Introduction

Main Changes in the Past Year

During the past 12 months, the key legislative change to employment law in Australia have involved reforms to casual employment. Further protections for workers from harassment and bullying have been proposed by the Australian government and are expected to become law by the end of 2021. Temporary changes which occurred in 2020 in response to the COVID-19 pandemic have been wound back. The key legislative changes are set out in COVID-19 Crisis.

Reforms to Casual Employment

Changes to the Fair Work Act 2009 (Cth) (FW Act) relating to casual employment became law on 27 March 2021. The changes are in response to recent Federal Court decisions that illustrated the risk that employees first engaged on a casual basis may in fact be permanent employees and accordingly, be entitled to leave and other entitlements.

Employers must provide casual employees with an information statement prepared by a government authority (the Fair Work Ombudsman) which sets out details of the new casual provisions of the FW Act. The information statement must be provided to each casual before, or as soon as practicable after, they commence casual employment.

Definition of a “casual employee”

The FW Act now defines a casual employee as a person who is offered and accepts employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

To assess whether an employer makes no such firm advance commitment in its offer, only the following factors are taken into account under the FW Act:

  • whether the employer can elect to offer work;
  • the ability of the employee to accept or decline work;
  • whether the employee will work only as required according to their employer’s needs;
  • whether the employment is described as casual employment; and
  • whether the employee is entitled to receive casual loadings or a specific rate of pay.

Conduct by the parties after the employee accepts the employer’s offer is not taken into account when assessing whether the person is a casual employee.

This removes the risk that an employee may start employment as a genuine casual but subsequently be considered a permanent employee by the conduct of their employment.

This means that the employer’s offer to the new employee (and the content of their employment contract) will be key in working out whether or not an employee meets the definition of a casual employee.

Set-off provisions

Casual employees are entitled to a designated loading (or payment) usually equivalent to 25% of their hourly rate. The FW now provides that a casual loading may be set off against claims by a casual for various leave entitlements (including annual leave and personal leave) and redundancy pay under the National Employment Standards (NES), an industrial instrument or an employment contract.

A court must reduce any amount payable to the employee (by the amount of the casual loading) in respect of the employee’s claim. The court has a discretion to apportion the casual loading between the various entitlements in some circumstances.

Casual conversion

The NES have been amended to include an obligation for employers to offer permanent employment to some casuals and a right for some casuals to request permanent employment from their employer.

If a casual employee meets the following conditions:

  • has been employed for a period of 12 months;
  • for at least the last six months, worked a regular pattern of work on an ongoing basis; and
  • could continue working the same pattern (without significant adjustment) on a full-time or part-time basis,

the employer must, within 21 days of the end of the 12 months, make the casual a written offer of either full-time or part-time employment. This does not apply to small business employers.

The casual has 21 days to accept or reject such an offer.

Some casuals may already have rights under a modern award or enterprise agreement relating to conversion to permanent employment. The modern award or enterprise agreement has no effect to the extent to which it excludes the new casual conversion rights under the NES.

A casual employed for at least 12 months may also request full-time or part-time employment in some circumstances.

Proposed Changes to the FW Act and Sex Discrimination Laws

In response to a National Inquiry into Sexual Harassment in Australian Workplaces and the resulting [email protected] Report, the Sex Discrimination and Fair Work (Respect at Work) Amendment Bill 2021 (Bill) was introduced into the Australian Parliament in June 2021.

The Bill proposes to amend the FW Act to:

  • introduce two days paid compassionate leave if the employee, or the employee’s current spouse or de facto partner, has a miscarriage;
  • expressly provide for sexual harassment as a “valid reason” for dismissal of an employee in the context of the unfair dismissal provisions of the FW Act (addressed in Termination of Employment) – having a “valid reason” for dismissal is one of the provisions that needs to be satisfied by employers to defend an unfair dismissal claim commenced by a former employee; and
  • expand the existing anti-bullying jurisdiction to include sexual harassment – under this proposed change, a "stop sexual harassment order" would be available to be made by the Fair Work Commission (FWC) where an individual has been "sexually harassed at work".

