1 Legal framework
1.1 Are there statutory sources of labour and employment law?
The main statutory source of labour and employment law for a majority of employers in Australia is the Fair Work Act 2009 (Cth). The Fair Work Act operates alongside federal, state and territory legislation that sets statutory standards for issues such as work, health and safety, discrimination and workers' compensation.
The Fair Work Act also provides for modern awards and enterprise agreements which set minimum terms and conditions of employment.
For those not covered by the Fair Work Act, the state legislation will usually apply. For example, the Industrial Relations Act 1996 (NSW) applies in New South Wales.
1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?
Yes. The common law contractual system operates in parallel with the statutory sources. The contractual system particularly assists those employees who may not be covered by modern awards or enterprise agreements.
1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?
Employment contracts are fundamental to the employment relationship. The regulation of the individual employment relationship is firmly embedded in the common law concept of contract.
Common employment contracts include:
- permanent contracts (either full-time or part-time);
- fixed-term contracts or maximum-term contracts; and
- casual contracts.
A valid contact is created when the following requirements are met:
- There is the intention to create a legal relationship;
- There is offer and acceptance;
- There is consideration;
- The parties are legally capable of making a contract;
- There is an absence of vitiating factors (eg, misrepresentation); and
- The contract is not rendered ineffective by reason of conduct which is illegal or contrary to public policy.
Employment contracts need not be in writing. Employment contracts can be wholly oral. It is not uncommon for an employment contract to be partly written and partly oral.
Terms are implied into employment contracts in Australia by fact, custom or law. Terms implied by law are the most noteworthy. These includes terms such as the employee's duty of fidelity and loyalty and duty to obey.
Most implied terms can be excluded by an express term in the contract.
The common terms of employment in a written contract of employment will usually include:
- the employee's status (full time, part time, fixed term or casual);
- obligations with respect to confidential information and IP rights; and
An employment contract cannot provide less than the minimum requirements set out in the National Employment Standards (provided for in the Fair Work Act) or modern awards and enterprise agreements. The 10 standards cover:
- maximum weekly hours of work;
- flexible work arrangements;
- parental leave;
- annual leave;
- personal/carer's leave;
- community service leave;
- long service leave;
- public holidays;
- notice of termination and redundancy pay; and
- provision of a fair work information statement to employees.
2 Employment rights and representations
2.1 What, if any, are the rights to parental leave, at either a national or local level?
All employees (male or female) are entitled to unpaid parental leave, provided that they have worked with the employer for at least 12 months and have or will have responsibility for the care of the child. Casual employees must be able to establish that they have been employed on a regular and systematic basis and have a reasonable expectation of ongoing employment.
2.2 How long does it last and what benefits are given during this time?
Following the adoption or birth of a child, employees are allowed a total of 12 months' unpaid parental leave and can request an additional 12 months of leave under the National Employment Standards found in the Fair Work Act.
On the conclusion of unpaid parental leave, employees have the right to return to the same position they occupied before going on leave. If the employee's position has significantly changed or no longer exists, a similar alternative position must be offered to the employee. If the employee's position no longer exists, then a redundancy may occur.
An employee on unpaid parental leave gets 10 ‘keeping in touch' days. These allow an employee who is still on unpaid parental leave to go back to work for a few days. The employee gets his or her normal wage for each keeping in touch day (or part thereof).
Employees who are the primary carers of an adopted or newborn child can receive 18 weeks of pay capped at the national minimum wage under the Australian government's Paid Parental Leave Scheme. Eligible partners and fathers are entitled to two weeks of pay under the same scheme.
2.3 Are trade unions recognised and what rights do they have?
Industrial organisations, such as employer associations and unions apply to the Fair Work Commission for registration under the Fair Work (Registered Organisations) Act 2009 (the RO Act).
From 1 May 2017, the Registered Organisations Commission regulates registered organisations.
Registration provides unions with several rights in relation to the interests of their members. The Fair Work Act gives unions the right to act as a bargaining representative when negotiating an enterprise agreement. Unions can also represent members in disputes to enforce standards in the Fair Work Act, modern awards and enterprise agreements.
Additionally, unions can enter an employer's place of business to conduct investigations into possible breaches of the Fair Work Act, industrial standards, work or agreements by;
- examining all or any work processes in conjunction with an investigation;
- conducting voluntary interviews with any parties in conjunction with an investigation; and
- requesting the production of any record or document pertinent to an investigation.
