The two numbers that decide who can bring an unfair dismissal claim, and how much they can win, both rose on 1 July 2026. The high income threshold is now $190,100, up from $183,100, and the compensation cap is now $95,050, up from $91,550.
Both figures are adjusted every year on 1 July, and the version that applies to you is the one in force when the dismissal took effect, not when you lodge the claim.
What changed
| Measure | Dismissal on or after 1 July 2025 | Dismissal on or after 1 July 2026 |
|---|---|---|
| High income threshold | $183,100 | $190,100 |
| Compensation cap | $91,550 | $95,050 |
Fair Work Commission, High income threshold and Compensation cap (both last updated 1 July 2026). The threshold is set under Fair Work Regulations 2009 reg 3.05(6). Verified 26 July 2026.
What the high income threshold does
The high income threshold limits eligibility. An employee who earns above it and is not covered by a modern award or an enterprise agreement is not protected from unfair dismissal, and cannot bring a claim.
The award or agreement point is the part people miss. If you are covered by a modern award or an enterprise agreement, the threshold does not shut you out no matter what you earn. It only bites for award-free and agreement-free employees, which in practice means senior staff on individual contracts. Our modern awards guideexplains how to work out whether an award covers you.
How the compensation cap is worked out
The compensation cap is simply half the high income threshold in force immediately before the dismissal. That is why the two numbers move together: $190,100 halved gives $95,050.
The cap is a ceiling, not an expectation. The Commission calculates compensation on the remuneration you would have received had you not been dismissed, then reduces it for factors including any misconduct and your efforts to find other work. The Commission's own data shows fewer than 0.4% of applicants receive the maximum. Compensation for unfair dismissal also cannot include an amount for hurt, distress or humiliation.
Which year's figure applies
The figure that matters is the one in force when the dismissal took effect. A dismissal that took effect on 28 June 2026 uses the $183,100 threshold and the $91,550 cap, even if the claim is lodged in July. A dismissal that took effect on 2 July 2026 uses the new figures.
Separately, the deadline to lodge is short and unforgiving: applications must reach the Commission within 21 days of the dismissal taking effect. Our unfair dismissal guide covers eligibility, the minimum employment period and what the Commission can order.
A worked example
Rowan earns $196,000 a year and is dismissed on 15 July 2026. He is not covered by an award or an enterprise agreement.
His earnings are above the $190,100 threshold, so he is not protected from unfair dismissal and cannot bring a claim.
His colleague Mei earns the same $196,000 but is covered by a modern award. The threshold does not exclude her, so she can bring a claim, and any compensation would be capped at $95,050.
Common questions
Does earning over the threshold always block a claim?
No. It only blocks employees who are not covered by a modern award or an enterprise agreement. Award-covered employees can claim regardless of income.
Is the compensation cap what most people receive?
No. Fewer than 0.4% of applicants receive the maximum. The cap is an upper limit on an amount that is calculated from lost remuneration and then discounted.
What counts towards the high income threshold?
It is based on annual earnings, which is a defined concept and does not simply mean total package. If you are near the line, the exact composition of your remuneration matters and is worth getting advice on.
Author & reviewer
Sarah has spent over a decade advising Australian SMBs on Fair Work, NES compliance, and payroll. Based in Sydney, she has worked across hospitality, retail and professional services.