Based on previous decisions in the FWC’s anti-bullying jurisdiction, it is anticipated that such orders might include orders requiring the individuals or group to stop the specified behaviour, regular monitoring of behaviours by an employer and/or the provision of information and additional support and training to workers. No financial compensation is available in this jurisdiction and former employees would not be eligible to seek such an order.

The Bill proposes to amend the Sex Discrimination Act 1984 (Cth) (SDA) to include a prohibition against “harassment on the ground of sex”. This has the effect of expanding the SDA’s application to different types of conduct not previously caught, including harassment that is based on an individual’s sex but is not necessarily sexual in nature.

The application of harassment laws under the SDA, are also proposed to be broadened under the Bill to include:

  • the broad concept “workers”, which is intended to capture workers such as employees, contractors, volunteers, interns and the self-employed;
  • members of parliament, judges and public servants for both federal and state governments would also be included; and
  • harassment in connection with the person being a worker will also be included, meaning that the person being harassed does not need to be performing work when the harassment occurs.

Under the Bill, the Australian Human Rights Commission Act 1986 (Cth) will be amended to allow complainants more time to make complaints under the SDA by only allowing the President of the Australian Human Rights Commission to terminate complaints on the grounds of time after 24 months (rather than six months).

A vote on the Bill by the Australian Parliament is expected after mid-August 2021.

Parental Leave Changes

In November 2020, the FW Act was amended to provide a right for an employee to take unpaid parental leave in connection with the birth of a stillborn child.

An employee may take the leave if they would have been entitled to take unpaid parental leave if the child had not been stillborn (unpaid parental leave in Australia is addressed generally at Other Terms of Employment). An employee may cancel their parental leave and return to work if a child is stillborn (or dies during the 24-month period starting on the child’s date of birth).

Accrual of Personal/Carers Leave (PCL)

In August 2020, the High Court handed down an important decision reversing the decision of the Full Bench of the Federal Court on the interpretation of the PCL provisions under the FW Act (see Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) & ors [2020] HCA 29). Under these provisions, an employee is entitled to accrue ten days’ PCL for each year of service.

The Court clarified the interpretation of a “day” of PCL referred to in the FW Act to calculate PCL entitlements, confirming that for the purposes of calculating PCL it was appropriate for employees working 38 ordinary hours per week to accrue 76 hours of PCL per annum. The High Court ultimately held that to calculate PCL:

  • each year of service is equivalent to an employee's ordinary hours of work in a two-week period (the entitlement accrues progressively);
  • one "day" of PCL (as referred to in the FW Act) consists of one tenth of the equivalent of an employee's ordinary hours of work in a standard two-week period (the reference to ten days’ PCL is to two standard five-day working weeks); and
  • for employees without consistent fortnightly work cycles, ten days’ PCL is equivalent to 1/26th of their ordinary hours of work in a year.

The decision means that PCL accrues progressively at a rate of 1/26th for each ordinary hour worked by an employee (regardless of whether they work full-time or part-time) regardless of how many hours an employee may be allocated to work on the particular day of their PCL.

The decision does not displace the ability of an employer and employee to negotiate more beneficial arrangements for PCL.

Workplace Relocation

In LWB Disability Services South Limited t/as Life Without Barriers v Smith [2021] NSWCA 37, the NSW Court of Appeal held that a reference to an employee’s ordinary location of work was not an express condition or essential term of their contract of employment.

The variation of an employee’s work location was therefore not an action constituting the repudiation of the employment contract.

The Court considered the following factors when characterising the location of work provision.

  • The industrial award that supplemented the employment contract entitled the employer to transfer its employees to various locations; the award and its corresponding legislation were held to be matters of law forming part of the background knowledge of the contractual relationship even though they were not expressly referred to in the employment contract.
  • The reference to the work location in the employment contract constituted details of the employee’s position (and nothing more).
  • It would be impractical to construe the location of work as an essential term of the employment contract; Such a construction would be inconsistent with the variables present in a permanent employment position where future events may require changes to be made to the work location (eg, the work location may become inhabitable).

The Court also found that the employer’s behaviour could not be held to be repudiatory where the purpose of the change in work location was to continue the employment relationship rather than sever it.

