Employment Law and Labour Law in Australia
Workplace laws in Australia apply equally to all workers employed in Australia, whether they are citizens of Australia or overseas workers. These workplace laws provide basic protection and entitlements for all workers.
Commonwealth Workplace Legislation
The Fair Work Act 2009 (Cth)
The Fair Work Act 2009 (Cth) is the principal industrial relations instrument in Australia and applies to most workers in Australia (although some government employees are an exception to this).
The Act has minimum conditions of employment, which are known as The National Employment Standards. As statutory conditions, these cannot be modified in any form that would disadvantage the employee, and include the following:
- Maximum weekly hours set at a maximum of 38 (but does allow for “reasonable additional hours” to be worked);
- Requests for flexible working arrangements for applicable employees (such as reduction in working hours, job sharing arrangements or working from home arrangements), and an employer can only refuse such requests on “reasonable business grounds”;
- Parental leave and related entitlements (twelve months of unpaid parental leave once twelve months of continuous service has been completed, and provisions relating to birth-related leave, adoptions and also recognition of same sex and de facto relationships);
- Annual leave (employees other than casuals are entitled to four weeks of paid “holiday” leave for each year of service);
- Personal leave (covering paid “sick” leave, unpaid carer’s leave), with the minimum entitlement for employees (other than casuals) set at ten days per year;
- Compassionate leave (paid leave in the event of the death or serious illness or injury of a family member), set at two days per occasion;
- Community service leave (employees including casuals are entitled to be absent from work in order to perform certain community service activities, which is generally unpaid leave);
- Long service leave (employees are entitled to long service leave in accordance with their applicable pre-modern award, enterprise agreement, or state or territory long service leave laws and vary between states and territories;
- Public holidays (an entitlement exists for employees to be absent from work on a public holiday);
- Notice of termination (the employer must not terminate an employee’s employment, subject to certain exceptions, unless the employer has given the employee written notice of the day of termination or payment in lieu, with minimum periods of notice applying);
- Redundancy or Severance pay (minimum entitlement to severance pay for eligible employees whose employment is terminated due to redundancy because of operational requirements), with the amount payable depending upon the length of the employee’s service;
- Fair Work Information Statement (formal advice that employers are required to provide to employees about their industrial rights and other matters).
Modern awards prescribe minimum wages and conditions of employment applicable to employees in the relevant industry or occupation and are criticised for being quite inflexible. The awards do not apply to all employees (with many professionals and managers being exempted).
An Enterprise Agreement can be negotiated within a business, or through a system of collective bargaining in an individual enterprise. Collective bargaining is common where there is union involvement and results in an enterprise agreement if successful. If an enterprise agreement is made, this instrument usually displaces the award that was relevant to that industry. An enterprise agreement will only operate if it is approved by Fair Work Australia as meeting a “better off overall” test. This means that, overall, the employees affected by an enterprise agreement must be better off under the proposed agreement than under the relevant award.
Before terminating an employee, an employer in Australia must consider:
- Unfair dismissal laws;
- General protection provisions;
- Workers’ compensation legislation;
- Breach of contract;
- Anti-discrimination laws; and
- Occupational health and safety laws.
An unfair dismissal is a dismissal that is “harsh, unjust or unreasonable”. Fair Work Australia will consider if there is a valid reason for the dismissal (substantive fairness) and if the process undertaken by the employer leading to the dismissal has been fair (procedural fairness). Factors such as previous warnings, counselling and whether the employee was given a proper opportunity to respond to the reason for dismissal will be important.
Requirements include the following:
- The applicant must lodge the application within 14 days from the termination;
- The dismissal must not be a case of genuine redundancy;
- The applicant must meet the minimum employment period (one year for a small business, or six months for other employment); and
- The applicant’s salary must not exceed the high income threshold (however, if it relates to a modern award or an enterprise agreement, then this condition is not applicable); and
- If the employer is a small business (of less than 15 employees), the employer need not have complied with the Small Business Fair Dismissal Code.
If an unfair dismissal has occurred, there are two possible remedies:
- Reinstatement; or
Reinstatement is practically very difficult, given that the employer-employee relationship will exist after the employee has brought an unfair dismissal case, so compensation is the remedy most often granted. Various criteria to be considered when deciding on compensation are length of service, lost remuneration, and attempts to mitigate (such as by finding another job). The amount of compensation cannot exceed the lesser of six months’ pay or half the amount of the “high income threshold” immediately before the dismissal. Non-economic loss cannot be compensated for.
Breach of the General Protections
The Fair Work Act provides general protections to employees, and protects employees, employers and other members of the workforce from being discriminated against and from having adverse action taken against them. This includes termination of employment, demotion or any change in an employee’s position to his or her detriment, or the issuing of warnings or other disciplinary action. These actions may be unlawful if the act is motivated by an employee exercising a “workplace right”.
A “workplace right” is described as an employment entitlement, such as “the right of an employee to make a complaint or inquiry in relation to his or her employment”. Adverse action claims are difficult for employers to defend, as the reverse onus of proof applies, namely that it is for the employer to show that a workplace right was not breached. Substantial compensation can be awarded if it is determined that the employer breached a workplace right.
Workplace Health and Safety
The state and territory legislation imposes obligations on employers to ensure a safe and healthy workplace for their employees, but also on workers to:
- Take reasonable care for their own health and safety;
- Take reasonable care to ensure that their acts or omissions do not adversely affect the health and safety of other persons;
- Comply, so far as the worker is reasonably able, with lawful instructions that are given by the person conducting the business, requiring the worker’s compliance with the Workplace Health and Safety Act; and
- Co-operate with any reasonable policy or procedure of the person conducting the business, relating to health or safety in the workplace that the worker has been informed about.
Other Relevant Legislation
- Age Discrimination Act 2004 (Cth);
- Disability Discrimination Act 1992 (Cth);
- Human Rights and Equal Opportunity Commission Act 1986 (Cth);
- Racial Discrimination Act 1975 (Cth); and
- Sex Discrimination Act 1984 (Cth).
These Acts can be viewed on the Australian Human Rights Commission website.
Employees are afforded protection from discriminatory conduct by their employers and their fellow employees.
Independent Contractor or Employee
It is important to clarify if an individual should be engaged as an employee or an independent contractor. There are several different factors to take into consideration, including degree of control over work, hours, and leave. Further details can be found on the Fair Work Australia website. There are penalties for incorrect classification of an employee as an independent contractor, so it is important to seek professional advice if there is any uncertainty around classifications.
Fair Work Ombudsman
The Fair Work Ombudsman provides information and advice on workplace rights and obligations.
Fair Work Commission
The Fair Work Commission is Australia’s national workplace relations tribunal, having a range of functions, including:
- The provision of a safety net of minimum conditions, such as minimum wages in awards;
- The facilitation of good faith bargaining;
- The ratification of enterprise agreements;
- The adjudication of applications in relation to unfair dismissal;
- The regulation of industrial action;
- The resolution of workplace disputes through conciliation, mediation and public tribunal hearings;
- Workplace determinations, equal remuneration, transfer of business, general workplace protections, right of entry and stand down.