Introduction
Australia’s industrial relations system is regulated by the Fair Work Act 2009 (Cth) (the FW Act). Most employers in Australia are subject to its requirements. This is regardless of whether their employees are employed in accordance with an award set by an industrial body, an enterprise agreement or an individual employment contract. The FW Act sets out various minimum conditions of employment at a national level and sets out the rights and responsibilities of employees, employers and employee organisations.
Basic minimum conditions
All employees covered by the FW Act are entitled to a set of minimum conditions of employment, known as the "National Employment Standards".
These include:
- a maximum of 38 ordinary hours per week plus “reasonable additional hours”
- four weeks of paid annual leave per year (while an employee classified as a shift worker is entitled to five weeks’ paid annual leave per year)
- 10 days of paid personal/carer’s leave (including sick leave) per year, together with an additional two days of unpaid carer’s leave and a further two days of paid compassionate leave
- 10 days of paid family and domestic violence leave, if the employee is experience family and domestic violence and needs to do something to deal with the impact of the violence, and it is impractical to take that action outside of work hours
- 52 weeks of unpaid parental leave for both parents at the time of birth or adoption of a child, if the employee has completed 12 months of service, with the option to request an additional 52 weeks
- the ability to request flexible working arrangements if the employee is pregnant, a parent, a carer (for an individual with a disability, medical condition, mental illness or is frail and aged), has a disability, is 55 or older, is experience family or domestic violence, or the employee provides care and support to a member of the employee's immediate family who is experience family and domestic violence.
- an entitlement for casual employees to be offered to "convert" from casual employment to permanent employment, subject to certain minimum requirements being met (such as 12 months of service)
- long service leave based on relevant federal or state law which varies from state to state, but ranges between an entitlement to 6 to 13 weeks of leave subject to between 7 to 10 years of continuous service
- unpaid community service leave of a reasonable period for an employee engaged in an “eligible community service activity” such as jury service or voluntary emergency management
- redundancy pay where termination of employment is for redundancy and the employee has at least 12 months’ continuous service
- an entitlement to be absent from work on public holidays, subject to qualification such as an employer making an reasonable request and an employee making an unreasonable refusal to work
Basic rates of pay, loadings, penalty rates and other entitlements are set by the national minimum wage order and modern awards.
Unfair dismissal
The FW Act gives eligible employees the right to make a claim against their employer for unfair dismissal if a termination can be demonstrated to be harsh, unjust or unreasonable.
Small businesses that employ 15 or fewer employees and comply with the Small Business Fair Dismissal Code are exempt from unfair dismissal laws. Equally, employees are not protected if they have:
Equally, employees are not protected if they have:
- not served the “minimum employment period” (12 months for a small business employer or six months otherwise)
- been engaged on a fixed-term contract or for a specified task
- been engaged as short-term casual employees
- been engaged as trainees for a specified time period
- been engaged as seasonal employees.
Employees are also not protected if their dismissal was due to a “genuine redundancy” or if they earn more than the high-income threshold (which is $142,000 after 1 July 2018) unless they are covered by an award or enterprise agreement. This threshold is adjusted every year on 1 July.Employees are also not protected if their dismissal was due to a “genuine redundancy” or if they earn more than the high-income threshold, (which is $167,500 after 1 July 2023) unless they are covered by an award or enterprise agreement. This threshold is adjusted every year on 1 July.
General protections and anti-discrimination legislation
The FW Act also contains provisions in relation to workplace discrimination by an employer who takes adverse action against a current or prospective employee for exercising a workplace right, or due to protected attributes such as race, religion, sexual preference, pregnancy or age. Various other state and federal anti-discrimination legislation also prohibits similar discriminatory conduct.
Work, health and safety
Work, health and safety legislation imposes obligations on all employers to ensure the safety of their employees while at work, including by minimising both physical and psychosocial hazards. Laws have largely been harmonised in most jurisdictions apart from Victoria (although there are a number of state-based differences).
Employee-related taxes
Since 1 July 2000, Australia has used the pay-as-you-go tax withholding system.
Employers are required to withhold tax from the remuneration paid to employees and to remit the tax to the Australian Taxation Office on a regular basis.
The amount withheld is calculated according to scales prescribed by the Commissioner of Taxation.
Fringe benefits tax is payable by employers on the value of certain benefits provided to employees in connection with employment. These are widely defined to include a range of privileges, services or facilities such as the private use of motor vehicles, interest-free or low interest loans or accommodation.
Payroll tax is a state tax levied monthly by each state on the payroll of employers who pay wages in excess of a prescribed threshold. The rate varies by state.
Generally, states will require employers to register when monthly wage payments reach certain levels.
Superannuation
Federal legislation requires employers to contribute a prescribed minimum level of superannuation for each employee. As of 1 July 2023, this is set at 11% of an employee’s notional earnings base (though it will continue to rise in 0.5% increments until it reaches 12% in 2025). Employers who provide less are liable to pay a non-deductible charge called the Superannuation Guarantee Charge. There are also limits on the maximum amount of superannuation contributions made for the benefit of an employee that an employer can claim as a tax deduction.