Gilbert + Tobin’s employment lawyers, Dianne Banks, James Pomeroy, Tom Brett and Kaushalya Mataraaratchi are pleased to contribute to Chambers’ Global Practice Guide to Employment, 2020.
In a world that has become much more global, where cross-border relationships, acquisitions, etc, have become standard practice, it is crucial to have sufficient insight into the local employment laws that can have an impact on the global situation.
This guide describes the nature and scope of the legal framework governing the employment relationship around the world. The country outlines cover not just the typical topics for employment professionals – such as wages, benefits and health benefits laws – but also regulations more broadly affecting organisations, such as union organisation, immigration and the data privacy and retaliation restrictions.
1.1 Main Changes in the Past Year
During the past 12 months, the main changes to employment law have occurred in response to the COVID-19 pandemic. The key legislative changes are set out in 1.2 COVID-19 Crisis.
Pandemic Amendments to Modern Awards
In April 2020, the Fair Work Commission (FWC) varied 99 modern awards (Awards) in response to the COVID-19 pandemic. The variations to the Awards were initially effective from 8 April 2020 until 30 June 2020. In July 2020, the operation of these provisions were extended until 30 September 2020 in respect of approximately 50 Awards.
The Awards were varied to include the following provisions:
Full-time, part-time and casual employees are eligible to a one-off entitlement of two weeks’ unpaid leave (Pandemic Leave) if they are:
- required, by government or medical authorities or acting on medical advice, to self-isolate; or
- otherwise prevented from working by measures taken by government or medical authorities in response to the COVID-19 pandemic.
- all employees are entitled to up to two weeks of leave (the entitlement is not pro-rated). Employees may take less than two weeks' leave and employers may allow employees to take additional unpaid leave;
- employees are required to give their employer notice of their intention to take Pandemic Leave and the reason they require leave as soon as practicable (this may, in certain circumstances, be a time after their leave commences);
- an employer may ask an employee to give evidence that the application for Pandemic Leave is for a proper purpose; and
- taking Pandemic Leave does not affect an employee’s entitlement to any other paid or unpaid leave (it can be taken even if the employee has paid-leave entitlements) and counts as a period of service for the purpose of the calculation of entitlements under modern awards and the National Employment Standards.
Double annual leave at half pay
Under the Awards, an employer and employee can agree for the employee to take twice as much annual leave on half pay. For example, an employee takes two weeks’ annual leave but is paid for only one week. One week's annual leave is deducted from the employee’s leave accruals.
Accrual of Personal/Carers Leave
In August 2019, a Full Bench of the Federal Court handed down an important decision on the interpretation of the PCL provisions under the Fair Work Act 2009 (Cth) (FW Act) (see Mondelez v AMWU  FCAFC 138). Under these provisions, an employee is entitled to accrue ten days’ PCL for each year of service.
The Court interpreted a “day” of PCL to mean a 24-hour period that would otherwise be allotted to work.
The Court rejected what was previously the accepted approach that employees working 38 ordinary hours per week accrue 76 hours of PCL per annum. The Court held there was no justification for converting PCL into hours.
The Court’s interpretation has implications for employees who do not work a conventional 38-hour week over five days. For example, for employees who work 38 ordinary hours per week over fewer than five days per week, the Court’s decision means they will be entitled to ten days of PCL paid for the hours for which they would have worked. As a result, these employees will receive more hours of PCL than employees whose hours of work are arranged in the conventional way.
In July 2020, the High Court heard an appeal of the decision and has reserved its judgment.
Qantas Sick-Leave Decision
In CEPU & others v Qantas Airways Ltd  FCA 656, the Federal Court ruled that employees who are stood down without pay under the FW Act are unable to access paid PCL. The ruling concerned a challenge by several trade unions to a decision by Qantas not to provide PCL to employees who had been stood down without pay under Australian’s national employment statute, the FW Act.
Central to the Court’s ruling was its characterisation of PCL as a form of income protection for workers when they are unable to work due to for example, illness or injury. An employee who is stood down without pay has no income to protect and has no requirement to work. Paying PCL to such an employee would be inconsistent with the purpose of the leave.
During a period of unpaid stand-down, the FW Work Act provides that an employee is not taken to be stood down if the employee is:
- taking paid or unpaid leave that is authorised by the employer; or
- otherwise authorised to be absent from his or her employment.
The Court found neither of these two circumstances entitled a stood-down employee to PCL:
- as PCL is an entitlement not to attend work, PCL is not leave authorised by the employer because the employee is not performing work in the first place; and
- PCL is not an authorised absence from their employment. This expression refers to specific entitlements under the FW Act for an employee to be absent from their employment, such as jury service or for absences in respect of community service activities.