Qantas Sick-Leave Decision

In CEPU & others v Qantas Airways Ltd [2020] FCAFC 205, the Full Federal Court (Rares and Colvin JJ, Bromberg J dissenting) ruled that employees who are stood down without pay under the FW Act are unable to access paid PCL. The ruling concerned a challenge by several trade unions (Unions) to a decision by Qantas not to provide PCL to employees who had been stood down without pay under Australian’s national employment statute, the FW Act.

During a period of unpaid stand-down, the FW Work Act provides that an employee is not taken to be stood down if the employee is:

  • first limb – taking paid or unpaid leave that is authorised by the employer; or
  • second limb – otherwise authorised to be absent from their employment.

The Unions argued that if PCL is not authorised by the employer under the first limb, PCL could be taken by an employee provided that the conditions for taking PCL are met (even if the employer did not authorise the leave). Those conditions are that the employee is absent from work due to illness or injury which is substantiated where required by the employer.

The Full Court (by majority) found neither of these two circumstances entitled a stood-down employee to PCL.

  • During a stand-down, the taking of paid or unpaid leave is subject to an express authorisation by the employer; the fact that the conditions for taking PCL (absent the stand-down) are met is immaterial.
  • PCL is not a form of authorised absence from their employment as contemplated by the FW Act; this expression refers to specific entitlements under the FW Act for an employee to be absent from their employment, such as jury service or for absences in respect of community service activities.

An application by the Unions for the High Court to hear an appeal of the Full Court’s decision was rejected by the High Court in May 2021.

Public Health Orders

Australian public health orders have had significant implications for the ability of people to work and the way people work during the pandemic. For example, during the height of the lockdown in 2020 and in response to a COVID-19 outbreak in the Greater Sydney area in June 2021, the NSW Public Health Order required individuals to remain at home unless they had a reasonable excuse not to do so. In effect, employees were obliged to work from home unless it was not possible.

As at July 2021, the Order provides that NSW employers must allow their employees to work at home where it is reasonably practicable for them to do so. This means that employers may ask (but not oblige) employees to return to their workplace where working from home is still possible. Accordingly, an employee may refuse a request or a purported direction from the employer to attend the workplace in these circumstances.

Gig Economy

The FWC handed down a significant decision on the status of gig-economy workers. In Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, a single member of the FWC decided that a food delivery driver for Deliveroo, Mr Franco, was an employee entitled to an unfair dismissal remedy under the FW Act.

Mr Franco claimed that he was unfairly dismissed by Deliveroo after working since about April 2017. In April 2020, Deliveroo terminated Mr Franco’s services on the basis that he failed to deliver orders in a reasonable time and that various complaints about delivery times had been made against him.

In finding that Mr Franco was an employee, the FWC considered various factors, having regard to the totality of the relationship between the parties, with no single factor being determinative. The factors included the level of control over the way the work was performed, whether work was performed for competitors, the provision of equipment to the worker, the contractual description of the working relationship, the method of remuneration, tax and entitlements.

Having regard to these factors, the FWC determined that:

  • the booking system used by Deliveroo to allocate deliveries had the effect of directing Mr Franco to work at particular times and make himself available for work, despite not directly exerting control over when and how Mr Franco could work;
  • Mr Franco was working as part of the Deliveroo business and not carrying on his own business, despite being entitled to work for competitors; and
  • Mr Franco was required to dress himself in Deliveroo branded attire and to present himself as part of the Deliveroo Business.

Notably, the FWC considered that while the ability to work for competitors is ordinarily an indicator of an independent contractor relationship, this “must be assessed in the context of a modern, changing workplace impacted by our digital world”.

Having found that Mr Franco was an employee, the FWC determined that Deliveroo did not have a valid reason because there was no clearly identified delivery time standards set by Deliveroo by which to measure Mr Franco’s performance. The FWC determined that Mr Franco should be reinstated, and his lost pay restored.

Deliveroo has appealed the decision, which was heard in July 2021. The Full Bench of the FWC has reserved its decision.

