If have a business in Australia and you are going to take on employees, you need to understand the regulatory landscape.
We've created this guide to help employers understand the fundamental workplace laws and the principles that underpin labour regulations in Australia.
Be aware that this is by no means a definitive list. Rather, it's an overview of the most important aspects of legislation and employment conditions, to help you understand your obligations and minimise risks.
Legislation
The principle piece of employment legislation in Australia is the Fair Work Act 2009, which shapes the national workplace relations system.
Along with the National Employment Standards, modern awards, and registered agreements, the Fair Work Act sets the terms and conditions of employment and the rights and responsibilities of parties in an employment relationship.
On top of that there are federal (national) and state anti-discrimination laws, and state and territory health and safety, worker’s compensation, and long service leave laws.
Governing agencies
The Fair Work Ombudsman (FWO)
Promotes, monitors, and enforces compliance with the Fair Work Act and workplace laws.
Fair Work Commission (FWC)
A tribunal established under the Fair Work Act to set minimum wages, make awards, approve enterprise agreements, help resolve workplace issues, and regulate registered organisations.
Basic principles
The Fair Work system covers most Australian workplaces and provides a framework for cooperative and productive workplace relations between employers and employees.
It aims to provide a guaranteed safety net of employment entitlements, enabling fairness at work and preventing discrimination against employees while achieving productivity and flexibility.
Key features of the Fair Work system include a broad base of minimum entitlements through the National Employment Standards, modern awards, the national minimum wage, and protections from unfair dismissal and adverse action.
In addition, employees can collectively bargain at an enterprise level (and in some cases multi-enterprise level) to provide better terms and conditions through enterprise agreements.
Employment documents/instruments
In Australia, employees are typically covered by modern awards (industry or occupation-based documents) or registered agreements (agreements between an employer and their employees).
Employees may also have written or verbal employment contracts (negotiated between the employer and the employee).
Modern awards
Most people who work in Australia are covered by a modern award that sets out the minimum terms and conditions of employment on top of the National Employment Standards (NES).
- Minimum terms and conditions can include minimum rates of pay, penalty rates, overtime rates, allowances, hours of work, breaks, etc.
- Workplaces and workers are covered depending on the industry and type of job.
- There are more than 100 industry or occupation awards.
- An employer can be covered by more than one award, depending on the jobs their employees do, but an employee can only be covered by one award.
- Awards don’t apply when an employer has a registered agreement in place, however a registered agreement needs to provide terms and conditions which see employees better off overall. For example, the base rate in the agreement can’t be less than the equivalent base rate in the applicable modern award.
- The Fair Work Commission reviews modern awards to ensure they meet their objectives (the last review began in 2014).
Registered agreements
- An agreement on employment conditions for a specific business, negotiated between the employer and their employees.
- Agreements must be approved by and registered with the Fair Work Commission.
- Examples include enterprise agreements, collective agreements, greenfields agreements, certified agreements, Australian workplace agreements (AWA) and individual transitional employment agreements (ITEA).
Employment contracts
- Employers and employees not covered by an award or registered agreement are considered to be award and agreement free.
- In these situations, the terms and conditions of employment can be set out in an employment contract between the employer and employee.
- Contracts aren't a legal requirement but we recommend you have one for every employee. They can be written or verbal - but putting it in writing formalises the agreement and clearly defines the terms of employment.
- The contract can’t provide less than the minimum terms and conditions of the NES and National Minimum Wage.
- All employees are covered by these minimum entitlements, regardless of whether or not they’ve signed an employment contract.
MyHR's guide to employment contracts.
Minimum entitlements
National Employment Standards
The NES set 11 minimum entitlements for all Australian employees.
Other workplace instruments (awards, enterprise agreements or employment contracts) can provide terms and conditions that are better than the NES and the National Minimum Wage, but cannot provide less.
The NES are:
Maximum weekly hours
38 hours a week for full-time employees or for other than full-time employees, the lesser of 38 hours or the employee’s ordinary hours in a week.
This includes any hours of authorised leave or absence (paid or unpaid).
Requests for flexible working arrangements
Certain employees who have worked for the same employer for at least 12 months have the right to request flexible working arrangements, e.g. changes to hours, patterns or locations of work.
Employers must give the person a detailed written response within 21 days, stating whether they grant or refuse the request. In responding, employers must make a genuine effort to find alternative arrangements to accommodate the person’s circumstances, and to consider the consequences of refusal.
If a dispute about these requests can’t be resolved at the workplace, the Fair Work Commission (FWC) can help.
Requests to convert from casual to permanent employment
Casual employees have the right to request a shift to permanent employment after a period of 6 months, or 12 months if they work for a business with fewer than 15 employees.
To be eligible, the employee must believe they no longer meet the definition of a casual employee, i.e. there is an absence of a ‘firm advance commitment to continuing and indefinite work’ and the employee is entitled to a casual loading or a specific rate of pay for casual employees.
The request must be in writing.
Employers have to consult with the employee and respond within 21 days.
If the employer accepts, they must engage the casual worker on a permanent full- or part-time basis.
Employers can refuse if the employee meets the definition of a casual employee or there are ‘fair and reasonable operational grounds’ for not accepting the request, e.g. if substantial changes would be required to the way in which work in the enterprise is organised or it would bring significant impacts to the enterprise’s operation.
Annual leave
Full-time and part-time employees get 4 weeks of annual leave (based on their ordinary hours of work).
Shift workers may get up to 5 weeks per year.
Annual leave accumulates and can be used from the first day of employment. Any unused leave rolls over from one year to the next.
Sick and carer's leave (personal/carer's leave), compassionate leave, and family and domestic violence leave
Full-time employees are entitled to 10 days paid sick and carer's leave, based on their ordinary hours of work. The leave is pro-rata for part-time employees.
