The employment relationship in Australia is variably governed by detailed legislation, industry awards, workplace agreements and individual contracts, offering employees a suite of protection and entitlements. The most recent legislative innovation is anti-bullying protections for employees, which allows employees who are subject to bullying to apply for an order to stop bullying. This new legislation (which is relatively onerous on employers) is reflective of a broader employment culture in Australia that is one of the most employee-friendly in the world.

Issues arising on hiring individuals

Overview

The Fair Work Act 2009 is the principal legislative instrument governing the employment relationship in Australia. The Fair Work Commission and the Fair Work Ombudsman (both established under this Act) are the government agendas charged with providing for workplace related supervision, assistance and redress for employees and employers.

The employment of most employees in Australia is governed by the national workplace relations system. Within that system, employment is primarily regulated through the use of industry specific modem awards or enterprise agreements negotiated between an employer or employers and employees (or union officials on behalf of employees) for a particular workplace.

The National Employment Standards (NES) also apply to employees under the national workplace relations system. NES provide a guarantee of basic minimum benefits for employees. These ten conditions cover working hours, leave, flexible work arrangements and termination of employment and cannot be supplanted to the employee's disadvantage by a modem award, enterprise agreement or individual employment contract.

Immigration

Any non-Australian nor non-New Zealand citizen seeking permission to work in Australia will need to apply for a visa from the Department of Immigration and Border Protection. If eligible, an employer can also sponsor an individual to work in Australia.

Employment structuring and documentation

Every employee in the national workplace relations scheme must be given a copy of the Fair Work Information Statement. This document provides information relevant to employment, including the NES, modem awards, agreements, the right to association and termination of employment.

Discrimination

Employees have the right under the Fair Work Act and various other state and national anti-discrimination statutes not to be discriminated against due to race, colour, sex, sexual orientation, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction and social origin. Anti-discrimination principles apply from the time of job application and throughout the employment relationship.

Issues arising during the employment relationship

Wages, annual leave and working time

Employees covered by the national workplace relations system generally have a standard working week of 38 hours, as provided for by the NES. Employers are not able to request or require employees to work more than the standard 38 hours and an employee can refuse to work extra hours if they are unreasonable.

As a matter of practice, working hours above 38 hours a week are often agreed between employer and employee as being `reasonable' and overtime may be provided for in an applicable award or agreement.

The NES also specifies that carers can request flexible working hours with their employer if they have been working for that employer for at least 12 months prior to the request for flexible hours or, for casual workers, have a history of employment with the company and expect to continue in that employment.

The minimum wages for employees are set out in the relevant industry award or enterprise agreement. There is also a national minimum wage (currently AUD 17.70 per hour or AUD 672.70 per week) for employees not covered by an award or an agreement, and other minimum wages set for junior workers, trainees and apprentices.

Under the NES, full-time employees (other than casual employees) are entitled to four weeks' paid holiday leave a year, with a supplementary leave allowance for shift workers. This leave accrues over the course of the working year and rolls over from year to year if unused. Unused holiday entitlements are also paid out to the employee following termination of their employment.

Full-time employees are also entitled to ten paid personal leave days a year (pro-rata for part-time employees), covering personal illness as well as the need to ca re for a member of their immediate family or an emergency. These accumulate from year to year. All employees (including casual employees) are also entitled to take two days' unpaid carers' leave on each occasion they are required to care for an immediate family member.

An employee covered by an award, enterprise agreement or individual contract may have different leave entitlements from those stated in the NES provided those entitlements are in excess of those minimum standards.

Family rights

Once an employee has worked for their employer for 12 months, they are entitled to 12 months' unpaid parental leave upon the birth of a child or adoption. In addition, certain periods of paid parental leave may be available to an employee. The employee is also entitled to return to the same or an equivalent position for which the employee is qualified and suited once they return from unpaid parental leave.

The position of casual employees as regards parental leave depends on their employment history and expected future continuous employment with their employer, as they are generally not entitled to leave unless they are long-term casual employees.

Trade unions

Membership of a union is voluntary and discrimination of an employee on the basis of me membership of a trade union is not permitted. All unions are registered with the Fair Work Commission.

A trade union representative is able to enter Australian workplaces in certain circumstances, such as investigating a breach of a workplace-related law, if they represent workers at that particular workplace and they hold a current right of entry permit issued by the Fair Work Commission.

Superannuation

Employers are currently required to pay a 9.5% superannuation contribution in addition to salary or wages for full-time, part-time and casual employees. An employee is generally able to select the fund that the superannuation contribution is paid into and can also make their own additional superannuation contributions.

Issues arising on termination of the employment relationship

Business transfers

Employees do not automatically transfer on the sale of a business or in the event of outsourcing or insourcing, and so an employer's duties in relation to termination and redundancy are often enlivened in this situation. An employer transferring or outsourcing its business should check the relevant award or enterprise agreement, as there is likely to be an obligation for an employer to consult with their employees if they are to be affected by a change to their workplace. Similarly, the Fair Work Act requires consultation with the relevant employee association if the change will result in the termination of more than 15 employees for reasons of an economic, technological, structural or like nature.

On the transfer of a business, an employee's accrual of entitlements generally recommences, but there are certain circumstances in which employment entitlements, including personal and carers' leave and parental leave, are to continue. Annual leave is an exception, and might be recognised by the new employer or, alternatively, might be paid out on termination of the previous employment. Long-service leave, redundancy, unfair dismissal and notice of termination are also exempted from being continuous entitlements following the transfer of a business.

Terminating employment

The termination provisions of the NES provide a minimum protection for employees which cannot be undermined in an award or agreement. Under these provisions, an employer is able to terminate a contract of employment on written notice. The amount of notice required is up to five weeks depending on the employee's length of service with the business. An award, agreement or individual contract might provide for alternate notice terms in excess of the minimum standards and provision for payment in lieu of notice is permitted.

There are some situations where no notice is required, such as for serious misconduct or for a casual employee.

Redundancy

Under the NES, an employee is entitled to redundancy pay if the employer decides that the position is no longer required or on the bankruptcy or insolvency of the company and the worker has been with the company for at least 12 months.

Redundancy entitlements provide employees with up to 16 weeks' pay, based on their length of service with the company. A modern award, agreement or individual contract may provide for an alternative redundancy scheme for an employee provided it is more beneficial than that provided for under the NES.

Unfair dismissal

The unfair dismissal provisions of the Fair Work Act apply to national workplace relations employees. A minimum period of service applies in order to qualify an employee to bring an unfair dismissal claim and the employee must not be a high income earner.

Under the unfair dismissal scheme, if a dismissal is harsh, unjust or unreasonable, or is not a case of a genuine redundancy, the employee is able to challenge that dismissal in the Fair Work Commission. Specific considerations apply for a small business. Employees earning in excess of AUD 138,900 per annum are not eligible to make an unfair dismissal claim.

An unfair dismissal claim must be lodged with the Fair Work Commission within 21 days of the dismissal The Commission has powers of redress such as reinstatement and payment of compensation to the wronged employee.

Published in collaboration with L&E Global: an alliance of employers’ counsel worldwide

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