Australia: Busted - Myths of employment law

We understand employers are busy overseeing the many elements that go into running their business. Managing employees and understanding employer responsibilities is a large part of running a successful operation. Unfortunately, it's not uncommon that we encounter an employer at the wrong end of a claim because they've bought into an "employment law myth" so we've busted a few employment myths for you.

Myth 1: The award doesn't apply if I pay over award rates

In most cases, the provisions of an award will apply to an employee whose role falls within an award even where an employee is paid over the minimum wage rates set by an award.

Employers often mistakenly assume that if they pay over award hourly or weekly rates they do not have to meet other award provisions such as hours of work, holidays, termination, overtime and penalties etc... This assumption is wrong, the award provisions apply even where over award rates are paid.

In the decision of Fair Work Ombudsman v Henna Group Pty Ltd [2012] the Federal Magistrates Court found an employer failed to pay a number of employee entitlements including overtime and penalty rates for weekends, public holidays and accrued leave on termination. The employer company had underpaid its employees a total of $16,036.75. The employer indicated that he was paying above award wages, however, this was not taken into consideration by the Court and the employer was found to have contravened award provisions, the Workplace Relations Act 1988 and the Fair Work Act 2009. The employer company, the sole director and the person responsible for paying the wages were all prosecuted and penalties of $160,000 for the employer company and $30,000 each for the individuals were imposed in addition to the payments owed to the employees having to be paid.

Myth 2: I can always just extend the probationary period of a new employee if I'm unsure about their performance

An employer can only extend a probationary period if the employment contract provides for that extension, or the employee agrees to the extension at the time it is proposed by his/her employer. However, if the probationary period goes beyond the expiration of the minimum employment period, being 12 months for an employer with less than 15 employees and 6 months for a company with 15 or more employees, the extension of the probation period will not prevent an employee who complains of being unfairly dismissed from bring a claim.

Section 383 of the Fair Work Act 2009 sets out the minimum period of employment (as noted above) which is required to have been completed to enable an employee to bring an unfair dismissal claim in circumstances where that employee asserts that the termination of their employment was harsh, unjust or unreasonable.

The minimum period of employment set out in section 383 of the Fair Work Act 2009 will apply irrespective of the probation period agreed to in the contract of employment for the purposes of an unfair dismissal claim.

Conversely, if an employee who has successfully completed a probationary period as set out in their employment contract of for example, three months, but is terminated before he/she has been employed by the employer for six months, he/she will not be able to pursue an unfair dismissal claim as the minimum period of employment required by the Fair Work Act 2009 has not been completed.

Myth 3: Annual leave can always be cashed out

Annual leave cannot be cashed out unless it is done in accordance with section 93 or 94 of the Fair Work Act 2009.

Section 93 of the Fair Work Act 2009 provides that a modern award or enterprise agreement may make provision for cashing out of annual leave provided a balance of 4 weeks annual leave remains. It is important to read the relevant modern award or enterprise agreement and check what requirements are stipulated in that instrument. However, keep in mind that most modern awards do not contain any provision permitting cashing out of annual leave.

Section 94 of the Fair Work Act 2009 provides that an employer and an employee whose employment does not fall under an award or an enterprise agreement, may agree to cash out that employee's accrued annual leave so long as:

  1. a balance of 4 weeks annual leave remains after any part that is cashed out;
  2. the agreement between the employee and employer is recorded in writing; and
  3. the cashed out annual leave must be paid as if the employee was taking annual leave, accordingly, if leave loading is payable when annual leave is taken then it must be paid out when annual leave is cashed out.

Each time annual leave is cashed out a new and separate agreement must be entered into.

Myth 4: I mostly employ permanent casuals

The term "permanent casual" is problematic.

True casual employment is ad hoc, uncertain and irregular.  Employees who work regular, systematic hours and have an expectation of ongoing employment may be deemed permanent employees. The impact of this is that employees who are deemed to be permanent employees may have rights for statutory entitlements (such as to annual leave) despite being paid a casual loading.

Then who is a casual employee?

It is important to keep in mind the decision of Telum Civil (Qld) Pty Ltd v Construction Forestry Mining and Energy Union [2013] FWCFB 2434.  In this matter the Full Bench of the Fair Work Commission held that the meaning of "casual employee" should be drawn from the relevant enterprise agreement or modern award and not from the common law approach. The Full Bench held that where an employee is covered by a modern award or an enterprise agreement that contains a definition of "casual employee", then that definition will apply, and not the more general common law definition.  This approach was said to be consistent with the objectives of the Fair Work Act to ensure that modern awards and enterprise agreements work with the National Employment Standards to provide a fair and relevant safety net of terms and conditions.

This is in contrast to the decision under the Workplace Relations Act 1988 of Williams v MacMahon Mining Services Pty Ltd (2010) 201 IR 365.  In this case a miner who had been working a fixed pattern of 12 hour shifts on a fly in fly out basis was found to be entitled to annual leave even though he had signed a contract clearly designating him as a casual.  The contract provided for termination on one hours' notice. The court found that there was nothing irregular or intermittent about Mr Williams engagement and therefore looked past the contractual description.

Additionally, if a person is casual under the enterprise agreement or award, they may still be able to bring an unfair dismissal claim if they assert the termination of their employment was harsh, unjust or unreasonable as the Fair Work Act 2009 specifically protects casuals who work regular and systematic basis for 12 months.

It is important to be clear with your employees about the nature of their engagement from the outset. But remember, if you begin to treat your casuals as if they are ongoing permanent employees, then they may be deemed to be entitled to the benefits of permanent employment.

Myths busted!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Veronica Lee
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.