2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?
There is no common law right to privacy in Australia. In Australia, data protection is regulated through the Privacy Act 1988 (Cth).
The Privacy Act contains an ‘employee records' exemption which allows employers to collect, use and disclose employee records without first obtaining consent from employees, provided that the action is directly related to the employment relationship.
Employers need not provide notice to employees before sending employee records to foreign organisations overseas. However, those foreign organisations will not benefit from the Australian employee record exception and will be subject to the privacy legislation in the country in which they reside.
Information that does not directly relate to the employment relationship and information obtained from prospective employees and independent contractors is not subject to the employee records exemption. In these circumstances, the Privacy Act applies.
There is no national workplace surveillance legislation in Australia. Some states and territories have specific workplace surveillance laws. For example, in New South Wales, the Workplace Surveillance Act 2005 (NSW) applies to optical surveillance, computer surveillance and tracking surveillance within the workplace. There are specific rules for notifying employees about surveillance in the workplace.
2.5 Are contingent worker arrangements specifically regulated?
Contingent workers are regulated in a limited way.
For example, the Fair Work Act general protections provisions extend to ‘workers', which includes independent contractors.
The Independent Contractors Act 2006 also provides a mechanism for independent contractors to ask a court to set aside a contract if it is harsh or unfair.
3 Employment benefits
3.1 Is there a national minimum wage that must be adhered to?
The Fair Work Act provides for the Fair Work Commission (FWC) to set and vary minimum wages for national system employees.
For employees who are award or agreement free, the minimum wage is the wage specified in the national minimum wage order. An annual wage review takes place each financial year and a national minimum wage order is made.
For the 2020/2021 financial year, the FWC's decision resulted in the new national minimum wage being set at A$753.80 per week or A$19.84 per hour from the first full pay period on or after 1 July 2020. This constituted a 1.75% increase and applies to all national system employees who are paid in accordance with the national minimum wage.
3.2 Is there an entitlement to payment for overtime?
Not every employee has an entitlement to overtime for working outside his or her ordinary hours or above his or her agreed number of hours.
For employees who are award or agreement covered, the modern award or enterprise agreement will typically contain a provision for the payment of overtime.
For those employees who are award or agreement free, there is no entitlement to be paid overtime unless there is a contractual entitlement (which is not common practice).
3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?
- four weeks of paid annual leave; or
- five weeks of paid annual leave if the employee is a shift worker as defined by the Fair Work Act or a modern award or enterprise agreement.
The entitlement to paid annual leave accrues progressively during a year of service based on an employee's ordinary hours of work and accumulates from year to year.
3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?
For each year of service with an employer, an employee is entitled to 10 days' paid personal/carer's leave.
The entitlement to paid personal/carer's leave accrues progressively during a year of service based on the employee's ordinary hours of work and accumulates from year to year.
The employee can take the leave because he or she:
- is not fit for work because of a personal illness or injury; or
- is providing care or support to a member of his or her immediate family or household because of a personal illness, injury or unexpected emergency affecting that family member.
3.5 Is there a statutory retirement age? If so, what is it?
4 Discrimination and harassment
4.1 What actions are classified as unlawfully discriminatory?
In Australia, unlawful discrimination is commonly referred to as ‘direct' or ‘indirect' discrimination. ‘Direct' discrimination refers to a situation where one employee is treated less favourably than another on the basis of an inherent characteristic, attribute or trait. ‘Indirect' discrimination is where a rule, policy, standard or practice unfairly disadvantages an employee with a particular characteristic, attribute or trait.
4.2 Are there specified groups or classifications entitled to protection?
Discrimination is generally prohibited at all stages of employment, including recruitment, during employment and on termination.
Protection is not limited to employees. Discrimination prohibitions usually extend to protect job applicants and independent contractors.
4.3 What protections are employed against discrimination in the workforce?
Federal, state and territory laws impose obligations on employers in relation to discrimination.
The four acts at a federal level cover discrimination based on sex (including family responsibilities, pregnancy and sexual harassment), disability, race and age. The Fair Work Act also has specific discrimination provisions.
Other common protected attributes include religion, gender identity and marital status.
