Significant reforms to the federal workplace relations laws came into effect on 1 July 2009, with the commencement of the Fair Work Act 2009 (Cth) (FW Act).

In light of the main constitutional underpinning of the FW Act (the corporations power), corporations are covered by the federal workplace relations laws. As a result, this guide will concentrate solely on the federal system.

The major features of the federal workplace relations system under the FW Act include:

  • A new safety net of minimum terms and conditions of employment that took effect on 1 January 2010, the main components of which are the 10 National Employment Standards (NES) and modern awards
  • The creation of a new tribunal, Fair Work Australia (FWA), with broad powers giving it a central role in the bargaining process
  • The introduction of good faith bargaining requirements that apply to all who participate in the bargaining process
  • A streamlined general protections regime that protects employees against discriminatory, unfair or unlawful conduct
  • Enhanced powers for the Fair Work Ombudsman (an independent Commonwealth agency responsible for enforcing compliance with federal workplace laws).

A large number of employees in the Australian labour market are award-free employees. This means that the terms and conditions of their employment may be negotiated privately between the employee and the employer and embodied in a common law contract of employment (either verbal or written). The contract of employment between the employer and the employee is subject to specific state or federal legislative provisions (including the NES) regarding:

  • Annual leave
  • Personal leave (sick leave, carer's leave and compassionate leave)
  • Parental leave
  • Long service leave
  • Minimum rates of pay
  • Termination of employment
  • Workers compensation
  • Equal employment opportunity
  • Unlawful discrimination and sexual harassment
  • Occupational health and safety.

Another feature of the Australian labour market is collective bargaining between employers, employees and unions. In the main, collective bargaining takes place in industries where employment terms and conditions are generally covered by an award or there is a high union presence, although historically bargaining has also taken place directly between employers and employees without the involvement of a union.

National Employment Standards

The 10 key minimum entitlements under the NES relate to the following matters:

  • Maximum weekly hours
  • Requests for flexible working arrangements
  • Parental leave and related entitlements
  • Annual leave
  • Personal/carer's leave and compassionate leave
  • Community service leave
  • Long service leave
  • Public holidays
  • Notice of termination and redundancy pay
  • Fair Work Information Statement.

The NES cannot be excluded by an enterprise agreement or contract of employment. Further, an enterprise agreement or contract of employment must not provide for conditions of employment less favourable than those set out in the NES and, if they do, the more favourable terms and conditions of employment in the NES will prevail. The inclusion of less favourable conditions of employment may result in an employer breaching the NES, which could lead to a penalty being imposed by a court.

Modern awards

As part of the Federal Government's workplace relations reforms, industrial awards (which set minimum employment conditions on an enterprise or industry basis) underwent a "modernisation" process and came into effect on 1 January 2010. 3,000 former industrial awards were reduced to a smaller number of industryspecific awards (known as "modern awards").

Most modern awards provide for the following:

  • Minimum wages
  • Overtime payments for work in excess of normal hours
  • Hours of work and rostering
  • Penalty rates for shift work and weekend work
  • Special rates for dirty or dangerous work.

It is illegal to contract out of awards – employers cannot make agreements with their employees that are designed to circumvent award provisions, irrespective of employee consent. Action may be taken by an employee, the Fair Work Ombudsman or unions seeking the enforcement of award provisions against an employer.

Enterprise agreements and good faith bargaining

The bargaining regime under the FW Act encourages employers to negotiate terms and conditions of employment at the enterprise or workplace level. The intention is that the negotiated terms and conditions of employment are then embodied in an enterprise agreement.

One of the most significant reforms introduced by the FW Act is the good faith bargaining requirements imposed on parties who are negotiating an enterprise agreement. The good faith bargaining requirements seek to regulate the behaviour of the negotiating parties (known as bargaining representatives), including the manner in which they deal with each other.

Under the good faith bargaining requirements, the bargaining representatives must:

  • Attend and participate in meetings at reasonable times
  • Disclose relevant (not confidential) information in a timely manner
  • Respond to proposals in a timely manner
  • Give genuine consideration to the other representatives' proposals and provide reasons for responses
  • Refrain from capricious or unfair conduct that undermines collective bargaining and freedom of association
  • Recognise and bargain with other bargaining representatives.

While bargaining representatives are required to comply with the good faith bargaining requirements, the FW Act expressly states that the requirements do not require any of the bargaining representatives to make concessions during bargaining or for the bargaining representatives to reach agreement on the terms that are to be included in the agreement.

FWA can make orders to enforce compliance with the good faith bargaining requirements. The orders that may be made by FWA include determining whether a majority of employees want to bargain if the employer has not agreed to bargain, and the scope of the proposed agreement to ensure it covers the appropriate group or category of employees. FWA may also issue bargaining orders if a party is not meeting the good faith bargaining requirements or issue a serious breach declaration if serious and sustained breaches of a bargaining order are occurring that significantly undermine the bargaining process.

