What is a guarantee of annual earnings?
A guarantee of annual earnings is a Fair Work Act arrangement under which a modern award does not apply to an employee guaranteed earnings above the high income threshold.
A guarantee of annual earnings is a mechanism under the Fair Work Act 2009 where an employer gives a high-earning employee a written guarantee that they will earn more than the high income threshold over a set period. While the guarantee is in place, the relevant Modern Award does not apply to that employee.
The guarantee must be in writing and the employee must agree to it. Even though the award no longer applies, the employee keeps their entitlements under the National Employment Standards, and the guaranteed earnings must stay above the high income threshold, which is indexed each 1 July.
Key facts
- •Set out in the Fair Work Act 2009
- •Applies only where guaranteed earnings exceed the high income threshold
- •While in force, the relevant Modern Award does not apply to the employee
- •Must be in writing and accepted by the employee
- •The National Employment Standards still apply throughout
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Ask FairWork Mate AIFrequently asked questions
Does a guarantee of annual earnings remove all my entitlements?
No. It only switches off the Modern Award. You keep all of your National Employment Standards entitlements, such as annual leave, personal leave, and notice of termination.
What is the high income threshold that applies to this?
It is a figure set under the Fair Work Act and indexed on 1 July each year. Check the current amount with the Fair Work Commission, because the guarantee only works if earnings stay above it.
FairWork Mate is an independent commercial service. We are not affiliated with, endorsed by, or associated with the Fair Work Ombudsman, the Fair Work Commission, or any Australian Government agency. Content is general information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.