Under anti-discrimination laws, an employer may also be vicariously liable for actions of an employee undertaken in connection with his or her employment, unless the employer can prove that it took all reasonable steps to prevent the discrimination.
4.4 How is a discrimination claim processed?
In general, a complaint is lodged with the statutory authority (eg, the Anti-discrimination Board or the Australian Human Rights Commission) for assessment and possible resolution through alternative dispute resolution measures such as conciliation. If the complaint remains unresolved, the claim is pursued through the relevant court or tribunal.
A general protections claim (alleging discrimination) can also be made under the Fair Work Act. The first stage in this process is typically conciliation (however, this may not be the case if there has not been a termination of employment) through the Fair Work Commission. If the claim is unresolved, the claim can be pursued through the Federal Circuit Court or Federal Court.
4.5 What remedies are available?
The remedies available generally include:
- damages (including economic loss, non-economic loss, pecuniary loss and aggravated or exemplary damages);
- retractions; and
Under the Fair Work Act penalties can also be imposed on corporations and individuals. Maximum penalties of up to A$66,000 (or $666,000 for serious contravention) for a corporation and A$13,320 (or $133,200 for serious contravention) for an individual apply in respect of breaches of the discrimination provisions of the Fair Work Act.
4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?
Harassment is a type of discrimination and is dealt with under the federal, state and territory anti-discrimination legislation. For example, sexual harassment is defined (and prohibited) under the Sex Discrimination Act 1984 (Cth).
Many anti-discrimination laws also prohibit victimisation of a person on the grounds that he or she has made or is proposing to make a complaint under anti-discrimination legislation.
The remedies that may be granted typically include payment of compensation, an order for re-employment or an injunction. In terms of compensation, an applicant can be awarded both economic and compensation for any distress or humiliation.
An application for an order to stop bullying can be lodged with the Fair Work Commission. The Fair Work Commission can make an order to stop bullying, but cannot make any monetary compensation orders.
5 Dismissals and terminations
5.1 Must a valid reason be given to lawfully terminate an employment contract?
Generally, an employer may dismiss an employee for any reason by providing the requisite period of notice or without notice if the employment is being terminated on the basis of serious misconduct.
Employees can challenge the termination of their employment in certain circumstances. There are three primary claims:
- unfair dismissal;
- general protections; and
- breach of contract.
Provided that an employee is eligible, he or she can commence an unfair dismissal claim before the Fair Work Commission (FWC) alleging that the termination was "harsh, unjust or unreasonable". To determine whether the dismissal is "harsh, unjust or unreasonable", the FWC will consider whether there was a valid reason for the dismissal related to the employee's capacity or conduct.
5.2 Is a minimum notice period required?
Under the National Employment Standards, the following minimum notice periods apply to the termination of a permanent employee.
|Period of continuous service||Minimum notice period|
|1 year or less||1 week|
|More than 1 year - 3 years||2 weeks|
|More than 3 years - 5 years||3 weeks|
|More than 5 years||4 weeks|
If an employee is over 45 years of age and has worked for the same employer for more than two years, he or she will be entitled to an extra week of notice.
Modern awards, enterprise agreements and employment contracts may prescribe longer notice periods.
5.3 What rights do employees have when arguing unfair dismissal?
The rights that employees have when challenging a dismissal will vary depending on whether the employee is protected from unfair dismissal under the Fair Work Act or must rely on the individual employment contract (wrongful dismissal).
Employees have the right to apply for unfair dismissal at the FWC within a period of 21 days, which starts to run the day after the dismissal takes effect.
Employees must have been employed for at least six months before applying for unfair dismissal; and if an employee works for a small business, he or she must have been employed for a minimum period of 12 months.
Employees must also be covered by a modern award or enterprise agreement or earn less than the high-income threshold.
Under the Fair Work Act, a person has been unfairly dismissed if the FWC is satisfied that:
- the person has been dismissed; and
- the dismissal was harsh, unjust or unreasonable; and
- the dismissal was not consistent with the Small Business Fair Dismissal Code; and
- the dismissal was not a case of genuine redundancy.
Where the employment has been terminated in breach of the individual employment contract, this will be a "wrongful dismissal. The employee may seek a remedy at common law in these circumstances.
A wrongful dismissal may arise where the employee is:
- dismissed without receiving the contractual notice period;
- summarily dismissed without proper cause;
- dismissed prior to the expiry of a fixed term contract; or
- is constructively dismissed.