Public Health Orders
Australian public health orders have had significant implications for the ability of people to work and the way people work during the pandemic. For example, during the height of the lockdown, the NSW Public Health Order required individuals to remain at home unless they had a reasonable excuse not to do so. In effect, employees were obliged to work from home unless it was not possible.
The Order currently provides that NSW employers must allow their employees to work at home where it is reasonably practicable for them to do so. This means that employers may ask (but not oblige) employees to return to their workplace where working from home is still possible. Accordingly, an employee may refuse a request or a purported direction from the employer to attend the workplace in these circumstances.
In Gupta v Portier Pacific Pty Ltd & another  FWCFB 1698, the Full Bench of the Fair Work Commission decided that Uber Eats “Delivery Partners” are not employees. The case concerned the employment status of an Uber Eats food deliverer (known as a “Delivery Partner”). The applicant Delivery Partner, Ms Gupta, claimed that she was unfairly dismissed by Uber or its subsidiary (Portier Pacific) after working since about September 2017. During the period when she held a Partner account, she undertook approximately 2,200 deliveries.
In January 2019, Uber blocked Ms Gupta’s Partner Account claiming that Ms Gupta had failed to meet its delivery standards. Ms Gupta claimed that this act amounted to an unfair dismissal.
The Full Bench found that Ms Gupta was neither employed nor conducting a business in her own right. The majority held that three critical factors pointed decisively away from a finding of employment:
- Portier Pacific exercised no control over when or for how long Ms Gupta performed her work;
- Ms Gupta was able to accept work through other competitor food delivery apps or perform other types of passenger or delivery work provided this did not compromise her capacity to affect her Uber Eats deliveries; and
- Ms Gupta was not required to wear a uniform, her car bore no logos, and there is no evidence that she was required even to represent that she was part of the Uber Eats business beyond what was necessary to collect the particular meal from the restaurant and deliver to the customer.
The majority found that Ms Gupta was neither employee nor independent contractor disturbs an established line of precedent that has treated the notions of serving in the business of another and operating one’s own business as being entirely dichotomous; that is, a worker is either an employee or an independent contractor employed in his or her own business enterprise.
1.2 COVID-19 Crisis
Wage Subsidy Scheme
In response to the pandemic, the Australian Government established a wage subsidy scheme (known as JobKeeper) under which the Australian Government reimburses the wages paid by employers who have suffered a prescribed reduction in turnover. The Government provides a wage subsidy of AUD1500 before tax per fortnight paid to employers in arrears to reimburse them for income already paid to their eligible employees.
The scheme was originally designed to operate from 30 March until 27 September 2020. On 21 July 2020, the Australian Government announced changes to the wage subsidy and extended its operation until 28 March 2021. From 28 September 2020, the JobKeeper scheme will transition to a tiered system where eligible employees will receive JobKeeper payments based on the average number of hours per week that they worked for their employer in the four weeks of pay periods prior to 1 March 2020.
Eligible employees who performed an average of 20 hours or more work for their employer in the four weeks of pay periods prior to 1 March 2020 will receive reduced payments of:
- AUD1,200 per fortnight from 28 September 2020 to 3 January 2021; and
- AUD1,000 per fortnight from 4 January 2021 to 28 March 2021.
All other eligible employees will receive reduced payments of:
- AUD750 per fortnight from 28 September 2020 to 3 January 2021; and
- AUD650 per fortnight from 4 January 2021 to 28 March 2021.
Changes to the Fair Work Act
The Australian Government enacted temporary amendments to the FW Act. The amendments commenced on 9 April 2020 and are automatically repealed on 28 September 2020. The changes to the FW Act apply only to employers who qualify for the JobKeeper scheme, as well as their employees, who will be eligible to receive the benefit of the wage subsidy.
The Government has yet to announce whether it will legislate to extend the operation of the temporary amendments to the FW Act in line with the extension of the JobKeeper Scheme until 28 March 2021.
The key changes are:
- employers must pay their employees at least AUD1,500 in respect of each fortnight until 27 September 2020 in order to be eligible to receive the JobKeeper payment as a wage subsidy;
- subject to consultation obligations and reasonableness requirements, employers may give three different types of directions to employees (each a JobKeeper-enabling direction):
a) reducing their days and hours of work known as a JobKeeper stand-down direction;
b) performing any other duties within the employees' skill and competence; and
c) performing duties at a different work location;
- employers may request that an employee perform work on different days or at different times during a period, compared with the employee’s ordinary days or times of work. The employee must not unreasonably refuse the request;
- the right for employers to request employees to take annual leave which must not be unreasonably refused; and
- an employer and employee may agree to take twice as much annual leave at half the employee’s rate of pay.