This is the second decision by the FWC where a gig economy worker has been found to be an employee. The decision of the FWC in Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (again Commissioner Cambridge) found a Foodora delivery driver to be an employee and eligible to unfair dismissal protection. Shortly after this decision, Foodora ceased operations in the Australian market, and so was not the subject of an appeal. Deliveroo’s appeal provides the potential for a more authoritative ruling from a Full Bench of the FWC on the issue of gig-economy workers in Australia. It is anticipated that the Full Bench will be guided by their decision in Gupta v Portier Pacific Pty Ltd & another [2020] FWCFB 1698. In this decision from 2020, the Full Bench decided that Uber Eats “Delivery Partners” were not employees.

COVID-19 Crisis

Wage Subsidy Scheme

In response to the pandemic, the Australian government established a temporary wage subsidy scheme (known as JobKeeper) under which the Australian government reimbursed the wages paid by employers who have suffered a prescribed reduction in turnover. The government initially provided a wage subsidy of AUD1,500 before tax per fortnight paid to employers in arrears to reimburse them for income already paid to their eligible employees.

The scheme was originally designed to operate from 30 March until 27 September 2020. On 21 July 2020, the Australian government announced changes to the wage subsidy and extended its operation until 28 March 2021. From 28 September 2020, the JobKeeper scheme transitioned to a tiered system where eligible employees receive JobKeeper payments based on the average number of hours per week that they worked for their employer in the four weeks of pay periods prior to 1 March 2020.

Despite calls by some trade unions (and some others) to reinstate JobKeeper in response to further lockdowns caused by COVID-19, the Australian government has so far not extended the operation of JobKeeper beyond March 2021.

Changes to the Fair Work Act

The Australian government enacted temporary amendments to the FW Act. The amendments commenced on 9 April 2020 and (after an extension to their period of operation) were automatically repealed on 31 March 2021. The changes to the FW Act applied only to employers who qualified for the JobKeeper scheme, as well as their employees, who were eligible to receive the benefit of the wage subsidy.

The key changes were the following.

  • Subject to consultation obligations and reasonableness requirements, employers may give three different types of directions to employees (each a JobKeeper-enabling direction):
    • reducing their days and hours of work, known as a JobKeeper stand-down direction;
    • performing any other duties within the employees' skill and competence; and
    • performing duties at a different work location.
  • Employers may request that an employee perform work on different days or at different times during a period, compared with the employee’s ordinary days or times of work; the employee must not unreasonably refuse the request.
  • The right for employers to request employees to take annual leave which must not be unreasonably refused.
  • An employer and employee may agree to take twice as much annual leave at half the employee’s rate of pay.

Terms of Employment

Status of Employee

The expressions blue and white-collar workers are used in Australia to describe workers who are trade-qualified or perform manual labour and office-based workers or professionals, respectively. These expressions do not have any legal significance. A more useful distinction is that of (i) employees whose employment is subject to a modern award or enterprise agreement, and (ii) those employees who are not subject to either of these instruments.

Modern Awards

Employees in certain industries and occupations are covered by modern awards. Modern awards are made by an industrial tribunal (the FWC) and prescribe minimum terms and conditions of employment. Modern Awards do not apply to employees whose earnings exceed the high-income threshold (currently AUD158,500) and are subject to a guarantee of annual earnings.

Enterprise Agreements

An enterprise agreement is a collective labour agreement that is usually negotiated at an enterprise level and most often applies to one employer in respect of its employees. Like a modern award, enterprise agreements prescribe minimum terms and conditions of employment. Within Australia there are various types of employment arrangements which vary depending on the numbers of hours worked each week, the terms of engagement and the agreement between the parties. These include:

  • full-time employment – employees who work for 38 hours per week (plus reasonable additional hours);
  • part-time employment – employees who work less than 38 hours per week (for example, three days a week on an ongoing basis);
  • fixed or maximum-term employment – employees who work for a temporary specified term (for example, six months) either on a full-time or a part-time basis (termination of employment usually occurs at the end of the fixed or maximum term, but the parties may include provisions dealing with termination at any time on notice);
  • casual employment – a person who is offered and accepts employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work (these employees are viewed as being employed under a series of separate engagements).

Contractual Relationship

Ordinarily, the key terms of an employment contract will be set out in a written agreement between the parties. However, the terms may also be concluded by a verbal agreement or a combination of both. The key terms of employment will usually include the employee’s position, title, location, employment status (ie, full-time, part-time, fixed-term or casual), remuneration, incentive entitlements, obligations with respect of use and disclosure of confidential information, intellectual property rights, post-employment restraints of trade (if any, addressed in Restrictive Covenants), termination and redundancy.

