Australia: The Safety Net of Employment - Best Practice Guide

The safety net consists of the 10 National Employment Standards (NES) and modern awards, and sets the minimum terms and conditions of employment for all employees in the federal system. Set out below is a snapshot of particular elements of each NES entitlement.


An employer must comply with the NES in relation to each of its employees.

Any attempt to exclude the NES or provide less favourable entitlements will not be effective as the NES entitlement will simply prevail. Such an attempt may also put the employer at risk of breaching the NES, which may result in court proceedings, the imposition of a penalty and/or an order to make good any shortfall.

An employer can agree to supplement the NES by providing more favourable entitlements. Machinery terms that are ancillary or incidental to a NES entitlement are also permitted, eg specifying the manner in which an employee must apply for annual leave. Terms that are ancillary or incidental to the NES or that supplement the NES must not be detrimental to the employee.

Specific provisions in the NES allow modern awards or enterprise agreements to deal with issues that may otherwise be contrary to the NES, eg allowing for the cashing out of paid annual leave.


  • The minimum entitlements in the NES cover standard conditions such as hours of work, leave, public holidays, notice of termination and redundancy pay.
  • 123 modern awards came into effect on 1 January 2010 following an extensive review process that streamlined and simplified thousands of existing awards.
  • The modern awards are either industry based or apply to certain occupations.


Maximum weekly hours of work

An employer may require or request an employee to work additional hours, but only if they are reasonable. An employee may refuse to work the additional hours if they are not reasonable. A non-exhaustive list of factors to take into account when determining reasonableness is included in the NES.

Requests for flexible working arrangements

An employer may refuse a request for flexible working arrangements made by an employee on 'reasonable business grounds'. If it does so, an employee cannot challenge the decision under the Fair Work Act 2009 (Cth) (FW Act) unless the employer and employee have agreed to Fair Work Australia (FWA) or an independent third party dealing with the matter under a contract of employment, enterprise agreement or other written agreement. Depending on the circumstances, an employee may have a remedy available to them under applicable discrimination legislation if their request is refused.

The NES does not specifically identify what may or may not be "reasonable business grounds". Reasonableness should be assessed in the circumstances that apply when the request is made.

Examples of reasonable business grounds include:

  • The effect on the workplace and the employer's business of approving the request, including the financial impact of doing so and the impact on efficiency, productivity and customer service
  • The inability to organise work among existing staff
  • The inability to recruit a replacement employee or the practicality or otherwise of the arrangements that need to be put in place to accommodate the employee's request.

Parental leave

Under the NES, an employee is entitled to unpaid birthrelated or adoption-related leave. The separate labels of maternity and paternity leave are no longer used.

The total period of leave may be 24 months from the date of birth or adoption. The entire period could be taken by one employee or by each member of an "employee couple" separately taking 12 months' leave.

If an employee, either on their own or as a member of an employee couple, wishes to take more than 12 months' leave, the employee may request a longer period from their employer. The period of the extension cannot exceed 12 months less any unpaid parental leave taken, or intended to be taken, by the other member of the employee couple.

An employer may refuse an employee's request for additional parental leave, but only on reasonable business grounds. The comments made earlier about FWA dealing with disputes and examples of reasonable business grounds equally apply here.

The period of "concurrent leave" (the period of leave that may be taken at the same time by the employee and the employee's spouse or de facto partner around the date of birth or adoption) has also been increased to three weeks.

Government-funded paid parental leave became available from 1 January 2011. The government-funded scheme provides eligible working parents with 18 weeks of pay at the minimum weekly wage. From 1 July 2011 employers are expected to act as paymasters under the scheme.



Trevor and Glenys can each take up to 12 months of unpaid parental leave after the birth of their child, ie a total of 24 months so long as the periods do not overlap (but for an initial three week period) and one period starts after the other period ends.