2. Terms of Employment
2.1 Status of Employee
Blue-collar and White-collar Workers
The expressions blue- and white-collar workers are used in Australia to describe workers who are trade-qualified or perform manual labour and office-based workers or professionals, respectively. These expressions do not have any legal significance. A more useful distinction is that of: (i) employees whose employment is subject to a modern award or enterprise agreement, and (ii) those employees who are not subject to either of these instruments.
Employees in certain industries and occupations are covered by modern awards. Modern awards are made by an industrial tribunal (known as the Fair Work Commission) and prescribe minimum terms and conditions of employment. Modern Awards do not apply to employees whose earnings exceed the high-income threshold (currently AUD153,600) and are subject to a guarantee of annual earnings.
An enterprise agreement is a collective labour agreement that is usually negotiated at an enterprise level and most often applies to one employer in respect of its employees. Like a modern award, enterprise agreements prescribe minimum terms and conditions of employment. Within Australia there are various types of employment arrangements which vary depending on the numbers of hours worked each week, the terms of engagement and the agreement between the parties. These include:
- full-time employment – employees who work for 38 hours per week (plus reasonable additional hours);
- part-time employment – employees who work less than 38 hours per week (for example, three days a week on an ongoing basis);
- fixed- or maximum-term employment – employees who work for a temporary specified term (for example, six months) either on a full-time or a part-time basis. Termination of employment usually occurs at the end of the fixed or maximum term, but the parties may include provisions dealing with termination at any time on notice;
- casual employment – employees who do not have regular or systematic hours of work and do not have an expectation of ongoing continuous work. These employees are viewed as being employed under a series of separate engagements.
2.2 Contractual Relationship
Types of Employment Contracts
Ordinarily, the key terms of an employment contract will be set out in a written agreement between the parties. However, the terms may also be concluded by a verbal agreement or a combination of both. The key terms of employment will usually include the employee’s position, title, location, employment status (ie, full-time, part-time, fixed-term or casual), remuneration, incentive entitlements, obligations with respect of use and disclosure of confidential information, intellectual property rights, post-employment restraints of trade (if any, addressed in 3 Restrictive Covenants), termination and redundancy.
Employment contracts may provide for ongoing employment or for a fixed or maximum term of employment (addressed in 2.1 Status of Employee).
An employment contract cannot provide for less than the legal minimum requirements set out in the National Employment Standards (NES) or collective instruments, such as modern awards or enterprise agreements.
The ten standards set out under the NES are:
- maximum weekly hours of work (38 plus reasonable additional hours);
- a right to request flexible work arrangements in certain circumstances;
- parental leave (up to 12 months' unpaid leave and the right to request a further 12 months);
- annual leave (four weeks per annum cumulative from year to year, or five weeks for some employees);
- personal/carer’s leave (ten days paid plus two days of unpaid carer’s leave), compassionate leave (two days' paid) and family and domestic violence leave (five days unpaid);
- community service leave (unpaid leave for community service activities and jury duty (the first ten days of jury duty is paid));
- long-service leave (governed usually by State and Territory legislation);
- public holidays (a paid day off (unpaid for casuals), except where reasonably requested to work);
- notice of termination and redundancy pay (up to five weeks’ notice of termination and up to 16 weeks' redundancy pay, both based on length of service); and
- provision of a Fair Work Information Statement to employees (which provides information to employees on the minimum terms and conditions).
It is in the interests of all parties to have a written employment contract outlining the terms of the employment relationship, in order to mitigate the risk of a dispute about the terms of employment.
2.3 Working Hours
Maximum Working Hours
The NES provides that the maximum hours per week are 38 hours for a full-time employee. The hours an employee works in a week are taken to include any hours of leave or absence (whether paid or unpaid) authorised by the employer under the terms of the employee’s employment or by or under a law.
Reasonable Additional Hours
The NES provides that employers cannot require employees to work more than 38 hours unless the additional hours are reasonable. Under the NES, the following must be considered in determining whether additional hours are reasonable:
- any risk to employee health and safety;
- the employee’s personal circumstances, including family responsibilities;
- the needs of the workplace or enterprise;
- whether the employee is entitled to receive overtime payments, penalty rates or other compensation for (or a level of remuneration that reflects an expectation of working) additional hours;
- any notice given by the employer to work the additional hours;
- any notice given by the employee of his or her intention to refuse to work the additional hours;
- the usual patterns of work in the industry;
- the nature of the employee’s role and the employee’s level of responsibility;
- whether the additional hours are in accordance with averaging provisions included in an award or agreement that is applicable to the employee or an averaging arrangement agreed to by an employer and an award/agreement-free employee; and
- any other relevant matter.