5.4 What rights, if any, are there to statutory severance pay?
Under the Fair Work Act, in the case of redundancy, employees who have been employed for one year or more with the same employer are entitled to the following severance.
|Redundancy pay period|
|Employee's period of continuous service with the employer on termination||Redundancy pay period|
|1||At least 1 year but less than 2 years||4 weeks|
|2||At least 2 years but less than 3 years||6 weeks|
|3||At least 3 years but less than 4 years||7 weeks|
|4||At least 4 years but less than 5 years||8 weeks|
|5||At least 5 years but less than 6 years||10 weeks|
|6||At least 6 years but less than 7 years||11 weeks|
|7||At least 7 years but less than 8 years||13 weeks|
|8||At least 8 years but less than 9 years||14 weeks|
|9||At least 9 years but less than 10 years||16 weeks|
|10||At least 10 years||12 weeks|
Severance (or redundancy pay) is payable in addition to notice.
Modern awards, enterprise agreements and employment contracts may prescribe longer notice periods.
6 Employment tribunals
6.1 How are employment-related complaints dealt with?
Employment-related complaints are predominantly dealt with by the Fair Work Commission (FWC); however, the Federal Court of Australia or the Federal Circuit Court may deal with complaints where they have original jurisdiction or where the complaint cannot be resolved by the FWC.
Where the complaint involves allegations of discrimination, employees may bring a claim under the federal, state or territory anti-discrimination laws, which will be dealt with by the relevant court or tribunal.
6.2 What are the procedures and timeframes for employment-related tribunals actions?
If an employee is dismissed, an employment-related complaint may be lodged with the FWC. The application must be made within 21 days of the dismissal. The parties will then typically participate in a conciliation. If conciliation fails, the complaint will go to a hearing before the FWC or the Federal Circuit Court or Federal Court.
Employees must pay a nominal fee when lodging an application with the FWC, which may be waived on the basis of financial hardship.
For breach of contract claims, an employee has six years from the breach to commence a claim.
The period is also six years for an employee who wishes to make a general protections claim while still employed.
7 Trends and predictions
7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
Compliance is a key theme, given the ever-increasing complexity around employee entitlements, including the annualised salary arrangements that commenced on 1 March 2020. The risk of breaching employment laws is also at an all-time high.
The risk of a breach combined with the expanded compliance and enforcement framework will no doubt be causes of concern for employers. We have already seen examples of how adverse publicity around underpayments can impact on a business.
Given the COVID-19 pandemic, it is likely that:
- There will be an increase in restructures being undertaken by organisations; and
- There will be changes to the way work is performed, including an increase in the amount of work being performed from home. This may lead to an increase in flexible working requests and work, health and safety considerations.
Organisations will need to ensure that they are compliant with their obligations around redundancy, including any consultation process that is required. The FWC is reporting a 65% increase in unfair dismissal claims when comparing April 2020 to April 2019.
Changes to the industrial relations system are also likely. The prime minister has asked the attorney general, in his capacity as minister for industrial relations, to look at the system and the minister has released two discussion papers seeking input on the operation of certain parts of the system. The two discussion papers are entitled:
- Improving Protections of Employees' Wages and Entitlements: Further Strengthening the Civil Compliance and Enforcement Framework; and
- Review of the Code for the Tendering and Performance of Building Work 2016.
Finally, there is also a spotlight on casual workers, with recent decisions finding that workers who were classified as casual workers were not truly ‘casual' when the substance of the relationship was examined. This meant that those workers were entitled to annual leave, compassionate leave and personal leave. These decisions directly impact the manner in which casual employees are engaged and paid.
8 Tips and traps
8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?
It is critical that employers are aware of their obligations under workplace laws and instruments, particularly in respect of minimum payments and entitlements for employees under modern awards. Employers in the fast food, restaurant and café industries remain a top priority for the Fair Work Ombudsman.
Strategies for compliance include:
- undertaking spot-checks on payments to employees (particularly where employees are paid annualised salaries);
- training human resources and pay-roll staff on compliance;
- staying up to date on changes to minimum entitlements – for example, increases to minimum wages; and
- using the above suggestions to ensure there is a strong system is in place to monitor compliance.
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.