Employment, industrial relations and work health & safety

Employment and industrial relations in Australia are predominately governed by the Fair Work Act 2009 (Cth) (Fair Work Act). The Fair Work Act covers all private sector employees in Australia (with a limited exception in Western Australia). The practical application of the Fair Work Act in workplaces is overseen by the Fair Work Ombudsman and the Fair Work Commission. Alongside the Fair Work Act, state laws impose obligations on employers in respect of various employment matters including long service leave entitlements, equal opportunity employment, and workplace health and safety.

Safety net conditions

The Fair Work Act contains minimum standards, known as the National Employment Standards (NES), which apply to the terms and conditions of the employment of employees covered by the Fair Work Act. The NES are as follows:

Hours of work
The maximum weekly hours of work for an employee is 38 hours (subject to the exception of any reasonable additional hours).

Requests for flexible working arrangements
In certain circumstances, employees who have worked with the same employer for at least 12 months either in a permanent or casual capacity may request a change in their working arrangements. This may include changes to the hours, patterns, or locations of their work. A request for a flexible working arrangement may only be refused on reasonable business grounds.

Since 6 June 2023, employers must follow a more prescriptive process when determining whether to accept or refuse an employee's request for a flexible working arrangement. If employers intend to refuse a request, they must provide detailed reasons for doing so and propose any potential alternative options to accommodate the employee's needs. The Fair Work Commission will be able to arbitrate a dispute relating to flexible working arrangements and make orders in respect of an employee's request. The grounds to make a request will also be extended to include where an employee is pregnant, caring for a family member over the age of 55, or experiencing domestic violence.

Annual leave
All employees (other than those employed on a casual basis) are entitled to four weeks of paid annual leave each year.

Parental leave
Employees, including certain casual employees, who will or have primary responsibility for the care of a child are entitled to 12 months of unpaid parental leave and are able to request an additional 12 months of unpaid leave. An employee may also take their unpaid parental leave in the event they experience a stillbirth. Since 6 June 2023, new rules apply to employers who intend to reject an application from an employee who requests an extension of their unpaid parental leave.

Employees who earned $168,865 or less in the 2022-23 financial year will generally be eligible for federal government-funded Parental Leave Pay for 18 weeks. For children born or adopted from 1 July 2023 onwards, this will increase to 20 weeks. Employers required to provide Parental Leave Pay are reimbursed by the government. It is important to recognise that many employers decide to provide additional parental leave entitlements above these minimum requirements.

Personal/carer’s leave
All employees (other than those employed on a casual basis) are entitled to 10 days of paid personal/carer’s leave each year. Where an employee (including an employee employed on a casual basis) has exhausted their entitlement to paid leave, they are entitled to two days of unpaid carer’s leave for each occasion.

Compassionate leave
All employees (other than those employed on a casual basis) are entitled to two days of paid compassionate leave for each occasion where a member of their family or household dies, contracts a personal illness, sustains a life-threatening personal injury, or suffers a miscarriage.

Family and domestic violence leave
Under the NES most employees, including part-time and casual employees, are now entitled to 10 days of paid family and domestic violence leave each year. Leave renews each year but does not accumulate year-to-year. For employers with fewer than 10 employees, these changes come into effect on 1 August 2023.

Community service leave
All employees (other than those engaged on a casual basis) who engage in eligible community service activities may take unpaid leave for the duration of the activity.

Public holidays
All employees are entitled to be absent from work on gazetted public holidays (subject to the exception where an employee is reasonably required to work). Permanent employees are entitled to be absent whilst receiving their ordinary pay.

Notice of termination and redundancy pay
An employer is unable to terminate an employee’s employment without the provision of written notice on the day of the termination (with the length of the notice depending on the duration of service of the employee). An employee may also be entitled to redundancy pay if their employment terminates because of the redundancy of their role.

Casual employment conversion
An employer has an obligation to offer permanent employment to casual employees who have been employed for 12 months, have worked a regular pattern of hours for at least six months and could continue working the same pattern as a part-time or full-time employee.

Fair Work Information Statement
All new employees must be presented with a Fair Work Information Statement which contains information about the NES, collective agreements and modern awards, trade union rights, and termination of employment. There is a separate Fair Work Casual Employment Information Statement. A Fixed Term Contract Information Statement will soon be introduced, which will need to be provided to some employees (discussed further below).

Awards

Employees in Australia may be covered by an industry- specific or occupation-specific modern award which sets out minimum terms and conditions of employment for those employees who fall within the scope of the award. Modern awards generally contain terms dealing with issues including minimum wages, hours of work, types of employment, consultation, and dispute resolution.