Averaging of Hours
The hours of work for employees not covered by a modern award or enterprise agreement may be averaged over a period of up to 26 weeks. Modern awards and enterprise agreements may provide that ordinary hours of work are averaged over a period greater than 26 weeks.
Not all employees are entitled to additional remuneration (known as overtime) or time off in lieu of overtime for working outside their ordinary hours or above their agreed number of hours. Employees are only entitled to overtime if it is a contractual entitlement (which is not common) or a modern award, enterprise agreement or other industrial instrument that provides for overtime.
National Minimum Wage
The FWC annually reviews and sets the minimum wage that must be received by employees in Australia. The FWC national minimum wage order comes into effect from the first pay period on or after July 1st each year.
For the 2020 financial year (1 July 2020 to 30 June 2021):
- the national minimum wage was set at AUD753.80 per week or AUD19.84 per hour, based on a 38-hour week; and
- casual loading remains at 25% (which is compensation that casual employees are paid for not receiving certain entitlements, eg, leave that full-time and part-time employees receive).
The FWC announced a minimum-wage rates increase in modern awards of 1.75% with staged effective dates for different groups of modern awards: Group 1 will commence from 1 July 2020; Group 2 will commence from 1 November 2020; and Group 3 will commence from 1 February 2021.
2.5 Other Terms of Employment
Under the NES, permanent (ie, full-time and part-time) employees are entitled to:
- four weeks' paid annual leave per annum. It accrues progressively during a year and is cumulative from year to year. Some shift workers are entitled to up to five weeks' annual leave per annum;
- accrue ten days' paid personal/carer’s leave and are entitled to take two days' unpaid carer’s leave on each relevant occasion once they have exhausted their paid-leave accrual – this allows employees to take time off when they are unwell or a family member for whom they are required to care is unwell;
- two days' paid compassionate leave – this is also known as bereavement leave and allows employees (including casual employees) to take leave when an immediate family member dies or contracts or develops a life-threatening illness or injury;
- five days' unpaid family and domestic violence leave – this is available to allow employees (including casual employees) to deal with the impact of family and domestic violence;
- up to 12 months' unpaid parental leave – this is available to employees (including casuals) who give birth or whose spouse or de facto partner gives birth or who adopts a child under 16 years of age. Casuals are eligible if they have been working on a regular and systematic basis for at least 12 months and there was a reasonable expectation of continuing work with the employer but for the birth or adoption of a child. Eligible employees can receive up to 18 weeks' paid parental leave from the Australian government, which is paid at the national minimum wage level; and
- long-service leave – this is paid leave provided to employees who have completed a specific period of continuous service with an employer (for example, employees in New South Wales are entitled to 8.67 weeks’ long-service leave after ten years’ service). Where the criterion for continuous periods service has been met, accrued and untaken long-service leave must be paid out to the employees on termination. Long-service leave is governed by State and Territory legislation; therefore, long-service leave may be available to casuals in some States and Territories.
3. Restrictive Covenants
3.1 Non-competition Clauses
Legitimate Business Interest
Non-compete clauses and other restraints of trade are, as a general rule, contrary to public policy and void unless they are justified by special circumstances in a particular case. The party seeking to enforce the non-compete clause bears the onus of establishing its validity.
Whether any of the restrictions are enforceable will depend on whether:
- the non-compete protects a legitimate business interest (considering the factual circumstances of the company and the industry in which it operates); and
- the non-compete goes no further than is necessary to protect that legitimate business interest, having regard to the duration, geography and activities sought to be restrained by it.
Legitimate business interests that may justify non-compete clauses include protection of the following:
- confidential information;
- client or customer connections;
- trade secrets;
- staff and staff connections; or
An employer is not entitled to be protected against mere competition. The legitimate business interest is assessed in the context of the factual circumstances existing at the time the restraint was entered into. The circumstances of the individual being restrained in the context of the employment will also be considered in determining the validity of the non-compete clause.
A basic requirement of any contract is that there is consideration for the agreement reached. This principle also applies in restraint cases. However, there is no principle that employees must receive remuneration equivalent to the period of restraint for the restraint to be enforceable. Moreover, the fact that an employee will suffer no financial loss in being restrained will be a matter considered by the court.