Employment contracts may provide for ongoing employment or for a fixed or maximum term of employment (addressed in Status of Employee).

Minimum Requirements

An employment contract cannot provide for less than the legal minimum requirements set out in the NES or collective instruments, such as modern awards or enterprise agreements.

The ten standards set out under the NES are:

  • maximum weekly hours of work (38 plus reasonable additional hours);
  • a right to request flexible work arrangements in certain circumstances;
  • parental leave (up to 12 months' unpaid leave and the right to request a further 12 months);
  • annual leave (four weeks per annum cumulative from year to year, or five weeks for some employees);
  • personal/carer’s leave (ten days paid plus two days of unpaid carer’s leave), compassionate leave (two days' paid) and family and domestic violence leave (five days unpaid);
  • community service leave (unpaid leave for community service activities and jury duty (the first ten days of jury duty is paid));
  • long-service leave (governed usually by state and territory legislation);
  • public holidays (a paid day off (unpaid for casuals), except where reasonably requested to work);
  • notice of termination and redundancy pay (up to five weeks’ notice of termination and up to 16 weeks' redundancy pay, both based on length of service); and
  • provision of a Fair Work Information Statement to employees (which provides information to employees on the minimum terms and conditions) and a Casual Employment Information Statement to casual employees (which provides information to casual employees on the changes to the FW Act discussed in Introduction).

It is in the interests of all parties to have a written employment contract outlining the terms of the employment relationship, in order to mitigate the risk of a dispute about the terms of employment.

Working Hours

The NES provides that the maximum hours per week are 38 hours for a full-time employee. The hours an employee works in a week are taken to include any hours of leave or absence (whether paid or unpaid) authorised by the employer under the terms of the employee’s employment or by or under a law.

Reasonable Additional Hours

The NES provides that employers cannot require employees to work more than 38 hours unless the additional hours are reasonable. Under the NES, the following must be considered in determining whether additional hours are reasonable:

  • any risk to employee health and safety;
  • the employee’s personal circumstances, including family responsibilities;
  • the needs of the workplace or enterprise;
  • whether the employee is entitled to receive overtime payments, penalty rates or other compensation for (or a level of remuneration that reflects an expectation of working) additional hours;
  • any notice given by the employer to work the additional hours;
  • any notice given by the employee of their intention to refuse to work the additional hours;
  • the usual patterns of work in the industry;
  • the nature of the employee’s role and the employee’s level of responsibility;
  • whether the additional hours are in accordance with averaging provisions included in an award or agreement that is applicable to the employee or an averaging arrangement agreed to by an employer and an award/agreement-free employee; and
  • any other relevant matter.

Averaging of Hours

The hours of work for employees not covered by a modern award or enterprise agreement may be averaged over a period of up to 26 weeks. Modern awards and enterprise agreements may provide that ordinary hours of work are averaged over a period greater than 26 weeks.

Overtime Payments

Not all employees are entitled to additional remuneration (known as overtime) or time off in lieu of overtime for working outside their ordinary hours or above their agreed number of hours. Employees are only entitled to overtime if it is a contractual entitlement (which is not common) or a modern award, enterprise agreement or other industrial instrument that provides for overtime.

Compensation

The FWC annually reviews and sets the minimum wage that must be received by employees in Australia. The FWC national minimum wage order comes into effect from the first pay period on or after July 1st each year.

For the financial year 1 July 2021 to 30 June 2022:

  • the national minimum wage was set at AUD772.60 per week or AUD20.33 per hour, based on a 38-hour week; and
  • casual loading remains at 25% (which is compensation that casual employees are paid for not receiving certain entitlements, eg, leave that full-time and part-time employees receive).

The FWC announced a minimum-wage rates increase in modern awards of 2.5% with staged effective dates for different groups of modern awards: Group 1 will commence from 1 July 2021; Group 2 will commence from 1 September 2021; and Group 3 will commence from 1 November 2021.

Other Terms of Employment

Under the NES, permanent (ie, full-time and part-time) employees are entitled to the following.

