Section 12 of Doing Business in Australia
Australia’s national employee legislation is known as the Fair Work Act 2009 (Cth) (FW Act). The FW Act applies to all private sector employers (including unincorporated employers) and their employees in all Australian states (other than Western Australia) and the territories. In Western Australia, the FW Act applies to private sector employers which are trading or financial corporations and their employees.
Fair Work Commission (FWC)
FWC is the tribunal responsible for administering the FW Act. FWC’s functions include approving enterprise agreements, ensuring good faith bargaining, varying modern awards and hearing unfair dismissal claims.
The Fair Work Ombudsman is responsible for promoting compliance with modern awards, enterprise agreements and other statutory obligations.
The minimum terms and conditions of some employees are governed by “modern awards”. Modern awards are limited to dealing with 10 entitlements, including minimum rates of pay and overtime. All modern awards must include a flexibility term which allows for negotiated arrangements between an employer and individual employees.
Modern awards do not apply to employees earning over $153,600 (from 1 July 2020), provided their earnings are guaranteed by agreement with their employer. This threshold is indexed from 1 July annually.
Collective bargaining and enterprise
Under the FW Act, there is a focus on collective, as opposed to individual, bargaining. In order for an enterprise agreement to be approved, each employee or prospective employee must be better off under the agreement compared with an applicable modern award.
The FW Act also requires employers and other bargaining representatives to negotiate an enterprise agreement in good faith. This involves the parties complying with specified procedural and behavioural rules in relation to a negotiation known as the good faith bargaining requirements, examples of which include attendance and participation at meetings, genuinely considering proposals by other representatives, not engaging in capricious or unfair conduct, and recognising other bargaining representatives.
FWC may make various orders in relation to bargaining, including the ability to compel bargaining representatives to comply with the good faith bargaining requirements.
National employment standards (NWS)
The FW Act sets out the following 10 minimum statutory conditions of employment, known as the NES: maximum weekly hours of work, a right to request flexible work arrangements, parental leave, annual leave, personal/carer’s leave, community service leave, long service leave, public holidays, notice of termination and redundancy pay, and a right for employees to receive an information statement explaining their rights under the FW Act. These conditions cannot be modified to an employee’s detriment by a contract, award or workplace agreement.
The FW Act contains “general protection” provisions which are intended to protect:
- a person’s “workplace rights”;
- freedom of association (including the right to join, or be represented or not represented by industrial associations; or to engage in lawful “industrial activities”); and
- a person from workplace discrimination.
The FW Act provides remedies where the protections have been contravened.
Other protections include that an employer must not dismiss an employee who is temporarily absent from work due to illness or injury. A person may make an application to FWC claiming a breach of the general protections provisions.
Termination of employment
All employers, regardless of their size, may be subject to a claim to FWC for unfair dismissal once an employee’s probationary period is completed, assuming no other jurisdictional objection applies. Some employees are not eligible to make claims for unfair dismissal, including casual employees. However, these employees may have other kinds of claims (such as claims regarding workplace rights).
A dismissal is not unfair when it occurs because of a “genuine redundancy”. A genuine redundancy occurs if an employer no longer requires an employee’s job to be performed because of operational requirements, such as an operational restructure, or, head count reduction and the employer complies with consultation obligations in an applicable industrial instrument.
A dismissal is not a genuine redundancy if in all of the circumstances the employee should have been redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.
In addition, under the FW Act, it is unlawful for any employer to terminate employees for certain reasons, such as temporary absence due to illness or injury; membership of a trade union; commencing certain legal proceedings against the employer; and certain kinds of discrimination.
All employers must provide notice of termination in accordance with the FW Act.
A contract of employment may be entered into with the minimum of formality. There is no requirement for a contract to be in writing to be enforceable. An employment contract may therefore be valid even if made entirely orally. However, a prudent employer will enter into a written employment contract with an employee upon commencement of the employment and ensure the contract continues to reflect the employee’s position during the course of their employment.
The terms and conditions of an employee’s contract come from various sources. First, some terms are expressly agreed by the parties orally or in writing. Second, there are terms implied into the contract by law, from facts or custom and practice.
The Commonwealth superannuation guarantee legislation currently requires employers to pay a percentage of their employee’s ordinary time earnings (currently 9.5%) to an approved superannuation fund which is independently administered and generally unrelated to the employer. The rate of superannuation contributions increases to 10% on 1 July 2021, then by 0.5% on 1 July of each year until it reaches 12% in 2025.
An employee is not obliged to make any matching or further contribution. Salaries as stated in Australia generally include the superannuation contribution amount. It is important to ensure that each prospective employee understands whether a proposed salary is inclusive or exclusive of the required superannuation contribution.
Work health and safety
Most Australian jurisdictions (the Commonwealth, New South Wales, Queensland, South Australia, Tasmania and both Territories) have uniform legislation dealing with work health and safety legislation. The Government of Western Australia has developed new work health and safety legislation based on the uniform legislation. On 10 November 2020, the Work Health and Safety Bill 2019 (WA) received royal assent. A target date of 1 July 2021 for the commencement of the new legislation and accompany regulations has been set by the WA Government. Victoria has declared to retain its own safety legislation and will not adopt the uniform legislation. There is a duty placed on employers to provide a work environment which is safe and without risk to the health of employees. The various Australian laws reflect the following general themes:
- ensuring that the premises controlled by the employer are safe and without risk to health;
- ensuring that any plant or substance provided for use by the employees is safe and without risk to health;
- ensuring that the systems of work and the working environment are safe and without risk to health;
- providing information, instruction, training and supervision as necessary to employees;
- providing adequate facilities for the welfare of employees at work; and
- consulting with employees in relation to occupational health and safety issues.
Employers are also required to obtain workers compensation insurance for their employees which covers them for workplace injuries.
This guide is current as of April 2021.