Position in NSW
In all states of Australia except New South Wales (NSW), unreasonable restraints will not be enforced. In NSW, the position is different because of the NSW Restraints of Trade Act 1976 (RTA). The RTA provides that a restraint is valid to the extent it is not against public policy. Where a NSW restraint is challenged, the RTA empowers the NSW Supreme Court to consider and in effect read down and effectively amend an unreasonable restraint in the context of an actual breach and impose a lesser restraint; for example, a court may find that an employee should be restrained for three months in NSW rather than six months throughout Australia. While there are numerous cases where the RTA has been used, the outcome of each case will turn on its particular facts.
3.2 Non-solicitation Clauses – Enforceability/Standards
Australian courts have recognised an employer’s interest in maintaining a stable workforce. This interest may be protected by a time-limited post-employment restraint prohibiting the former employee from soliciting the employer’s employees. In granting an order enforcing an employee non-solicitation restraint, the court will consider the length and breadth of the restraint in the context of whether it applies to all employees or only to those the restrained employee could reasonably be said to have influence over.
Australian courts have recognised that some customer relationships which an employee develops and/or maintains on behalf of their employer may be protected by a time-limited post-employment restraint prohibiting the former employer from soliciting the employer’s customers.
Not all customer relationships will justify the protection of a non-solicitation restraint. The courts will consider various factors, such as the nature of the employee’s dealings with the customer (including their complexity and timeframe, frequency and how exclusive they are in relation to the employer’s other employees). A non-solicitation restraint is also more likely to be enforceable when the employee’s dealings with the customer take place at the customer’s premises.
In other words, the non-solicitation restraint is more likely to be enforced where the employee is seen by the customer as (according to one case) the “human face” of the business.
4. Data Privacy Law
4.1 General Overview
The Privacy Act 1988 (Cth) (Privacy Act) provides the governing framework for privacy in Australia and deals with the collection, use and disclosure of personal information.
Employee Records' Exemption
The Privacy Act provides an exemption for employee records that are directly related to a current or former employment relationship in a private sector organisation.
For an employee record to be exempt from protection under the Privacy Act, three requirements must be satisfied:
- the private sector organisation must act in its capacity as a current or former employer of an individual;
- the act or practice must be directly related to a current or former employment relationship with the private sector organisation; and
- the act or practice must be directly related to an employee record (being a record of personal information relating to the employee) held by the employer organisation and relating to the individual.
This exemption does not extend to unsuccessful job applicants (since no employment relationship is formed) or contractors.
5. Foreign Workers
5.1 Limitations on the Use of Foreign Workers
Employers and foreign workers (excluding New Zealand citizens) must meet strict requirements to be able to work full-time lawfully in Australia. New Zealand citizens are able to work in Australia without a business sponsorship. Foreign employees seeking a short-term working period of up to three months can do so if supported by their employer and the activity is considered of value to the employer or an associated business in Australia.
Employers may sponsor foreign workers to obtain a visa to work lawfully in Australia for longer periods. With some exceptions, the worker must be on a list of skilled occupations. Employers must be a registered sponsor with the Department of Immigration.
Relevant visas include Temporary Skill Shortage Visas (one to four years' duration with no geographical restrictions) and Regional Sponsored Migration Scheme Visas (at least two years’ employment for work done in a regional area). In each instance, the worker must either have the skills to perform the occupation or undergo a skills' assessment, unless an exemption applies.
If the job is on the list of skilled occupations and the standard visa programmes are not available, it may be possible to enter into a labour agreement with the Australian government. Labour agreements are usually in effect for five years and provide for visas to be granted without the usual visa requirements being met. The visas available under a labour agreement are the Temporary Skill Shortage Visa and the Employer Nomination Scheme Visa. Salaries paid to sponsored foreign workers must meet minimum levels as set by the Department.
The Employer Nomination Scheme Visa can be used for permanent residency sponsored by an Australian business, either upon initial application or after three years working for the employer in Australia. A more limited skilled occupations list applies.
5.2 Registration Requirements
Registration may be required for some occupations, eg, doctors, nurses and lawyers. If registration is required, this will have to be obtained as part of the application process. Occupation skills' assessments by a relevant nominated authority may be required for permanent residency applications.
6. Collective Relations
6.1 Status/Role of Unions
Trade unions, enterprise associations (an association of member employees performing work in the same enterprise) and employer associations are legally recognised entities which are required to be registered with the Registered Organisations Commission. This Registered Organisations Commission and the FWC have split responsibilities for the regulation of these unions and associations.