Enterprise agreements

Alternatively, employees in Australia may be covered by an enterprise agreement. An enterprise agreement is negotiated by an employer and its employees (or a trade union on behalf of the employees). Employees covered by enterprise agreements must be better off than they would be if the relevant modern award applied to them.

In some industries, trade unions remain prominent as representatives of their employee constituencies, at both the individual and collective bargaining levels. Australian employees’ rights to associate with (or not associate with) a trade union are protected. The Fair Work Act prohibits the adverse treatment of an employee based on their union membership (or lack of union membership). The Fair Work Act also protects employees’ rights to be represented by an employee organisation during a period of collective bargaining.

Recent amendments to the Fair Work Act have created new enterprise bargaining streams to provide employees and unions with enhanced abilities to bargain for multi-enterprise agreements.

Individual employment contracts

Employment agreements
Employers in Australia are not required to enter into written contracts with their employees. However, most Australian employees will be covered by some written allocation of rights, responsibilities, and risks. These include contracts at the individual level, “enterprise agreements” at the enterprise level, and “modern awards” at the industry and/or occupational level. Many awards require an employer to provide certain details of the employment in writing. An employment contract cannot exclude the NES.

Pay
Most workers in Australia are entitled to be paid a national minimum wage. Employers who pay below the national minimum wage may be liable for large penalties. The national minimum wage is less for employees under the age of 21 and for some apprentice employees. The national minimum wage does not apply to independent contractors who are not deemed by law to be employees, although some independent contractors are regulated by some forms of minimum standards. There are also laws which offer independent contractors recourse if the contract or its terms are deemed to be “unfair”.

Employment benefits
Australia operates a compulsory superannuation or pension scheme. The provision of other benefits (including health or medical benefits) is at the discretion of the employer.

Employee incentive schemes
As part of the Australian government’s commitment senior executives and employees of companies in early stages of growth are often given access to incentive schemes. These can be structured in various ways. The most common types include share option plans, performance rights plans, and share plans. These strengthen the alignment of interests of employers and employees and are sometimes used as a supplementary means of payment. To encourage employee share ownership and entrepreneurship in Australia, the Federal Government provides taxation incentives that promote the use of employee incentive schemes. The Australian Securities & Investments Commission has also widened the exemptions from various Australian prospectus and other fundraising requirements in respect of employee incentive schemes that are offered to Australian resident employees.

Fixed-term employment contracts
From 6 December 2023, fixed-term employment contracts will be prohibited where the contract is for a term of more than two years. This includes renewable and consecutive contracts for the same or substantially similar work. There are some limited exceptions to this, including:

• where the employee is engaged for specific types of work;
• where the employee earns more than $167,500 per annum or is a casual worker;
• where the position is funded by the government or relates to a governance position of predetermined duration; or
• where the relevant contract is otherwise permitted by a modern award.

Employees commencing a fixed-term employment contract will need to be presented with a Fixed Term Contract Information Statement, as prepared by the Fair Work Ombudsman, before or as soon as practicable after the employment contract is entered into.

These amendments will apply only to new fixed-term employment contracts and extensions. Where a contract purports to exceed the new limits, the term will cease to have effect, which will effectively convert the employment to a permanent position. Employers cannot alter an employment contract to avoid contravening these provisions. Breaches will attract a civil penalty of up to $93,900 (or $939,000 for a serious contravention).

Pay secrecy
As of 6 June 2023, an employee has the right to disclose information about their remuneration and to ask other employees about their remuneration. Pay secrecy clauses in contracts of employment cease to have effect if they hinder these rights. An employer will contravene these provisions if they enter into an employment contract which includes terms inconsistent with these new pay secrecy amendments. Breaches can attract a civil penalty of up to $93,900 (or $939,000 for a serious contravention).

Work Health and Safety

Employers in Australia must comply with Work Health and Safety (WHS) legislation. The WHS legislative regime is state-based and uniform, with the exception of Victoria and Western Australia, which is modelled on national WHS legislation.

Under the WHS regime, employers must do everything reasonably practicable to ensure the health and safety of their workers, any other person at their workplace, and any site connected with their business. This includes monitoring, on an ongoing basis, any risks to health and safety and, where necessary, taking active steps to minimise the risks.

A breach of a WHS law may be a criminal offence which may lead to the prosecution of the employer/company (and its officers) by the requisite authority and the imposition of fines or a custodial sentence for individuals.

Unfair dismissal

Under the Fair Work Act, an employee may bring a claim for unfair dismissal where the termination of their employment was “harsh, unjust or unreasonable”.