  • Four weeks' paid annual leave per annum which accrues progressively during a year and is cumulative from year to year; Some shift workers are entitled to up to five weeks' annual leave per annum.
  • Ten days' paid personal/carer’s leave and are entitled to take two days' unpaid carer’s leave on each relevant occasion once they have exhausted their paid-leave accrual – this allows employees to take time off when they are unwell or a family member for whom they are required to care is unwell.
  • Two days' paid compassionate leave – this is also known as bereavement leave and allows employees (including casual employees) to take leave when an immediate family member dies or contracts or develops a life-threatening illness or injury.
  • Five days' unpaid family and domestic violence leave – this is available to allow employees (including casual employees) to deal with the impact of family and domestic violence.
  • Up to 12 months' unpaid parental leave – this is available to employees (including casuals) who give birth or whose spouse or de facto partner gives birth or who adopt a child under 16 years of age. Casuals are eligible if they have been working on a regular and systematic basis for at least 12 months and there was a reasonable expectation of continuing work with the employer but for the birth or adoption of a child. Eligible employees can receive up to 18 weeks' paid parental leave from the Australian government, which is paid at the national minimum wage level.
  • Long-service leave – this is paid leave provided to employees who have completed a specific period of continuous service with an employer (for example, employees in New South Wales are entitled to 8.67 weeks’ long-service leave after ten years’ service). Where the criterion for continuous periods service has been met, accrued and untaken long-service leave must be paid out to the employees on termination. Long-service leave is governed by state and territory legislation; therefore, long-service leave may be available to casuals in some states and territories.

Restrictive Covenants

Non-competition Clauses

Non-compete clauses and other restraints of trade are, as a general rule, contrary to public policy and void unless they are justified by special circumstances in a particular case. The party seeking to enforce the non-compete clause bears the onus of establishing its validity.

Whether any of the restrictions are enforceable will depend on whether:

  • the non-compete protects a legitimate business interest (considering the factual circumstances of the company and the industry in which it operates); and
  • the non-compete goes no further than is reasonably necessary to protect that legitimate business interest, having regard to the duration, geography and activities sought to be restrained by it.

Legitimate business interests that may justify non-compete clauses include protection of the following:

  • confidential information;
  • client or customer connections;
  • trade secrets;
  • staff and staff connections; or
  • goodwill.

An employer is not entitled to be protected against mere competition. The legitimate business interest is assessed in the context of the factual circumstances existing at the time the restraint was entered into. The circumstances of the individual being restrained in the context of the employment will also be considered in determining the validity of the non-compete clause.

Consideration

A basic requirement of any contract is that there is consideration for the agreement reached. This principle also applies in restraint cases. However, employees are not required to receive remuneration equivalent to the period of restraint in order for that restraint to be enforceable. The fact that an employee will suffer no financial loss in being restrained will be a matter also considered by the court when assessing the issue of consideration.

In all states of Australia except New South Wales (NSW), restraints cannot be read down and enforced in circumstances where they are considered unreasonable. In NSW, the position is different because of the NSW Restraints of Trade Act 1976 (RTA). The RTA provides that a restraint is valid to the extent it is not against public policy. Where an NSW restraint is challenged, the RTA empowers the NSW Supreme Court to consider and in effect read down to “save” and effectively amend an unreasonable restraint in the context of an actual breach and impose a lesser restraint; for example, a court may find that an employee should be restrained for three months in NSW rather than six months throughout Australia. While there are numerous cases where the RTA has been used, the outcome of each case will turn on its particular facts.

Non-solicitation Clauses – Enforceability/Standards

Australian courts have recognised an employer’s interest in maintaining a stable workforce. This interest may be protected by a time-limited post-employment restraint prohibiting the former employee from soliciting the employer’s employees. In granting an order enforcing an employee non-solicitation restraint, the court will consider the time period, geographic region and categories of employees covered by the restraint to determine whether it applies only to those employees that the former employee could reasonably be said to have influence over.

Customer Relationships

Australian courts have recognised that some customer relationships which an employee develops and/or maintains on behalf of their employer may be protected by a time-limited post-employment restraint prohibiting the former employee from soliciting the employer’s customers.