A consequence of a serious breach declaration is that FWA may, in certain (albeit rare) circumstances, arbitrate an outcome and make a workplace determination to finalise the terms and conditions of employment.

Before it can start to operate, the enterprise agreement must be approved by FWA. One of the matters that must be satisfactorily addressed for the agreement to be approved is that it must pass what is known as the "better off overall" test. In essence, the test focuses on whether there is, on balance, a reduction in the employee's overall terms and conditions of employment measured against any relevant award and the NES benchmark. If there is such a reduction, then the agreement does not pass the test and may not be approved by FWA.

Holidays and leave entitlements

The NES provides for four weeks (20 business days) of paid annual leave per year, with the timing of holidays to be agreed between employer and employee (although directions to take leave can be given in certain circumstances). The NES also provides for 10 paid public holidays per year, with the ability for additional public holidays to be set or substituted.

Generally, all employees are entitled to three months' long service leave after 15 years' continuous service with one employer and paid pro rata long service leave after 10 years. In some states, the period of continuous service to qualify for the leave is less than 10 years.

Employers' obligations

Employer dealings with employees are covered by a number of award and legislative provisions.

Unfair dismissal laws in the FW Act only apply when an employee has completed a "minimum employment period", which is 12 months for a "small business employer" (less than 15 employees) and six months for other employers. Under these laws, the employer may not dismiss an employee in circumstances that are "harsh, unjust or unreasonable", ie unfair, although some senior employees will not be entitled to make such a claim (due to the level of their remuneration taking them beyond the jurisdictional coverage of the unfair dismissal laws). An employee can be reinstated (with back pay) or given compensation of up to the value of six months' remuneration if the termination is found to be unfair.

Employees whose jobs cease to exist (and who are made redundant) may be entitled to additional severance pay entitlements under the NES, in awards or possibly in the employee's contract of employment or applicable policy.

Employers must retain records regarding their employees' wages, annual leave, time keeping and accidents (specific advice should be sought regarding the period of time records must be retained by the employer).

General protection

The FW Act introduces a simplified and expanded set of general protections against discriminatory, unfair or unlawful conduct. The general protections prohibit coercion, misrepresentation, unlawful termination, discrimination and certain other conduct, creating civil remedy provisions that can be enforced in a court.

The general protections protect "workplace rights" as defined broadly in the FW Act. The general protections prohibit "adverse action" being taken against a person when that person decides to, or not to, exercise a "workplace right" or engage, or not engage, in "industrial activities". An employee is also protected from adverse action because of the employee's race, colour, sex, age and other such prohibited grounds.

Workers' compensation

Compensation to workers arising from workplace injuries comes under a number of state and federal statutes. In general, where any worker suffers personal injury in the course of their work, they are entitled to compensation. Most state workers' compensation schemes pay a percentage of the injured employee's preaccident ordinary time earnings.

Union memebership

The general protections in the FW Act referred to earlier also protect an employee from adverse action because of their decision to be, or not to be, a member or officer of a union or to, or not to, engage in industrial activities. No industrial tribunal can compel someone to belong to a union. There is no power to make award provisions that demand a "closed shop", ie a union-only workplace.

While "closed shops" are prohibited at law, they can and do operate in certain industries.

Under the FW Act it is illegal for employers to dismiss, cause harm or otherwise prejudice employees because of union membership. It is also illegal to refuse employment on that basis.

Industrial action

Australia's pluralist society sees strikes and other industrial actions occur, though its industrial relations record has improved dramatically, with far fewer working hours lost through industrial action.

Employers may restrain unlawful strikes by applying for an order under the FW Act or by issuing common law injunctions. Legislation also prohibits certain types of boycotts. Award breach actions can also be taken out by employers against unions.

Lawful industrial action by employees and lawful lock-out by employers are available during the bargaining of an enterprise agreement, but only after a secret ballot of affected employees that approves the taking of industrial action.

Affirmative action and equal employment opportunity

Federal and state legislation prohibits sexual harassment and discrimination on any grounds including sex, marital status, impairment or imputed impairment, religious or political beliefs, race, pregnancy and age. Employers need to consult the specific legislation as some states cover additional aspects such as criminal records.

The Equal Opportunity for Women in the Workplace Act 1999 (Cth) also requires employers with 100 or more employees to develop and implement an affirmative action program. This legislation does not seek to establish compulsory minimum quotas – it requires only that employers set objectives and forward estimates.

Compulsory retirement age has been outlawed in most jurisdictions.

Workplace health and safety

Around Australia, all employers owe a common law duty to their employees to take reasonable care to avoid realistically foreseeable risks of injury. Statutory provisions in state legislation also impose general duties on employers to provide safe workplaces and obligations to provide protective measures, including for machinery. Breaches can result in prosecution and substantial penalties.

Sweeping new national workplace safety laws came into effect on 1 January 2012, but only in some states and territories.

Most Australian workplaces are smoke-free.

Employees and business sales

No legislation in Australia provides for employees to automatically transfer to a buyer. When a business is sold, sellers must terminate existing employment contracts and buyers must then make employment offers. In some cases, buyers may be bound by prior terms and conditions of employment set out in enterprise agreements.


Australia's federal Department of Immigration and Citizenship administers migration to, and temporary entry into, Australia. A number of initiatives exist to assist businesses, including having department branches in Canberra and business centres in each state and territory.

Government considers that Australian business must have access to overseas skills, ideas, contacts and technology, and may need to recruit overseas personnel. Benefits are seen in attracting business people to establish or join businesses in Australia and in overseas companies gaining access to Australia's skilled labour force, industries, developed market and natural resources.

Temporary entry for employment

All visitors to Australia must hold a visa. Depending on the length of stay and the purpose for which a visa is sought, categories available to employees and business people include:

Business Electric Travel Authority/eVisa Short Stay Business Visa

A Business Electronic Travel Authority/ eVisa may be applied for by citizens of certain countries, while a Short Stay Business Visa may be applied for by citizens of any country.

Their purpose is to allow genuine business visitors to undertake business-related activities such as attending meetings, conducting business negotiations and exploratory business visits. The visas do not allow the visa holders to work in Australia.

Both visas are normally granted for multiple entries of up to three months each within a 12-month period.

Sponsored Temporary Business Long Stay (subclass 457) Visa

For Australian and overseas businesses wanting to bring foreign workers to Australia for up to four years, this is the most commonly used visa subclass.

Employers must sponsor the visa holder and will be subject to certain sponsorship obligations. There is no limit on the number of entries to and exits from Australia, as long as they occur during the visa's life span. The visa holder's dependent family members, for example spouse and children, can be included in the application.

Local or foreign business employers wanting to use this program must be approved as business sponsors. In addition, both the position to be filled and the intended employee must meet certain requirements.

In overview, the employer must:

  • Obtain approval to sponsor overseas workers
  • Nominate the positions for which it intends to recruit those workers (from a list of eligible occupations)
  • Cooperate with the Department in its monitoring requirements
  • Pay the employee a market-level salary (which must exceed a certain threshold value)
  • Meet a number of obligations, and certain costs, as part of the program.

The employee:

  • Must apply for and satisfy all criteria for their visa, including English language ability
  • May not work in Australia for any employer other than their sponsor.

Service sellers

Of use to employers supplying services into Australia, this program allows representatives to be sent to Australia to negotiate or enter into service supply agreements with Australian businesses. They cannot provide the services directly; they can only engage Australian providers to do so. Relating only to services and not the sale of goods and other products, the visa puts no limit on the number of times a successful applicant can enter and leave Australia during its life span, which is normally six months.

As there are no sponsorship or nomination requirements, this option may be more attractive to overseas employees, depending on the circumstances. Importantly, service sellers must not be employed by a company in Australia.

Labour agreements

This option requires a sponsoring organisation (for example an employer, industry association or group of employers), the Federal Government (through the Department of Immigration and Citizenship and the Department of Education, Employment and Workplace Relations) and employees to collaborate together.

These parties can negotiate a labour agreement in special circumstances not covered by standard sponsorship provisions. For example, a labour agreement might be used where a proven labour shortage exists in a particular sector. Either temporary or permanent visas may be granted.

Business owners, investors and senior executives

A range of visas is available for business owners and investors. The criteria for these vary but applicants will generally need to hold significant assets and have invested, or be willing to invest, some of these in Australian businesses or investments.

While temporary and permanent visas are available, in most cases it isn't possible to apply initially for a permanent business visa. Instead, applicants need to hold a provisional visa for at least two years before applying for permanent residence.

A temporary visa is available to senior executives of major businesses with turnover greater than AU$50 million.


Employer nomination scheme

Australian businesses wishing to engage overseas employees on a permanent basis may access this scheme, which involves the grant of permanent residence. Two stages are involved: first, the employer nominates the position and the employee for the position; then second, the employee applies for their visa.

Proposed employees must be highly skilled, suitable for the position and, unless exceptional circumstances apply, less than 45-years-old.

If the employee hasn't been both working in Australia in the nominated occupation and working for the nominating employer for two years, they must undergo a skills assessment or be receiving a minimum annual salary of at least AU$165,000 (excluding superannuation and allowances) - this figure may be adjusted over time.

State and territory support

Some Australian states and territories also actively encourage migrants and temporary visa holders to settle in their regions. They can assist visa applicants by nominating them and offering them assistance and some dispensations.

Regional support

The Regional Sponsored Migration Scheme (RSMS) is for employers in regional Australia, to fill skilled positions they are unable to fill from the local labour market. Under the RSMS, employers are able to nominate staff from overseas or temporary residents currently in Australia to fill full-time, permanent vacancies. The employees applying for a visa can be either skilled workers from overseas or skilled temporary residents.

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