Employment Law in Australia
By Richard Ottley
Posted: 15th February 2013 09:59
Nothing is Ever Straightforward
Australia's employment law landscape comprises a complex and overlapping body of common law as impacted by State and Commonwealth legislation and various industrial awards made by industrial bodies (which awards set certain minimum employment conditions for various industry sectors).
The fact that Australia has six States, two Territories and a Commonwealth, all with different agendas and priorities, has historically led to a wide variety of legislation dealing with similar areas and at times confusion and uncertainty. This is especially so where Commonwealth jurisdiction eclipses State jurisdiction in the same area.
The above complexity raises a significant challenge to overseas organisations wishing to set up businesses in Australia, especially from a compliance perspective.
Key Australian Industrial & Employment Law Legislation
In recent times, the jurisdiction of the Commonwealth has been extended to cover a wider range of issues and to a greater number of employers and employers, with the collaboration of most states (excepting the State of Western Australia). Those states who have embraced these changes have done so, by ceding some of their power to legislate in the area of industrial relations, to the Commonwealth.
The Commonwealth Fair Work Act 2009 now provides a significant safety net of employee rights and employer obligations applicable nationally (but with a more limited application in Western Australia). The Act addresses, amongst other things:
- a comprehensive safety net of minimum employment conditions;
- a minimum wage (currently $606.40 per week);
- regulation of a system of modern awards covering the workplace (which provide employment conditions which supplement the minimum conditions under the Act);
- regulation of other industrial instruments designed to give greater flexibility by allowing for variations to award prescriptions (such as enterprise agreements and individual flexibility arrangements);
- protections for employees from unfair dismissal or from adverse action taken by their employers on proscribed grounds;
- protections against discrimination;
- achieving fairness and productivity by enterprise level bargaining underpinned by good faith;
- assisting employees with a balance between work and family life; and
- protecting the freedom to choose to be represented in the workplace.
Minimum conditions under the Act include:
- maximum weekly hours- 38 hours per week (unless a request to work beyond 38 hours is reasonable);
- the ability for employees to request flexible working arrangements;
- various types of leave including: parental leave, annual leave, public holidays, personal carers leave (which includes the taking of sick leave) compassionate leave and community service leave;
- entitlements employees may have on termination to receive minimum notice periods (or pay in lieu) and in the case of redundancy, redundancy pay;
- an obligation on employers to provide employees with a Fair Work Information Statement upon their commencing employment.
Other Important Employment Laws in Australia
In addition to the Commonwealth Fair Work Act 2009 there is a body of Commonwealth legislation relevant to the employment relationship which deals with such matters as income tax, superannuation and anti-discrimination legislation. Federal anti-discrimination legislation which comprises five pieces of legislation is itself likely to be consolidated into a single Act this year, following release of the Human Rights and Anti-Discrimination Bill.
Because Australia has a federal system, there is a further layer of State legislation relevant to the employment relationship which deals with such matters as: payroll tax, occupational health and safety, discrimination, workers compensation and long service leave (paid leave payable upon an employee acquiring a minimum number of years of service).
Problem Areas for Employers
Particular areas where generally employers get into difficulties are when engaging staff or when terminating staff. Some employees (generally the most senior) are award free and their employment terms will largely be determined by the common law as underpinned by Commonwealth and State legislation. Others will be covered by an award and need to be treated accordingly.
When engaging employees, some employers fail to determine whether an award regulates the employment or the employee is "award free". This can lead to their failure to comply with their award obligations leading to potential underpayment of employees and penalties under the Fair Work Act. Failure to provide a Fair Work Information Statement to every new employee is another common error. Failure to have in place a suitable restraint provision in relevant cases may leave an employers' goodwill exposed when it comes to termination. Some organisations deliberately or accidentally classify employees as contractors with a potentially significant raft of adverse consequences, including various penalties imposed under Commonwealth and State legislation.
Due to the ease with which employees may access the Fair Work Commission (a Tribunal which mediates and in some cases arbitrates disputes or claims arising from termination), employers need to exercise extreme caution when considering termination. It is often not enough to have a sound basis for termination. A failure to follow procedural fairness in the context of a claim for unfair dismissal under the Fair Work Act may prove fatal to the employer.
To conclude, it is advisable for organisations establishing a business in Australia, to invest adequate time, energy and resources in understanding the employment landscape and building a solid foundation based upon compliance, and tailoring their contracts and employment documents to their business needs.
Richard Ottley is a partner in both the employment and commercial team at Swaab Attorneys. Richard has been qualified as a solicitor for over 30 years and has worked in both the United Kingdom and Australia. Richard's employment law practice consists of drafting employment agreements and industrial instruments and contractor agreements, advising on award coverage, statutory entitlements and the rights and obligations of both employees and employers including under the Fair Work Act. He advises on whether restraint of trade clauses are enforceable. He also advises in connection with disciplining, performance management and the termination of employees, including acting for both employers and employees on unfair dismissal claims, claims for adverse action and discrimination based claims. He is also a notary public and a mediator.
For further information on employment law, please visit the website of Swaab Attorneys or contact Richard Ottley on +61 2 9233 5544 or firstname.lastname@example.org.