Leave accumulates from the first day of employment and any unused leave carries over to the following year.
Casual employees aren’t eligible for paid sick and carer's leave.
All employees, including casuals, are entitled to 2 days compassionate leave each time they meet the criteria (a member of their immediate family or household dies, or contracts or develops a life-threatening illness or injury; a baby in their immediate family or household is stillborn; they have a miscarriage; or their current spouse or de facto partner has a miscarriage).
Employees, including part-time and casual, are entitled to 10 days of paid family & domestic violence leave.
Parental leave and related entitlements
All employees who have or will have responsibility for the care of a child are able to take parental leave if they have worked for their employer for at least 12 months.
Primary caregivers are eligible for 18 weeks of paid parental leave and secondary carers are entitled to 2 weeks, both paid at the national minimum wage by the federal government.
Employees are entitled to up to 12 months of unpaid parental leave and can request up to an additional 12 months of leave.
Community service leave
Employees, including casuals, are entitled to take community service leave.
Community service leave is unpaid for all activities other than jury duty. Employers have to pay employees the difference between any jury duty payment and the employee's base pay rate for the ordinary hours they would have worked.
There is no limit on the amount of community service leave an employee can take.
Long service leave
Employees are entitled to long service leave depending on the laws of each state or territory (or set out in a federal pre-modern award).
Public holidays
Employees are entitled to take the day (or part day) off on public holidays. The number of days each year depends on the state or territory they work in.
Permanent employees are entitled to receive their base rate of pay for hours they would have worked (if the holiday is a day they would normally work).
Casual employees are entitled to take the day off, but do not receive payment.
If asked to work the employee can refuse, if reasonable to do so.
Our guide to paying public holidays.
Notice of termination and redundancy pay
In most circumstances, employers have to give employees written notice of their last day (when employment ends).
The length of the notice period ranges from 1-5 weeks, depending on the employee’s continuous service with the employer and the person’s age (employees over 45 get an extra week of notice if they have worked for the employer for at least 2 years).
Notice of termination is not required when the employer has good reason to dismiss the person for serious misconduct, or for casual and fixed-term employees.
The length of notice for employees who are resigning depends on the terms in their award, enterprise agreement, or employment contract.
The employee is due salary, unused annual leave, and any other entitlements up to the last day of employment. If it’s written in their employee contract, you can offer the employee a payout for their notice period or have them work it.
Most employees, except casuals, who have worked continuously for an employer (with more than 15 employees) for more than 12 months are entitled to redundancy pay. The amount ranges from 4-16 weeks’ pay, based on their length of continuous service (small business or other exclusions may apply).
Modern awards may have redundancy clauses that apply instead of the NES.
Employment information statements
Employers must provide all employees with a copy of the Fair Work Information Statement (FWIS) when they start their new job.
For casual employees, employers must give them the Casual Employment Information Statement (CEIS) before or as soon as possible after they have started employment, and again after 6 months, 12 months, and every 12 months thereafter.
Employers with fewer than 15 employees only need to provide it to new casual employees and then after 12 months.
Every employee engaged on a new fixed-term contract must be given a copy of the Fixed Term Contract Information Statement (FTCIS) when they enter into the contract.
The information statements provide information about the conditions of employment.
Minimum wage
All employees working in Australia are entitled to a minimum wage. For most employees, the minimum wage is set by the applicable modern award or enterprise agreements, depending on the industry of the employer and occupation of the employee.
The national minimum wage applies to employees not covered by an award or registered agreement. This is the minimum pay rate provided by the Fair Work Act 2009 and is reviewed each year.
Casual employees covered by the national minimum wage also get at least a 25% casual loading.
Rest and meal breaks
Paid and unpaid rest breaks and meal breaks are provided for in the relevant award, enterprise agreement, or other registered agreement.
Paying wages
Employees can be paid in a number of different ways including in cash, by cheque, and directly into their bank account by electronic funds transfer (EFT).
Employers have to pay employees at least monthly for the work they do and employees need to be given a pay slip (electronically or in hard copy) within 1 working day of being paid.
Employers cannot deduct any money from an employee’s pay unless it is legally required, e.g. income tax, superannuation, or court order, the employee agrees to the deduction in writing (and it is principally for their benefit), or it is allowed under their modern award or registered agreement.
Probation periods
Probation periods can be used at the start of the employment relationship to check an employee’s suitability for a role.
The employer usually decides on the length of the period, e.g. 3 or 6 months.
Employees on probation receive the same entitlements as other employees, including the entitlements in the NES.
If an employee doesn’t pass the probation period, employers must still give notice and pay out any unused accumulated annual leave.
Terminating an employment relationship
Unfair dismissal
Protection from unfair dismissal is one of the key features of the Fair Work system.
Employees can claim a dismissal is unfair if they believe they were dismissed in a harsh, unjust, or unreasonable manner.
Employees have 21 days (from the day after the dismissal) to apply to the Fair Work Commission.
Employees need to be employed for at least 6 months before they can apply (or for at least 12 months if they work for a business of fewer than 15 employees).
Most matters are resolved through a conciliation conference, which is a confidential and informal discussion between the two parties. However, if a case is not resolved at conciliation, the Fair Work Commission will hold a formal hearing or conference to decide the outcome.
Small businesses have more protection from unfair dismissal claims, and they will be deemed to be fair if the employer follows the Small Business Fair Dismissal Code (and can provide evidence of this).
General protections
Employees can also apply to the FWC if they believe they have been dismissed in breach of general protections (which protect employees from workplace discrimination and other adverse actions), or if their termination was unlawful.