If only Glenys is to take leave, she could take 12 months' leave and could take an additional 12 months' leave if she wanted to, subject to her employer approving the additional period. if Glenys takes the additional 12 months' leave, Trevor is not entitled to any unpaid parental leave.

If Glenys wants to take 18 months' leave, she must seek her employer's approval for the additional six months' leave and Trevor may take six months' leave.

Glenys and Trevor would need to apply to the Commonwealth Family Assistance office for paid parental leave. The employer would receive the money from the government and pay the paid parental leave to the employee directly as a workplace entitlement.

Annual leave

The standard entitlement to four weeks of paid annual leave applies. The NES sets out arrangements for the cashing out of and directions to take leave.

The NES makes it clear that annual leave may only be cashed out in accordance with terms included in a modern award or enterprise agreement or by agreement between an employer and an award/agreement-free employee.

The cashing out of paid annual leave is not permitted if an award or agreement that applies to the employee does not include cashing out provisions. Specific conditions must be met to enable an employer and an award/agreement-free employee to agree to cash out leave.

Leave is to be taken at a time or times to be agreed between the employer and employee. An employer may also require an employee to take a period of annual leave in accordance with terms that may be included in a modern award or enterprise agreement or as agreed with an award/agreement-free employee, but only if the requirement is reasonable.

Personal/carer's leave and compassionate leave

The standard entitlement to ten days of paid personal/ carers' leave and compassionate leave applies, together with the entitlement to unpaid carer's leave for employees who have exhausted their entitlement to paid leave. The entitlement to unpaid carer's leave is extended under the NES to casual employees. The ten day per year cap on the amount of paid carer's leave that could be taken no longer applies.

An employee may also cash out their entitlement to paid personal/carer's leave in accordance with express terms set out in a modern award or enterprise agreement.

The standard entitlement to two days of paid compassionate leave per occasion applies, and casual employees may take unpaid compassionate leave for the same period.

Community service leave

Employees (including casual employees) who engage in an eligible community service activity are entitled to be absent from their employment to engage in the activity.

An eligible community service activity includes:

  • Jury service
  • Voluntary emergency management activity (eg voluntary fire fighting).

The NES sets out the manner and circumstances in which an employee (other than a casual employee) is entitled to be paid while absent on jury service. The entitlement to payment under the NES is capped at 10 days in total, although the entitlement to payment for jury service under an applicable state or territory law would continue to apply if the period of jury service continues beyond the 10-day period.

The NES also does not exclude a state or territory law that provides more beneficial entitlements than the entitlements under the community service leave NES (eg state laws that entitle a casual employee to be paid for jury service).

Long service leave

The current long service leave (LSL) provision in the NES is a transitional provision and will eventually be replaced when the Federal Government develops a uniform national LSL standard. The Government has stated the LSL standard will be developed in consultation with the states and territories.

If any employee does not have an entitlement to LSL under the NES, then the entitlement set out in the applicable state or territory LSL legislation will apply.

Importantly, the state or territory LSL legislation does not form part of an employee's entitlement to LSL under the NES.

An employee will be entitled to LSL under the NES in accordance with any "applicable award-derived LSL terms". In limited circumstances, parties may apply to FWA to preserve genuine agreement-based national LSL schemes.

Public holidays

An employee is entitled to be absent from work on a day or part-day that is a public holiday (as prescribed by the NES) in the place where the employee is based for work purposes.

If an employee is absent from work on a day or part-day that is a public holiday, the employee is entitled to be paid at their base rate of pay for their ordinary hours of work on that day. An employee is not entitled to any payment for absence on a public holiday if they would not have ordinarily worked on that day.

For example, if a public holiday falls on a Tuesday and a part-time employee is only rostered to work on Wednesdays and Fridays, the employee is not entitled to payment for the public holiday that falls on a Tuesday.