Not all customer relationships will justify the protection of a non-solicitation restraint. The courts will consider various factors, such as the employee’s role and seniority and the nature of their relationship with the customer (including the length and quality of the relationship, their frequency of contact and the exclusivity of their dealings compared to other employees). A non-solicitation restraint is also more likely to be enforceable when the employee’s dealings with the customer took place at the customer’s premises.

In other words, the non-solicitation restraint is more likely to be enforced where the employee is seen by the customer as (according to one case) the “human face” of the business.

Data Privacy Law

General Overview

The Privacy Act 1988 (Cth) (Privacy Act) provides the governing framework for privacy in Australia and deals with the collection, use and disclosure of personal information.

Employee Records' Exemption

The Privacy Act provides an exemption for employee records that are directly related to a current or former employment relationship in a private sector organisation.

For an employee record to be exempt from protection under the Privacy Act, three requirements must be satisfied:

  • the private sector organisation must act in its capacity as a current or former employer of an individual;
  • the act or practice must be directly related to a current or former employment relationship with the private sector organisation; and
  • the act or practice must be directly related to an employee record (being a record of personal information relating to the employee) held by the employer organisation and relating to the individual.

This exemption does not extend to unsuccessful job applicants (since no employment relationship is formed) or contractors.

Foreign Workers

Limitations on the Use of Foreign Workers

Employers and foreign workers (excluding New Zealand citizens) must meet strict requirements to be able to work full-time lawfully in Australia. New Zealand citizens are able to work in Australia without a business sponsorship. Foreign employees seeking a short-term working period of up to three months can do so if supported by their employer and the activity is considered of value to the employer or an associated business in Australia.

Employer Sponsorship

Employers may sponsor foreign workers to obtain a visa to work lawfully in Australia for longer periods. With some exceptions, the worker must be on a list of skilled occupations. Employers must be a registered sponsor with the Department of Immigration.

Relevant visas include Temporary Skill Shortage Visas (one to four years' duration with no geographical restrictions) and Regional Sponsored Migration Scheme Visas (at least two years’ employment for work done in a regional area). In each instance, the worker must either have the skills to perform the occupation or undergo a skills' assessment, unless an exemption applies.

If the job is on the list of skilled occupations and the standard visa programmes are not available, it may be possible to enter into a labour agreement with the Australian government. Labour agreements are usually in effect for five years and provide for visas to be granted without the usual visa requirements being met. The visas available under a labour agreement are the Temporary Skill Shortage Visa and the Employer Nomination Scheme Visa. Salaries paid to sponsored foreign workers must meet minimum levels as set by the Department.

Permanent Residency

The Employer Nomination Scheme Visa can be used for permanent residency sponsored by an Australian business, either upon initial application or after three years working for the employer in Australia. A more limited skilled occupations list applies. The employer must demonstrate that the position is a permanent role.

Registration Requirements

Registration may be required for some occupations – eg, doctors, nurses and lawyers. If registration is required, this will have to be obtained as part of the application process. Occupation skills' assessments by a relevant nominated authority may be required for permanent residency applications.

COVID-19

Due to the effects of COVID-19, restrictions on entry to Australia currently apply. Australian citizens and permanent residents are exempt from any entry restrictions as are their immediate family members.

Temporary residents are currently not able to enter Australia unless they apply for and receive a travel exemption. These may be granted where a state or commonwealth government has issued an invitation, where the person has critical or specialist medical skills or where the occupation would be of national interest. Occupations on the “Immigration Priority Occupations List” would normally be issued a travel exemption. Students requiring entry to complete courses may be granted a travel exemption.

If a temporary resident departs Australia, then may not be able to re-enter.

Applications for Travel exemptions are made online through the website of the Australian government’s Department of Home Affairs.

Collective Relations

Status/Role of Unions

Trade unions, enterprise associations (an association of member employees performing work in the same enterprise) and employer associations are legally recognised entities which are required to be registered with the Registered Organisations Commission. This Registered Organisations Commission and the FWC have split responsibilities for the regulation of these unions and associations.

