Overview

The national workplace relations system in Australia consists of several parts including:

  • The Fair Work Act
  • The Fair Work Commission
  • The Fair Work Ombudsman

The national minimum wage and the National Employment Standards (NES) together establishes the minimum safety net.

Most workers in Australia are covered by an award or an enterprise agreement, setting out the minimum conditions relevant to the relationship between an employee and employer. These so called industrial instruments are designed to provide clarity around remuneration, benefits, leave entitlements, etc.

Regardless of whether a staff member is on an award or not, it is important to agree on the engagement and establish the expectations for the job position. This should ideally be documented in the form of a compliant employment contract.

The contract should reflect the discussions you have had with the staff member and it essentially becomes an important piece of the onboarding process.

Fair Work Act

The Fair Work Act is a key component of the Australian employment system.

It specifically provides a mandatory safety net of 10 employment conditions via the so called National Employment Standards (NES). It is critical that your employment contract comply with these conditions when you hire and maintain staff.

  • Maximum standard week of 38 hours for full-time staff (plus reasonable additional hours)
  • Right to request flexible working arrangements (in certain circumstances)
  • Unpaid parental and adoption leave of 12 months with a right to request an additional 12 months
  • Paid annual leave of 4 weeks per year (pro rata)
  • Paid personal/carer’s leave of 10 days each year (pro rata), 2 days paid compassionate leave, 2 days unpaid carer’s leave per permissible occasion
  • Community service leave for jury service (paid) or activities dealing with certain emergencies or natural disasters (unpaid)
  • Right to long service leave (regulated on a state level)
  • Paid public holidays
  • Notice of termination and redundancy pay
  • Right for new employees to receive the Fair Work Information Statement (this statement provides information about the NES and other information that is relevant to your employees)

Note that only some of these conditions are relevant to casual staff contracts.

  • Right to unpaid carer's leave
  • Right to unpaid compassionate leave
  • Right to unpaid community service leave
  • Right to receive the Fair Work Information Statement

In some states and territories, long serving casuals are eligible for long service leave. Also note that where there is an expectation of ongoing work for a casual and the person has been employed regularly and systematically more than 12 months, they may have the right to request a flexible working arrangement and parental leave.

The Fair Work Act is managed by the Fair Work Commission and the Fair Work Ombudsman.


Fair Work Commission

  • Sets minimum employment conditions (National Employment Standards)
  • Makes decisions about industrial action
  • Resolves workplace disputes
  • Manages unfair dismissal claims
  • Deals with harassment claims
  • Manages industrial awards and registered agreements

Fair Work Ombudsman

  • Ensures compliance with the Fair Work Act, related legislation, awards and registered agreements
  • Provides advice and investigations relating to pay, conditions, entitlements, policies and workplace culture
  • Provides education and resources about pay rates and workplace conditions

It is important that any written employment agreements you have with your staff meets or exceeds the minimum requirements set by the Fair Work Act and associated regulations.

The contract

Whilst it is not mandatory to have a written job contract in place, it provides a documented point of reference for both parties and therefore minimises potential misunderstandings.

We highly recommend that you issue an employment contract to any new or existing employees. This includes contracts for full-time, part-time or casual staff as well as contractors.

The benefits include:

  • Sets out performance requirements
  • Establishes job duties
  • Protects commercial interests like IP
  • Outlines termination obligations
  • Confirms compliance with National Employment Standards (NES)
  • Formalises remuneration
  • Deals with confidentiality

A well written employment agreement should include sufficient detail (clauses) to allow the employer and employee to understand what is required by them and to set mutual expectations, including:

Duration, position, job duties, remuneration including any bonuses or commissions, allowances, leave (including annual leave, personal or carer's leave, parental leave, long service leave), superannuation, probationary period, termination (notice or no notice), protection of confidential information and intellectual property and post termination restrictions (eg non-compete).

If you use a template, ensure that the employment contract is customised / personalised to the individual staff member and role. Each engagement is different and you should consider the circumstances of each employee.

If the employee is on an award, you should refer to the award in the contract. You must ensure that any conditions meets or exceed the conditions stated in the award (from the perspective of the employee).

Employment contracts in Australia are legally valid if signed electronically. Electronic signatures make the onboarding process smoother than traditional signatures, and allows for better record keeping.

As the employee grows with the organisation, there may be a need to update the agreement. For example, there may be a salary increase or a change in role. Instead of drafting a new contract of employment, we suggest issuing a contract variation in the form of a standalone document which references the original agreement. This variation should be signed so that there is evidence of the update.

Awards

Most employees in Australia are covered by a so called modern award. Awards establish minimum employment standards for a group of employees (by occupation and/or industry).

The mandatory agreement includes terms such as:

  • Minimum wages
  • Penalty rates
  • Flexible working arrangements
  • Hours of work
  • Allowances
  • Leave
  • Superannuation
  • Redundancy
  • Procedures for consultation and dispute settlement

The conditions in awards apply on top of the minimum conditions set out in the National Employment Standards (NES).

Even though a relevant employee is automatically covered by the award they belong to, it is still important that you draft an employment agreement that is specific to the circumstances of the engagement.

For example, an award may not cover issues like ownership of intellectual property or confidentiality. Or the remuneration may exceed the minimum required by the award. This should all be captured in the form of an employment contract.

Staying compliant

The Australian regulatory workplace environment changes from time to time. It is therefore important to stay up to date and understand how changes may impact you and your staff.

For example, an award that is relevant to one of your staff members may be updated, which in turn may require you to communicate this to your staff. Or the government may issue new rules about how you engage with long term casuals.

The regulatory framework in Australia is complex and involves many different stakeholders and government organisations. The Fair Work Ombudsman is a good source of information about current requirements and what is generally expected of you with employing staff.

Or contact us if you would like assistance with anything specific.