Notice of termination and redundancy pay

The length of notice required to be given to an employee will depend on the duration of the employee's period of continuous service. At the lowest end, an employee who has been with their employer for less than a year is entitled to one weeks' notice. At the highest point, if an employee has been continuously employed with an employer for more than five years, they are entitled to four weeks' notice. An employee who is over 45 years old is entitled to an extra week of notice if they have at least two years of continuous service. Written notice of the day of termination must be given.

Employees are entitled to redundancy pay when their employment is terminated at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, or because the employer is bankrupt or insolvent. The entitlement is based on a sliding scale and calculated by reference to the length of the employee's continuous service on termination. An employee who has worked more than one year but less than two years is entitled to four weeks' pay. An employee has been employed continuously for over nine years but less than 10 years is entitled to 16 weeks of redundancy pay.

The length of an employee's service prior to 1 January 2010, when the NES came into operation, is only counted if the employee had an entitlement to redundancy pay under some other instrument, such as a modern award (or enterprise award), agreement or employment contract.

The NES standards for notice of termination and redundancy do not apply to employees such as casual or fixed-term employees, or to an employee summarily dismissed for serious misconduct.

Fair Work Information Statement

The Fair Work Ombudsman has prepared the form of the statement that must be given to an employee who starts employment.

The Fair Work Information Statement can be viewed at


What are an employee's "ordinary hours of work"?

The ordinary hours of work for an employee to whom a modern award or enterprise agreement applies will be the ordinary hours specified in the award or agreement.

Modern awards are required to prescribe ordinary hours, or a means of determining them. While not a requirement, enterprise agreements should also do likewise.

In general terms, the ordinary hours of work for an award/ agreement-free employee are the hours agreed as ordinary hours between the employee and his or her employer. Further rules enable the calculation of ordinary hours where no such agreement is reached and also provide protection for the employee where their agreed hours are less than their usual hours of work.

Who is an "award/agreement-free employee"?

An award/agreement-free employee is an employee to whom neither a modern award, an enterprise agreement or a "transitional instrument" (eg a workplace agreement, an Australian Workplace Agreement (AWA), or a pre-reform certified agreement) applies.

What is an employee's "base rate of pay"?

An employee's "base rate of pay" is the rate payable to the employee for his or her ordinary hours of work, but does not include the following:

  • Incentive-based payments and bonuses
  • Loadings
  • Monetary allowances
  • Overtime or penalty rates
  • Any other separately identifiable amounts.

What is the relevance of an employee's "base rate of pay" under the NES?

An employee's "base rate of pay" is relevant to calculating the amount payable to an employee when they take the various forms of leave under the NES. This includes paid annual leave, paid personal/carer's leave, payment for an absence from work on a public holiday or when a female employee takes paid "no safe job" leave (an entitlement under the parental leave NES).

What is an employee's "full rate of pay"?

An employee's "full rate of pay" is the rate of pay payable to the employee, including all of the following:

  • Incentive-based payments and bonuses
  • Loadings
  • Monetary allowances
  • Overtime or penalty rates
  • Any other separately identifiable amounts (eg amounts otherwise payable to an employee that the employee has agreed, under a salary sacrifice or other arrangement, to forgo in order to receive other benefits).

What is the relevance of an employee's "full rate of pay" under the NES?

An employee's "full rate of pay" applies in relation to two NES entitlements. An employee who receives a payment in lieu of notice on the termination of his or her employment is entitled to be paid at their full rate of pay, as is a pregnant female employee who is transferred to an appropriate safe job (an entitlement under the parental leave NES).

Who is an employee's "de facto partner"?

This term refers to a person who, although not legally married to the employee, lives with the employee in a relationship as a couple on a genuine domestic basis, whether the employee and the person are of the same or different sexes, and also includes a former de facto partner of the employee.

What is the relevance of the definition of "de facto partner" for the NES?

The definition of "de facto partner" has the effect of ensuring that entitlements under the NES to carer's leave, compassionate leave and birth-related unpaid parental leave apply equally to members of both sexes and samesex couples and their children.


Modern awards form the second element of the safety net.