In addition to the unions’ key roles of acting as the bargaining representatives for employees in relation to enterprise agreements, as set out below, trade unions and enterprise associations have broad rights to enter workplaces to:
- engage in discussion with workers who are entitled to be represented by that union and who are willing to meet with them; or
- investigate suspected breaches of modern awards, enterprise agreements or other workplace-related laws (such as work, health and safety laws).
Unions commonly act as advocates for employees in disputes with their employer and often initiate proceedings on behalf of employees with respect to certain workplace-related laws.
6.2 Employee Representative Bodies
There is no broad legislative framework for employee representative bodies or committees in Australia. There are, however, State and Territory laws relating to work health and safety which provide for the structure, rights and processes of health and safety committees and representatives. The main functions of such committees are to co-operate with the employer and other relevant parties in developing and carrying out measures to improve the safety of workers.
Enterprise agreements (addressed in 6.3 Collective Bargaining Agreements) may also provide a framework for the structure and rights of employee representative committees, which are generally limited to matters of work health and safety or major changes in the workplace.
6.3 Collective Bargaining Agreements
Employers and employees may negotiate collective agreements, referred to as "enterprise bargaining agreements", based on terms and conditions that must be better overall when compared to the minimums under applicable modern awards.
Modern awards set the minimum terms and conditions across the whole of industries and occupations in Australia.
The mandatory terms that must be included in enterprise agreements relate to the coverage and term of the agreement, consultation, flexibility and dispute resolution.
For genuinely new businesses, activities, projects or undertakings, employers and unions can bargain directly for a "greenfields agreement", without employees being involved or employed by the new enterprise.
When bargaining for such an agreement, the employer and employees may nominate a bargaining representative. Unions are the default representative for its member employees, unless revoked or another appointment is made by the employee. Bargaining must be in accordance with the prescribed good-faith bargaining requirements, which includes attending to and participating in meetings and genuinely considering a bargaining representative’s proposals. However, good-faith bargaining requirements do not require parties to make concessions or reach an agreement on terms to be included in the agreement.
Employees are able to take protected industrial action by striking or imposing partial work or overtime bans. However, protected industrial action may only be taken by employees when they are negotiating a new enterprise agreement and subject to certain notice and procedural requirements being satisfied. Employers may take responsive protected industrial action by locking out employees.
Once an enterprise agreement is made by the employer and employees, it must be approved by the FWC. It will then operate for its nominated term for a maximum period of four years and will continue to apply to the employer and employees even after its nominated expiry date, unless it is replaced or terminated.
There are also certain circumstances involving the acquisition of a business and the transfer of employees where enterprise agreements can transfer to the new employer and continue to apply to the transferring employee and the new employer, until replaced or terminated. In some instances, new employees of the new employer can also be covered by the transferring enterprise agreement. Applications can be made to the FWC for orders in relation to transfer of enterprise agreements, such as an order that the transferring enterprise agreement will not cover transferring employees.
7. Termination of Employment
7.1 Grounds for Termination
An employer may dismiss an employee by giving him or her the required period of notice without having a reason, or without notice for serious misconduct. Employees are able to challenge their termination in certain circumstances, as set out below.
Different procedures apply or are recommended, depending on the reason for termination and the employee’s ability to bring a claim. Where an employee is able to bring an unfair dismissal claim, the employer must have a valid reason for the termination and follow a fair process. Where the reason for the dismissal is the employee’s capacity, conduct (other than serious misconduct) or performance, this will generally involve a series of discussions with the employee and the giving of warnings.
Additional requirements apply where the termination is due to redundancy (which arises where the employer no longer requires anyone to perform the position held by an employee). For employees who are covered by an award or enterprise agreement, consultation must take place in accordance with the consultation provisions of the award or enterprise agreement. To avoid an adverse unfair dismissal outcome, redeployment to an available and suitable role within the employer’s business or the business of an associated entity must be considered.
Where 15 or more employees are to be made redundant, the employer has an additional obligation to notify the government employment agency and the union for any employees who are union members.
7.2 Notice Periods/Severance
Unless termination without notice is justified, the FW Act requires that employers give employees a specified minimum period of notice for the termination to be effective. The required minimum notice is a sliding scale ranging from one week (for employees with up to one year's continuous service) up to four weeks (for employees with more than five years’ continuous service). An additional one week's notice is required for employees who are over 45 years of age and have more than two years’ continuous service.
Longer periods of notice can also be specified in enterprise agreements and contracts (which may link to policies that are legally binding). An employer should give the longest period of notice legally applicable.
Redundancy pay (or severance) is payable in addition to minimum period for notice of termination in the FW Act. The FW Act sets out a minimum redundancy payment scale based on years of service. To qualify for a payment, employees must have at least one year's continuous service. The minimum payment is four weeks’ pay for employees with at least one year's service and the highest payment is 16 weeks’ pay for employees with nine years' but less than ten years’ service. After ten years’ service, the required redundancy payment is 12 weeks’ pay. “Pay” is calculated by reference to base pay for ordinary hours and excludes bonuses.
It is possible that an enterprise agreement, employment contract or a legally binding company policy may provide for more generous redundancy benefits.
Consultation obligations must be met with award and enterprise agreement employees (see 7.1 Grounds for Termination).
There is no legal requirement for external advice or authorisation; however, it is recommended that employers obtain legal advice before proceeding with redundancies.
7.3 Dismissal for (Serious) Cause (Summary Dismissal)
Termination without notice is permitted where the employee commits an act of serious misconduct. Serious misconduct is a breach of contract by the employee that is serious enough to warrant immediate termination because it demonstrates an intention by the employee not to be bound by his or her employment contract. Employment contracts commonly include examples of when termination for serious misconduct will be justified, including but not limited to where the employee is charged with a criminal offence. The Fair Work Regulations 2009 (Cth) also have a definition of serious misconduct which includes examples of theft, fraud, assault, being intoxicated at work and refusing to carry out a lawful and reasonable instruction.
For employees who are able to bring an unfair dismissal claim, they must be given details of the allegations against them, an opportunity to explain their conduct and be told the reason for termination. Procedurally, an unreasonable refusal by the employer to let the employee have a support person at any discussions related to the dismissal is a matter taken into account in an unfair-dismissal claim context.
7.4 Termination Agreements
Deeds of release or settlement/termination agreements are permitted in Australia. They can be used at the time of termination and are standard in the settlement of claims. They are most commonly in the form of a deed of release. The deed must be in writing, signed, witnessed (if executed by an individual outside Victoria) and stated to be a deed. It will only become effective on the date the parties indicate (by words and by the conduct and the circumstances surrounding the execution of the deed) that they intend to be bound.
Releases are not able to cover statutory workers' compensation claims (which relate to workplace injuries) or claims under superannuation legislation (which is a compulsory retirement-funding scheme).
7.5 Protected Employees
Employees who are covered by a modern award or enterprise agreement or whose earnings are less than the high-income threshold under the FW Act (currently AUD153,600) are able to bring an unfair dismissal claim. Earnings include base salary, salary sacrificed amounts and agreed value of non-monetary benefits. The high-income threshold is indexed annually. Service thresholds also apply; six months for an employee of a business with 15 or more employees and one year for employees of a business with fewer than 15 employees.
The FW Act also contains prohibitions on termination for specified reasons. These include where the reason is because of a workplace right (such as a right under the FW Act or a right to make a complaint or inquiry in relation to an employee’s employment), discriminatory grounds (including race, sex, age) or an employee’s temporary absence through illness or injury or engagement in industrial action. To avoid an inference of the above unlawful reasons being found to be the reason for termination, it is recommended that employees are notified, in writing, of the lawful reason(s) for termination, such as due to redundancy or because of performance or conduct concerns.
8. Employment Disputes
8.1 Wrongful Dismissal Claims
Breach of Contract
A breach of contract claim is available where an employee alleges that their dismissal constitutes a breach of an express or implied term of his or her contract. A breach of contract claim may be commenced in the State, Territory or Federal Courts (depending on the value of the claim and the contents of the allegation of breach) of the jurisdiction most closely connected to the claim.
The successful party in breach of contract claims will ordinarily be awarded their costs of the proceedings on an indemnity or party/party basis. Because of the cost implications, breach of contract claims are generally commenced for claims seeking a substantial award of damages or are attached to another claim (such as a general protections claim).
8.2 Anti-discrimination Issues
Australian Federal, State and Territory laws prohibit discrimination of employees based on certain grounds or attributes. These grounds and attributes include:
- sex, sexual orientation, gender identity or intersex status;
- marital or domestic status, family or carer’s responsibilities or pregnancy;
- political opinion; and
- social origin.
These attributes vary across the Australian, Federal State and Territory anti-discrimination laws. A claim of unlawful discrimination usually involves a claim that an individual or company has engaged in an act or omission based on one (or more) of the applicable attributes that result in some harm or less favourable treatment.
