a senior leader in Australia, because that one salary decides which dismissal and restraint rules apply.

Take a US software company hiring a regional vice president in Sydney at AUD 230,000 a year, in a role with no award or enterprise agreement coverage. Because the salary is above AUD 190,100 and there is no coverage, the unfair dismissal regime would not apply if the employment later ended. The NES still would: in the first year of service the notice period is 1 week, and there is no NES redundancy pay until a year of service is complete. A senior contract can set longer notice by agreement, and for a regional leader that is often sensible for both sides.

Now change one fact. If the same company hires a customer success lead in Brisbane at AUD 160,000, the person sits below the threshold and can generally claim unfair dismissal after the minimum employment period. If the arrangement involves a business supplying that worker to the company, the Queensland labour hire exemption for high earners would not apply either, since the salary is under the line.

The same employer can therefore face two quite different legal positions for two hires in the same month. Recording each role’s salary against AUD 190,100, and its award coverage, at the offer stage avoids surprises later.

Employers should treat AUD 190,100 as a planning marker for senior Australian hires, check it against salary each July, and draft contracts that work on either side of the line.

• Record, for every role, whether an award or enterprise agreement applies, since coverage overrides the salary test for unfair dismissal.
• Flag employees whose earnings sit within a few thousand dollars of the threshold before each 1 July review.
• Budget the compensation cap as the lesser of 26 weeks’ pay or AUD 95,050 when assessing exit risk.
• Keep restraint clauses under review while the non-compete Bill is in consultation, and note who would fall below the line if it passed.

Staff hired through Employer of Record Australia have us as their legal employer (employer of record), and we apply these rules in contracts, pay reviews and exits, working from the salary and role details you provide. Clause-by-clause guidance for a first contract is in the Australian employment contract checklist.

Salary decisions should not be driven by the threshold alone. Setting pay just above AUD 190,100 to avoid unfair dismissal coverage does nothing if an award applies to the job, and the figure will move again next July.

A cleaner approach is to set pay from the market for the role, then note the threshold position as a consequence. That keeps salary bands defensible to the employee and to the rest of the team, and avoids restructuring packages every July simply to stay above a moving number.