In order to be eligible to bring a claim for unfair dismissal, an employee must have been employed for a minimum of six months (or 12 months for those employed by a small business) and (unless they are covered by a modern award or enterprise agreement) earn less than A$167,500 (as at 1 July 2023 – this threshold is CPI-adjusted annually). An employee who has been dismissed due to a “genuine redundancy” will not be protected by unfair dismissal laws.

For small businesses (fewer than 15 employees), the Small Business Fair Dismissal Code prescribes the termination process. If the code is followed, termination is deemed fair, regardless of other considerations.

Discrimination

Discrimination in an Australian workplace will be unlawful where a person is treated less favourably based on their possession of a “protected attribute” — this includes the person’s age, sex, race, disability, or religion. Recent amendments to the Fair Work Act have introduced breastfeeding, gender identity and intersex status as protected attributes. Employers found to have discriminated against an employee will be liable to pay compensation and may be ordered to implement remedial measures.

Bullying

The Fair Work Act contains provisions that prohibit workplace bullying, which occurs where a person or group of people repeatedly act unreasonably towards a person or a group of workers and this behaviour creates a risk to health and safety. Unreasonable behaviour includes victimising, intimidating, threatening, and humiliating.

An employee may apply to the Fair Work Commission for a “stop bullying” order. Except for a fine, compensation, or reinstatement, the Fair Work Commission may make any order it considers appropriate to prevent the employee being bullied.

Sexual harassment

The Fair Work Commission has the power to make “stop sexual harassment” orders. An employee who has been sexually harassed at work can apply to the Fair Work Commission to stop the sexual harassment. Under the Fair Work Regulations, the definition of “serious misconduct” has been amended to now include “sexual harassment”.

The Fair Work Act has recently been amended to include a broad prohibition against sexual harassment in connection with work. While employees still have the option to seek "stop sexual harassment" orders, they can now also apply to the Fair Work Commission to deal with the dispute.

The Sex Discrimination Act 1984 (Cth) has also been amended to include a new Part IIA which introduces a positive duty requiring an employer or a person conducting a business or undertaking to take reasonable and proportionate measures to eliminate, as far as possible, conduct that includes sexual harassment, harassment on the ground of sex, discrimination on the ground of a person's sex, conduct that subjects a person to a hostile workplace environment on the ground of sex and acts of victimisation.

General protections

An employee, prospective employee, or independent contractor may bring a claim under the general protections provisions in the Fair Work Act where their employer has taken “adverse action” for an unlawful reason – e.g. because the person has a workplace right, proposes to exercise a workplace right, or has exercised a workplace right. Unlike a claim for unfair dismissal, there is no minimum period of employment a person must serve in order to make a claim for adverse action. There is also technically no limit on the amount of compensation that an employer may be ordered to pay by a court in the event that it is found to have acted adversely towards an employee.

Casual employment

Under the Fair Work Act, a person will be a casual employee if they are offered and accept employment on the basis that the employer makes no firm advance commitment to continuing indefinite regular work. In considering this definition, only these factors may be taken into account:

• whether the employer can elect to offer work to the employee, and whether the employee can elect to accept or reject work;
• whether the employee will only work as required according to the employer’s needs;
• whether the contract of employment describes the employment as casual; and
• whether the person will be entitled to a casual loading (usually 25%) or a casual-specific rate of pay.

Superannuation

Employers are required to make superannuation (pension) contributions on behalf of their employees. The current minimum level of contribution is 11% of the employee’s gross earnings. This is slated to increase further to 12% in the coming years. Employers who fail to meet the minimum level of support are liable to pay a superannuation guarantee charge which is not tax deductible.

An employee is entitled to nominate the fund into which their employer will make superannuation contributions. In the absence of a nomination, an employer must pay the contributions in accordance with the directions of the Australian Taxation Office.

Employees can access their superannuation once they reach a certain age or in defined circumstances of personal hardship.

Migration and visas

Companies seeking to employ non-Australian overseas staff in Australia need to comply with a range of legislative requirements, including ensuring employees have relevant visas that provide working rights.

The Temporary Skill Shortage (subclass 482) visa (TSS visa) was introduced by the Federal Government in March 2018. The TSS visa has short-term and medium-term streams. The short-term stream provides applicants with occupations on the Short-Term Skilled Occupations List with visas up to two or four years (if an International Trade Obligation applies). The medium-term stream provides applicants with occupations on the Medium and Long-Term Strategic Skills List with visas up to four years.

The introduction of the TSS visa and removal of the former Temporary Work (Skilled) (subclass 457) visa has resulted in the number of occupations eligible for a visa being reduced or having restricted access.

We recommend consulting a migration law specialist for information on relevant visa requirements and conditions.