The employment law in Australia is drafted and implemented to ensure a safe and healthy working environment. The laws protect the employees against bullying, discrimination, and harassment. These employment laws apply to foreign nationals coming to Australia for work purposes.
Here is a detailed guide that will help you learn about Australia’s labor law.
Who is Covered by the Employment Act?
The employment law in Australia protects full-time employees covered by the employment contract (i.e., employees).
Independent contractors are exempted from this act. They are protected under the Fair Work Act and the Independence Contractors Act 2006.
The Fair Work Act protects all employees except the state public sector employees. However, the rules may differ depending on whether the employee is a casual worker or a permanent employee. In addition to this, there are other criteria of whether an award or an enterprise agreement covers the employee.
In general, the non-management employee is covered by an award, which manages matters including -
- ~Minimum wages
- ~Hours of work
- ~Overtime and Penalty rates
- ~Consultation; and
- ~Dispute resolution
However, there are some industries where senior employees may be covered by an award, while junior employees may not be covered by a mention in some sectors in some sectors. As an employer, you are responsible for identifying the award coverage for their workforce.
The employment contract is a written agreement between an employer and the employee. The document sets out the terms and conditions to be enforced, which will be considered the base of the employment relationship.
According to the labor code in Australia, the contract must comply with the statutory minimum set by the National Employment Standards (NES) as mentioned in the Fair Work Act 2009 or any similar award, enterprise, or registered agreement.
Every employment contract may be different and contain a specific employment relationship between the employer and the employee. However, an employment contract must include some standard terms and conditions.
Below is the list of the required terms and conditions:
- ~Name and personal details of both parties (employer and employee
- ~The commencement date and probation period (in case of a permanent employee)
- ~Job title and description, stating the role and duties assigned to the employee
- ~The clause on Australian employment regulations and other requirements, including licenses, clearances, registrations
- ~Type of employment (like full-time, part-time or casual)
- ~The location of work and business hours
- ~Leave entitlements - the NES gives compulsory minimum standards for various types of leaves (e.g., annual leave, extended service leave, and personal leave)
- ~A non-disparagement clause prevents the employee from any action that can adversely impact the company
- ~A clause that protects employer property and information (e.g., company vehicle, intellectual property, etc.)
- ~A remuneration clause which establishes the payment method (e.g., salary, wage, or piece rate) and is paid separately (e.g., superannuation, loadings, overtime, bonuses, benefits, allowances)
- ~Clauses regarding Assignment, Jurisdiction, Severability, and Variation of Terms
- ~Agreement for confidentiality to clarify what employer information should be kept confidential and explain the possible consequences in case of any breach
- ~The duration of notice to be given by the employer and employee for the Australian employment law termination (there are minimum notice periods as per the Fair Work Act)
- ~Termination conditions
Key Provisions of the Act
The Fair Work Act lays down some statutory requirements to comply with to satisfy employment laws in Australia.
Fair Work Act 2009
The act aims to protect minimum entitlements such as a national minimum wage and the National Employment Standards (NES). Also, there are different employment conditions and entitlements associated with Modern awards or enterprises or any other registered agreements.
The Fair Work Act enables flexible working arrangements, protects from unfair dismissal, and provides general protection provisions. These provisions ensure that the employees are treated fairly and are protected against discrimination. The act has also created bodies that perform administrative and enforcement roles within the national workplace relations system.
According to the Labor Code of Australia, the Fair Work Act 2009 apply to businesses of all types, sizes, and industries across Australia.
However, this act has few exceptions.
For example, in Western Australia, the below-mentioned businesses will not be covered by the Fair Work Act:
- ~Sole Traders
- ~Other unincorporated entities
- ~Non-trading corporations
National Employment Standards (NES)
The National Employment standards are formed under the Fair Work Act 2009 (Act), including minimum employment standards in Australia. Under the National Employment Standard, there is a minimum of 11 entitlements that employers must provide to all employees. The 11 entitlements are as follows:
- ~Maximum weekly working hours: 38 hours per week is a full-time employee's maximum working hour limit. In addition to this, there are reasonable extra hours.
- ~Parental leave and other entitlements: Employees employed for the preceding 12 months are entitled to get up to 12 months unpaid leave. Moreover, they can also request an additional 12 months of unpaid leave.
- ~Annual leave: Every permanent employee is entitled to four weeks of paid vacation per year, plus an additional week for specific shift workers.
- ~Personal/carer’s leave: Permanent employees are entitled to 10 days paid personal/carer’s leave per year and two days paid compassionate leave as per the occasion. Moreover, they are also provided five days of unpaid family, and domestic violence leaves for casual and permanent employees every year.
- ~Requests for flexible working arrangements: This gives employees an entitlement to request a change in their working arrangements due to some exceptional circumstances.
- ~Long service leaves: This is an entitlement is given to employees based on their length of service in the business. This is usually derived from a pre-modern award, registered agreement, or state or territory legislation depending on the circumstances.
- ~Community service leaves: Unpaid leaves for voluntary emergency activities and leaves for jury service. This entitles a permanent employee for ‘make-up pay’ for up to 10 days for jury duty only if the evidence is provided.
- ~Notice of termination and redundancy pay: This entitles an employee up to five weeks ‘written notice of termination or payment in lieu (can differ according to circumstances), and up to 16 weeks severance pay on redundancy scheme, which is based on the employee’s total length of continuous service within the business.