Who is covered?

The modern awards replace pre-reform federal awards (save for enterprise awards), notional agreements preserving state awards (NAPSAs) and state reference transitional awards.

The majority of Australian employees are likely to be covered by a modern award. The modern awards apply to employees and employers on an industry wide or occupational basis. However, modern awards will not generally cover those employees who, because of the seniority of their role, have not traditionally been covered by awards. Modern awards will also not apply to high income employees who have 'guaranteed annual earnings' in excess of a threshold amount ($123,300 for the 2012/13 year and adjusted each year on 1 July). This exemption will only apply if the employer provides a written guarantee to pay the employee annual earnings at or in excess of the threshold.

It is also important to remember that whilst a modern award will cover the majority of employees, it does not mean it will apply directly to their employment. There is a number of excluded employees including those covered by workplace agreements (but not including pre-reform certified agreements), enterprise awards, preserved state agreements and AWAs.

What do modern awards cover?

Modern awards can supplement the NES and also include a further ten minimum terms and conditions of employment that cover:

  • Minimum wages
  • Types of employment (eg full-time, part-time, casual)
  • Overtime and penalty rates
  • Work arrangements (eg rosters)
  • Annualised wage arrangements
  • Allowances
  • Leave, leaving loading
  • Superannuation
  • Consultation and dispute resolution
  • Outworkers
  • Industry-specific redundancy.

Another important aspect of modern awards is the scope to make individual flexibility agreements (IFAs) with any award-covered employees. These IFAs can make individual arrangements that could address example overtime, penalty rates, hours of work and allowances in terms different from the modern award. There are strict conditions that apply to the making of these agreements.

Important to the BOOT

Modern awards also underpin the collective bargaining process for award-covered employees, providing the benchmark against which enterprise agreements will be tested for the "better off overall" test.


Arrangements have been put in place to enable the transition to modern awards. Modern awards contain "model transitional provisions", which include a five-year phase-in period (with 20% annual increments over this period) in relation to changes in entitlements as a result of the modern awards. These transitional provisions commenced on 1 July 2010 (six months after the modern awards have commenced). The matters included in the model provisions relating to phase-in are:

  • Minimum wages, including wages for junior employees, employees to whom training arrangements apply and employees with a disability
  • Casual and part-time loadings
  • Saturday, Sunday, public holidays, evenings and other penalties
  • Shift allowances.

Although modern awards have been in operation since 1 January 2010, the phase-in period commenced on 1 July 2010. The challenge for employees is to correctly apply the transitional provisions as they are phased in over the next five years.

Effect on take-home pay

The "model transitional provisions" also make it clear that the making of the award or the operation of the transitional arrangements are not intended to result in a reduction in the take-home pay of employees covered by the award. In the event that this occurs the employee has a right to apply to FWA for take-home pay orders.

Enterprise awards

Many employers operate under enterprise-specific awards. For these employers the opportunity exists to apply to FWA to modernise their enterprise awards. Enterprise awards that have not been modernised will not apply after 31 December 2013.


It is important that employers take steps to ensure compliance with the safety net (NES and modern awards). The Fair Work Ombudsman has a clear charter to enforce compliance and the FW Act imposes penalties (up to $6,600 for an individual and $33,000 for a corporation) for breaches of terms of the NES or a modern award.


  • Have you reviewed your employment entitlement and leave policies and procedures to ensure they are compliant with the NES and modern awards?
  • Have you made arrangements to communicate the changes to entitlements and respond to queries?
  • Have you reviewed the modern awards that apply to your workers?
  • Have you considered amending your contracts for high-income employees to provide for a 'guaranteed annual earnings' in excess of the threshold?
  • Are your managers informed of the factors that may determine whether an employee's request for flexible working arrangements or additional parental leave is reasonable?
  • Are your employment contracts up to date with the new changes?


Our team has many expert lawyers who can help you comply with the safety net.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions