1 Introduction
The Australian Herbert Smith Freehills Kramer Employment, Industrial Relations and Safety team help our clients achieve success across the full range of workplace issues.
In truth, the legal and social environment has never been more complex for employers. Issues of workplace relations, industrial relations, social expectations and risk management overlap in ways which require employers to be across a full range of potential issues. There are good opportunities too, but increasingly these are only available to employers which have a detailed understanding of these dynamics.
One of the primary changes we have seen across our client base has been the merging of responsibilities across internal teams. The IR team, HR or P&C teams now work closely with the safety team, the reportable conduct hotlines and the legal functions. These teams are now working closely together to ensure legal compliance but more importantly to drive productivity and growth for their business.
We remain exceptionally proud to partner with these clients and help them achieve success for their workforce and for their business.
We hope you enjoy this annual guide and find it a useful reference tool across the full range of employment topics which impact your role. Given legal developments over recent months, many of the chapters in this Guide have been refreshed and updated. We have taken into account the most recent reforms
across Australian State and Federal laws, as well as drawing on the leading cases and decisions which continue to shape the employment relationship in Australia.
Resilience is key, but flexibility is challenging
The global marketplace for Australian goods and services is increasingly complex. Employers which are able to shape their workforce to improve productivity stand to gain much from the uncertainty and changing market. Those which are unable to build internal resilience through change and growth will fall further behind. In this context, the macro-policy settings for Australian workplaces provide some friction. The pace of workplace regulations has not abated over recent years. Changes made at the Federal level over 2023 and 2024 lessened flexibility for employers to make changes to workplace conditions. There does not seem to be any sign that these changes will be reversed, and if anything, the discussion at the political level speaks of more regulation and more enforcement for non-compliance.
The enforcement and regulatory regime in Australia compares unfavourably to other jurisdictions in its intensity and the degree of external regulation of employers. For businesses with a global reach, at its worst this might make the Australian market less appealing for investment or for growth.
However, we have seen many examples where thoughtful strategic planning, workforce engagement and clear leadership can be used to great effect and can build business resilience in spite of these external factors. All of this rests on a clear understanding of the legal landscape affecting Australian workplaces, and a sense of innovation and a focus on growth.
The light is shining on internal workplace issues
Across the year, we have undertaken or managed a range of workplace investigations for our clients, and this is a core part of the support we are able to provide.
These investigations or reviews might arise as a result of whistleblower concerns, workplace complaints, or as a result of a desire by a business to understand more about its workplace culture and performance. These investigations are nearly always multi-faceted and complicated. They often feature intersecting workplace rights and responsibilities, including the emerging language of managing psychosocial-risk in the workplace.
Historically, often these investigations were focussed on a single issue or concern and often were solely for a limited internal audience of decision makers. What has changed over recent years has been the understanding that these investigations or reviews form part of the arsenal available to businesses to seek to effect change or raise internal awareness of issues. In some cases, these reviews are made public, even if they do not tell an entirely favourable story about historical conduct. Obviously, how these reviews are framed and undertaken is essential to that success, and for avoiding unintended impacts.
Contemporary practitioners should understand the role that these investigations and reviews can play and should invest in the capability of their internal teams and understanding the skill set of their external partners and legal advisors.
The stakes are high for senior business leaders, and they need support
Readers of this Guide will observe that one of the common features of the regulatory environment across a number of issues is the potential for senior officer, executive or board liability for non-compliance or breaches. This cohort of senior business leaders have been placed at the centre of compliance across areas like workplace safety, wage compliance, gender equality and anti-harassment expectations. Many of the penalties for not meeting these duties are criminal in nature, and there is a strong willingness of Australian regulators to pursue individuals for non-compliance.
Over the last decade or so, these sorts of workforce issues have been given a greatly increased prominence across many of our clients. The effect of this has been to elevate the importance of these matters to the highest levels in organisations.
There are great opportunities here for safety, IR, HR or P&C teams to directly add value at this C-suite and board level. These roles can now be squarely seen as strategic partners to the business, and there is something exciting about this opportunity for those teams and the clients with which we work.
2 An overview of employment regulation in Australia
Overview
Employment and workplace relations matters in Australia are governed by a range of state and federal laws. These cover areas such as minimum terms and conditions of employment, work health and safety (WHS), privacy, discrimination, superannuation, public holidays and various types of leave.
The terms and conditions of employment and industrial relations obligations of most employers are regulated at the federal level under the system established by the Fair Work Act 2009 (Cth) (FW Act).
However, certain employment-related matters continue to be regulated at the state and territory level.
This introductory chapter provides a general overview of employment regulation in Australia.
State and federal systems of regulation
Although the FW Act is the primary legislation governing employment in Australia, employers need to be aware of certain matters that are still the responsibility of each state and territory, and understand how the two levels of regulation interact.
The FW Act generally 'covers the field' and overrides state and territory laws that deal with the same subject matter.
However, certain matters are specifically excluded from the scope of the FW Act.
These matters include:
- workers' compensation
- work health and safety
- long service leave (other than for a limited number of employees who have a preserved award-or agreement-derived long service leave entitlement), and
- equal opportunity and discrimination.
Most, but not all, employers are covered by the federal system.
Employers who are not 'constitutional corporations' (trading, financial and foreign corporations) and certain federal and state government bodies will not necessarily be covered by the substantive provisions of the FW Act. A corporation will be considered a trading corporation if it engages in 'substantial or significant' trading activities. State and territory industrial laws regulate employers not covered by the FW Act.
National Employment Standards
The National Employment Standards (NES) are 12 minimum conditions of employment which apply to all employees covered by the FW Act.
The 12 minimum conditions of employment that comprise the NES are set out in the table below.
| STANDARD | GENERAL EXPLANATION |
| Hours of work | maximum 38 'ordinary' hours each week plus 'reasonable' additional hours |
| Flexible working arrangements | can be requested by employees who are parents, carers, have a disability, are aged 55 or older, are experiencing family and domestic violence, provide care or support to a family member who is experiencing family and domestic violence, and pregnant employees |
| Casual pathway to permanent employment | a process for employees to change from casual to full-time or part-time employment |
| Parental leave | up to 52 weeks of unpaid parental/adoption leave and related entitlements, with the ability to request a further 52 weeks' unpaid leave |
| Annual leave | 4 weeks per year, with an extra week for shiftworkers |
| Personal/carer's leave, compassionate leave, and family and domestic violence leave |
10 days of paid personal (sick/carer's) leave per year plus 2 days of unpaid carer's leave (per occasion required) 2 days of paid compassionate leave (per occasion required) 10 days' paid family and domestic violence leave per annum |
| Community service leave | to engage in eligible community service activities (eg jury service and voluntary emergency management activities such as fire-fighting) |
| Long service leave | entitlements are per state and territory long service leave legislation (other than for a few employers who are subject to preserved award and agreement entitlements) |
| Public holidays | the right to be absent from work without loss of pay on public holidays and the right to refuse to work on a public holiday on reasonable grounds |
| Notice of termination and redundancy pay | dependent on length of service, up to 5 weeks' notice of termination and up to 16 weeks' redundancy pay |
| Fair Work Information Statement and Casual Employment Information Statement | must be issued to certain employees to provide information about conditions of employment |
| Superannuation contributions | to pay superannuation contributions (11.5% in 2024-2025 and 12% in 2025-2026) of an employee's ordinary time earnings |
Some NES entitlements are tied to employment status (ie whether the employee is engaged on a permanent or casual basis) or length of service (eg parental leave, requests for flexible working arrangements, notice of termination and redundancy pay).
The NES also include rules about how these entitlements apply in practice (eg when annual leave can be taken, what documentation is required for personal leave, whether the leave is paid or unpaid etc). Further information about the NES and these rules can be found in Chapter 3, 'National Employment Standards'.
All enterprise agreements must comply with the NES, and all modern awards are underpinned by the terms of the NES. Common law contracts of employment are also subject to the NES. As the provisions of the NES are statutory minimum terms of employment, they cannot be traded off or bargained away. However, employers and employees are free to negotiate other terms and conditions of employment not covered by the NES or that are more generous than the NES.
Minimum wages
How are minimum wages set?
Minimum wages, including casual loadings, are set and adjusted by the Expert Panel of the Fair Work Commission (FWC) on an annual basis.
The 2023-2024 wage review
Following the Annual Wage Review 2023-2024, the Expert Panel:
- increased the national minimum wage for adults not covered by a modern award by 3.75% to $915.90 per week (based on a 38 hour week) or $24.10 per hour
- increased minimum award wages by 3.75%, and
- maintained the casual loading for award/ agreement-free employees at 25%.
For further information on award-specific minimum wage increases refer to Chapter 4, 'Modern Awards'. Employers should consult the wages provisions of any applicable modern award to determine the minimum wages for their employees.
The role of modern awards
What are modern awards?
Modern awards are industry or occupation-based instruments which establish a safety net of terms and conditions of employment that supplement the 12 minimum conditions of employment set out in the NES. Modern award terms are limited to the 12 matters covered by the NES, plus a further 10 terms and conditions of employment.
While awards were once the main source of regulation of employee terms and conditions, since the early 1990s, Australia's industrial relations landscape has been progressively reformed to make enterprise agreements the main focus. Since that time, awards have been intended to be a minimum safety net only, with enterprise bargaining being the primary means of determining actual terms and conditions of employment.
That being the case, not every employer and employee will be covered by a modern award (as they may not fall within the scope of the 'coverage' provisions of the modern award), and awards do not apply to employers or employees who are covered by an enterprise agreement.
Importantly, an enterprise agreement must leave all employees covered by it better off overall compared to the relevant modern award.
Minimum wages and modern awards
Each modern award includes terms dealing with minimum wages and skills-based pay scales for employees covered by the award. The minimum wages in modern awards are adjusted each year following annual wage reviews conducted by the Expert Panel of the FWC, as noted above.
For further information refer to Chapter 4, 'Modern Awards'.
Enterprise agreements
What are enterprise agreements?
Enterprise agreements are collective agreements made by employers and their employees under the FW Act. In most cases, employees are represented by unions which are allotted legal status as 'bargaining representatives'.
All enterprise agreements can operate alongside common law contracts of employment, however a contract of employment can only supplement (not undercut) enterprise agreement terms and conditions.
Sweeping changes to the enterprise bargaining regime in the FW Act were introduced following the passage of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth). For further information refer to Chapter 11, 'Enterprise Bargaining'.
Better off overall test (BOOT)
To be approved by the FWC, all enterprise agreements must pass the BOOT. Under the BOOT, each employee covered by an enterprise agreement must, on balance, be better off overall than they would be under the applicable modern or enterprise award.
The BOOT allows award conditions (but not NES conditions) to be traded off or modified as long as the total remuneration and/or benefits received by the employee under the proposed enterprise agreement leaves them better off overall than if the relevant award applied. The test is applied strictly by the FWC.
Labour hire and 'same job, same pay'
The FWC has power to make 'regulated labour hire arrangement orders'. These orders, which were first able to come into effect from 1 November 2024, require labour hire workers to be paid in accordance with enterprise agreements that apply to the same kind of work performed by the labour hire workers if they were directly employed by the 'host' company they are supplied to. Hosts must also provide sufficient payroll information to employers of labour hire workers to enable them to comply with their new payment obligations, and the Act introduces penalties for businesses who attempt to avoid the scope of the FWC's new powers.
See Chapter 23, 'Labour Hire' for more information.
Minimum standards for 'employee-like' workers
The FW Act contains provisions providing a new framework of protections for 'employee-like' workers in the gig economy and road transport industries, including powers for FWC to make minimum standards orders similar to modern awards.
See Chapter 24, 'Gig-economy and road transport operators' for more information.
To view the full pdf, click here.
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.