- ~Public holidays: In compliance with the Australian labor code, permanent employees can get a paid day off on a public holiday. There might be an exception in cases where reasonably requested work is required. However, in this case, a higher pay rate may be applied.
- ~Casual conversion and casual employment information statement: As an employer, you must give every new casual employee a Casual Employment Information Statement once they start their new job. This statement will provide information about casual employment and the applicable entitlements. It also includes information about the circumstances considered to convert a casual employee to permanent jobs.
- ~Provision of a fair work information statement: This statement contains information related to the National Employment Standards (NES), modern, agreement-making, the right to freedom of association. Individuality flexibility arrangements, transfer of business, termination of employment, and the respective roles of the Fair Work Commission and the Fair Work Ombudsman.
Work Health and Safety Standards (WHS)
Under the Australian labor law, this is a set of model Workplace Health and Safety laws that protect all employees' health, safety, and welfare at work. It also provides health and safety to people associated with the workplace, like the visitors, customers, and general public.
The act offers varied provisions like allocating duties concerning the management and control of risks, incident reporting, and consulting of workers. In addition to this, it also practices enforcement through fines and penalties, which provide safety, security, and comfort for employees.
State And Federal Anti-Discrimination Laws
The Fair Work Act ensures protection against discrimination for employees, but Australian labor act rules provide protection even if an employee is no longer employed. The State and Federal Anti-Discrimination law protects people from being discriminated against based on race, disability, race, sex, and age. The Australian Human Rights Commission governs this act.
The majority of businesses come under the Labor codes of Australia, which include the Fair Work Act 2009 and Fair Work Regulations 2009. Companies that fail to comply with the laws can be charged hefty fines and penalties, expensive back-pay orders, damaging employee claims, and personal fines for accessorial liability.
Some of the common types of penalties charged by the Fair Work inspectors are:
On-the-spot fines: Fair work inspectors have the authority to issue an on-the-spot infringement notice. This can be done if they find relevant evidence against an employer related to the infringement of record-keeping or pay slip obligations. The maximum fine from an infringement notice can be up to $630 for an individual and $3150 for a body corporate.
Court ordered penalties: In case of infringement of the Fair Work Act, the Fair work inspector can also take the matter to court. If this happens and the litigation is successful, the employers may also face court orders, including -
- ~Penalties up to $12,600 for an individual per contravention
- ~Penalties up to $63,000 for a body corporate per contravention
- ~Orders to pay the employee the amount they’re owed along with interest
- ~Orders to grant an injunction or interim injunction
- ~Orders to award the employee compensation for the loss they incurred
- ~Orders to reinstate an employee mean that the employer has to give them their job back
- ~Orders to rectify the discrimination
Australia Law on Termination
According to the Australian employment law, an employee cannot be terminated unless they provide written notice of their last work day. You can either allow the employee to serve their notice period or pay in lieu of notice as an employer.
The duration of the notice period is calculated according to the employee's age and tenure in the company.
Entitlements to be paid on termination
According to the Australia Labor Law, upon ending an employment relationship, employees must be given these entitlements in their final pay:
- ~Outstanding wages or other remuneration.
- ~Payment instead of notice of termination.
- ~Any redundancy pay or entitlements.
- ~Any other accrued annual leave and long service leave entitlements.
Balance any time off instead of overtime that the employee has received but not yet availed.
Compliance Strategies for Employers
Employers must comply with the national workplace laws levied under the Australian Labor regulations, including:
- ~The Fair Work Act 2009
- ~Fair Work Regulations 2009
They must also comply with other legislations:
- ~The National Employment Standards (NES)
- ~Modern Awards
- ~Enterprise Agreements
Furthermore, there are many other specific elements of employment that all employers must comply with. A failure to work per the legislation, NES, or an award can result in your business facing penalties.
How Can Multiplier Help?
To ensure the protection of both the organization and the employee, the ideal practice is to establish standard contracts, offer letters, and employment contracts. These contracts must also be verified and amended with time to keep the agreement updated and compliant with the labor laws. However, learning and implementing all these labor laws of Australia can be overwhelming.
Hence, it is best to manage all this efficiently to outsource the hiring and compliance chores to an expert partner and stay stress-free.
With Multiplier, you can rest assured as our HR professionals and our SaaS-based technology make global onboarding fast and easier.
Frequently Asked Questions
What is the national minimum wage in Australia?
The Fair Work Commission reviews the modern award minimum wages and decides a national minimum wage for employees not covered by enterprise agreements or modern awards. In July 2021, the minimum wage for the employees outside of enterprise agreement and award free employees were decided as follows:
- ~AUD 20.33 per hour
- ~AUD 772.60 per week (this amount is calculated based on a week of 38 hours)
What is the minimum paid holiday entitlement?
As per the National Employment Standard, full-time employees are entitled to four weeks of paid annual leave. This is given pro-rated for the part-time employees and is usually increased to five weeks for the shift workers. The casual employees are not given any annual leave.
Can employees request a change in working arrangements in Australia?
The NES allows employees to change their working arrangements if they:
- ~Are a parent and have the responsibilities of a school-aged child.
- ~Are the primary carer
- ~Have a disability
- ~Are over 55 years of age
- ~Are a victim of family violence