Direct and Indirect Discrimination
The types of discrimination that apply to most of these protected attributes include:
- direct discrimination that occurs when a person or group of people is treated less favourably than another person or group in the same (or materially the same) circumstances because of a protected attribute (listed above);
- indirect discrimination that occurs when a condition, unreasonable rule or policy that is applied universally disadvantages a group of people who share a particular protected attribute (listed above);
- harassment that occurs where an individual behaves in a manner to intimidate, insult, or humiliate, or places an individual in a hostile environment. The most common types of harassment that occur in an employment context are sexual harassment and disability harassment; and
- victimisation that occurs where an individual is threatened or suffers detriment because they have:
(a) lodged or propose to lodge a complaint of discrimination or harassment;
(b) provided information regarding an internal investigation or external agency investigating a discrimination complaint;
(c) reasonably asserted their rights or supported someone else’s rights under anti-discrimination laws.
(See also allegations of victimisation under whistle-blower provisions in 8.1 Wrongful Dismissal Claims.)
Burden of Proof
In Australia, successful claims of discrimination must be proved on the balance of probabilities. Complainants alleging direct discrimination are generally required to establish all the elements of the offence. The onus in claims of indirect discrimination under the Disability Discrimination Act 1992 (Cth), Sexual Discrimination Act 1984 (Cth) and Age Discrimination Act 2004 (Cth) is on the employer to prove that the condition, rule or policy was reasonable, having regard to the circumstances of the case.
Damages available in discrimination proceedings generally include:
- economic loss – past and future income loss of the complainant;
- general damages – non-economic loss resulting from the complainant’s pain, disability, loss of enjoyment of life, disfigurement or loss of expectation of life;
- pecuniary loss – the complainant’s out-of-pocket expenses for medical and other treatment expenses, aids and appliances and domestic and personal care;
- aggravated or exemplary damages – awarded where increased distress is suffered by the complainant because of the defendant’s conduct or where the court intends to deter other potential wrongdoers.
Other relief in discrimination claims include declarations, injunctions, a variation of contract (in limited circumstances), apologies and retractions.
9. Dispute Resolution
9.1 Judicial Procedures
Fair Work Commission
The FWC is a specialist employment tribunal which is responsible for conciliating and arbitrating collective and individual employment disputes.
As previously noted, the FWC has jurisdiction to conciliate and arbitrate unfair dismissal claims. The conciliation of general protections' claims is usually commenced in the FWC, which may arbitrate the claim if both parties consent.
Class actions or “representative proceedings” for employment law matters are becoming increasingly common in Australia. Class actions in the Federal Court may be commenced where seven or more people have a claim against the same person. The claims must: (i) be in respect of or arise out of the same, similar or related circumstances and (ii) give rise to a substantial common issue of law or fact, both being requirements which Australian courts have interpreted broadly to permit representative proceedings. Australian class actions generally operate on an “opt-out” system where all members within the relevant class are bound by the judgment (without needing to obtain their consent to be part of the group) unless they opt out. The court can also order that proceedings should not continue on a representative basis if it is in the interests of justice to do so (for example, where the costs of individual actions would be less than the class action).
In court proceedings, a party is generally entitled to be represented by a legal practitioner. In some employment proceedings, a party is not entitled to be represented, such as claims for amounts under the FW Act or a modern award where the amount which may be awarded by the court is less than AUD20,000.
Similarly, a party is not entitled to be represented by a legal practitioner in proceedings before the FWC without the permission of the FWC.
9.2 Alternative Dispute Resolution
The parties are generally free to agree to have disputes arising between them determined through arbitration. This includes pre-dispute agreements including employment contracts. Where the parties have agreed to settle a particular dispute through arbitration and an action is nonetheless brought before a court, the court will generally stay those proceedings and instead refer the dispute to arbitration in accordance with that arbitration agreement.
9.3 Awarding Attorney’s Fees
The FWC has a general power to order a party to pay the legal costs of another party where: (i) the applicant’s claim (or the other party’s response to the claim) was vexatious or without reasonable cause and (ii) it should have been reasonably apparent to the party that its position in the proceedings had no reasonable prospect of success.
The Federal Circuit Court or Federal Court of Australia has similar powers to make an order of costs in favour of the successful party for claims arising out of the FW Act.
The FWC has additional powers to award costs in respect of particular proceedings. For example, the FWC may award costs in respect of an unfair dismissal claim against a party if their unreasonable act of omission in relation to their conduct in the proceedings caused the other party to incur costs.
There are similar limitations on the court’s power to award costs in matters arising under the FW Act (such as a general protections' claim).
In claims for breach of contract, successful parties may receive a costs award in their favour on an indemnity or party/party basis for claims made in the State, Territory or Federal Court (see 8.1 Wrongful Dismissal Claims).
Our COVID-19 hub collates important articles and legal advice on various aspects of COVID-19 on how it may impact your business.