Doing business in Australia Part 9: Employment and industrial laws
07 Oct 2019
- Business Law
Australian members of Meritas, the premiere global alliance of independent law firms, have joined together to publish Australia: A legal guide for business investment and expansion. The guide provides practical information for foreign investors and businesses wanting to operate in Australia.
In part 9 of this series of articles, which presents different sections of the guide, we look at employment and industrial laws in Australia.
Employment and industrial laws
Terms and conditions of employment
Employment relationships in Australia are regulated at a number of levels and by a range of statutory and quasi-statutory instruments. Which instruments apply may depend on the state or territory in which the employee works, the work to be undertaken and the category of employer, including whether the employer is a ‘trading or financial corporation’. A corporation that derives a significant proportion of its revenue from the sale of goods and/or services will fall within this definition.
Employment within trading and financial corporations is regulated by a combination of federal and state employment and industrial laws. Other employment is regulated almost entirely by state employment and industrial laws.
Levels of regulation
Broadly, the levels of regulation are:
- Employment contracts (its terms are often modified or overridden by other levels of regulation)
- Statutory minimum conditions – the National Employment Standards
- Awards (i.e. arbitrated determinations) of industrial relations tribunals
- Federal enterprise or collective agreements.
National Employment Standards (NES)
There are 10 minimum workplace entitlements for all Australian employees and these are set out in the NES.
- A maximum standard working week of 38 hours for full-time employees, plus ‘reasonable’ additional hours
- The right to request flexible working arrangements to care for a child under school age or a person with a disability, etc.
- Twelve months unpaid parental or adoption leave, with a right to request a further 12 months
- Four weeks paid annual leave (pro rata)
- Ten days paid personal/carer’s leave per year (for personal ill health and to care for members of an employee’s household who are ill or injured), two days paid compassionate leave and two days unpaid carer’s leave
- Paid jury service leave or unpaid emergency service leave
- Five days unpaid family and domestic violence leave each year
- Paid long-service leave of 8.67 weeks after 10 years of continuous service
- Public holidays
- Notice of termination and redundancy pay.
New employees are to be given a Fair Work Information Statement that summarises the above conditions.
Australia also has a statutory minimum wage. At 30 May 2019 it is $19.49 per hour or $740.00 per week for adults.
There can be substantial variation depending on the terms of the contract and the nature of the work in which the employee is engaged. Contract terms may improve upon the NES but may not reduce them.
The current key federal employment legislation is the Fair Work Act 2009 (FW Act) (and Fair Work Regulations 2009). Its main features include:
- statutory minimum conditions (the NES, described above)
- modern awards (as a supplementary set of minimum standards and conditions relevant to particular industries and occupations)
- an enterprise-level bargaining system with an emphasis on collective agreements with industrial organisations (i.e. unions), rather than directly with an employer’s employees
- an institution, the Fair Work Commission, which plays a key role in facilitating and supervising industrial relations under the FW Act
- a Fair Work Ombudsman’s office with regulatory, monitoring and educational roles
- enhanced rights for employees aimed at discouraging and remedying unfair dismissals
- provisions enabling unions to readily access workplaces (including workplaces where the union has no members).
Some other employment law matters are covered by state or territory laws. Each Australian state and territory has its own unique legislation covering the following areas:
- occupational health and safety
- workers compensation (a form of statutory injury insurance)
- long-service leave.
Employers outside the private sector may also be subject to state minimum conditions and industrial relations laws. In Western Australia, additional dedicated state industrial relations laws can apply in the private sector for employers who are not trading and financial corporations.
Occupational health and safety – new federal model law
The federal government has taken steps since 2009 to harmonise occupational health and safety legislation across Australia and has developed a model Work Health and Safety Act, to be implemented by all states and territories. As of July 2018 the Commonwealth, New South Wales, South Australia, Queensland, the Australian Capital Territory and the Northern Territory have enacted the provisions of the Model Act. Victoria and Western Australia have yet to do so.
The key provisions are:
- an expanded duty of care for a ‘person conducting a business or undertaking’
- ‘worker’ now includes employees, volunteers, contractors, sub-contractors, apprentices, work-experience students and outworkers
- an expanded definition of ‘workplace’ to include any place where a worker goes or is likely to go while at work
- positive duties for ‘officers’ to exercise ‘due diligence’ and comply with their duty of care
- increased monetary penalties for breach and a range of new orders including training and adverse publicity orders.
An award is a binding order made by an industrial tribunal setting the minimum employment terms and conditions of certain employees. Awards regulate a large percentage of the workforce in Australia.
A (common law) employment contract cannot exclude award provisions, but it can confer additional (non-award) benefits on an employee. Awards don’t usually apply to senior management positions; however, such positions need to be checked for potential award coverage nevertheless.
The Fair Work Commission has modernised and consolidated its awards so that Australia’s suite of federally arbitrated settlements can operate comprehensively within a relevant industry.
The FW Act provides for an employer and its employees to make enterprise or collective agreements either directly or indirectly, by involving industrial organisations. It also permits employers to make greenfields agreements for new projects or enterprises as long as it bargains with the relevant union prior to engaging any employees.
The FW Act also provides for collective bargaining with employees and with industrial organisations. However, the collective agreement-making regime differs in at least the following respects:
- employers can be compelled to bargain collectively even if they do not want to do so if the majority of their employees
want to bargain
- any collective bargaining must be undertaken subject to ‘good faith’ obligations on bargaining representatives
- in some circumstances, an industrial organisation will be able to seek arbitration of outstanding matters in incomplete
Superannuation (pension plans)
Under the Superannuation Guarantee (Administration) Act 1992 (Cth), employers are required to pay superannuation contributions on behalf of their employees, amounting to a prescribed proportion of each employee’s earnings. The contribution rate is currently 9.5% of the employee’s earnings (subject to various caps that impact high earners).
The federal government has indicated its intention to gradually increase these compulsory contributions. It is likely that they will increase to around 12% by 2025–2026.
It is strongly recommended that you seek professional advice in the complex and constantly changing area of employment and industrial law.
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To read previous articles in this series, click on the titles below:
- Doing business in Australia Part 1: Top 10 question
- Doing business in Australia Part 2: Government and court structures
- Doing business in Australia Part 3: Business organisations
- Doing business in Australia Part 4: Foreign investment
- Doing business in Australia Part 5: Company law
- Doing business in Australia Part 6: Taxation
- Doing business in Australia Part 7: Intellectual property
- Doing business in Australia Part 8: Competition and consumer protection