In addition to the unions’ key roles of acting as the bargaining representatives for employees in relation to enterprise agreements, as set out below, trade unions and enterprise associations have broad rights to enter workplaces to:

  • engage in discussion with workers who are entitled to be represented by that union and who are willing to meet with them; or
  • investigate suspected breaches of modern awards, enterprise agreements or other workplace-related laws (such as work, health and safety laws).

Unions commonly act as advocates for employees in disputes with their employer and often initiate proceedings on behalf of employees with respect to certain workplace-related laws.

Employee Representative Bodies

There is no broad legislative framework for employee representative bodies or committees in Australia. There are, however, state and territory laws relating to work health and safety which provide for health and safety committees and representatives. The main functions of such committees are to co-operate with the employer and other relevant parties in developing and carrying out measures to improve the safety of workers.

Enterprise agreements (addressed in Collective Bargaining Agreements) may also provide a framework for the structure and rights of employee representative committees, which are generally limited to matters of work health and safety or major changes in the workplace.

Collective Bargaining Agreements

Employers and employees may negotiate collective agreements, referred to as "enterprise bargaining agreements", based on terms and conditions that must be better overall when compared to the minimums under applicable modern awards.

Modern awards set the minimum terms and conditions across most industries and occupations in Australia.

Mandatory Terms

The mandatory terms that must be included in enterprise agreements relate to the coverage and term of the agreement, consultation, flexibility and dispute resolution.

Greenfields Agreement

For genuinely new businesses, activities, projects or undertakings, employers and unions can bargain directly for a "greenfields agreement", without employees being involved or employed by the new enterprise.

When bargaining for an enterprise agreement, the employer and employees may nominate a bargaining representative. Unions are the default representative for their member employees, unless revoked or another appointment is made by the employee. Bargaining must be in accordance with the prescribed good-faith bargaining requirements, which include attending to and participating in meetings and genuinely considering a bargaining representative’s proposals. However, good-faith bargaining requirements do not require parties to make concessions or reach an agreement on terms to be included in the agreement.

Employees are able to take protected industrial action by striking or imposing partial work or overtime bans. However, protected industrial action may only be taken by employees when they are negotiating a new enterprise agreement and subject to certain notice and procedural requirements being satisfied. Employers may take responsive protected industrial action by locking out employees.

Once an enterprise agreement is made by the employer and employees, it must be approved by the FWC. It will then operate for its nominated term for a maximum period of four years and will continue to apply to the employer and employees even after its nominated expiry date, unless it is replaced or terminated.

Transfer of an enterprise agreement

There are also certain circumstances involving the acquisition of a business and the transfer of employees where enterprise agreements can transfer to the new employer and continue to apply to the transferring employee and the new employer, until replaced or terminated. In some instances, new employees of the new employer can also be covered by the transferring enterprise agreement. Applications can be made to the FWC for orders in relation to transfer of enterprise agreements, such as an order that the transferring enterprise agreement will not cover transferring employees.

Termination of Employment

Grounds for Termination

An employer may dismiss an employee by giving them the required period of notice without having a reason, or without notice for serious misconduct. Employees are able to challenge their termination in certain circumstances, as set out below.

Procedure

Different procedures apply or are recommended, depending on the reason for termination and the employee’s ability to bring a claim. Where an employee is able to bring an unfair dismissal claim, the employer must have a valid reason for the termination and follow a fair process. Where the reason for the dismissal is the employee’s capacity, conduct (other than serious misconduct) or performance, this will generally involve a series of discussions with the employee and the giving of warnings.

Additional requirements apply where the termination is due to redundancy (which arises where the employer no longer requires anyone to perform the employee’s position). For employees who are covered by an award or enterprise agreement, consultation must take place in accordance with the consultation provisions of the award or enterprise agreement. To avoid an adverse unfair dismissal outcome, redeployment to an available and suitable role within the employer’s business or the business of an associated entity must be considered.

Where 15 or more employees are to be made redundant, the employer has an additional obligation to notify the government employment agency and the union for any employees who are union members.

Notice Periods/Severance

Notice

Unless termination without notice is justified, the FW Act requires that employers give employees a specified minimum period of notice for the termination to be effective. The required minimum notice is a sliding scale ranging from one week (for employees with up to one year's continuous service) up to four weeks (for employees with more than five years’ continuous service). An additional one week's notice is required for employees who are over 45 years of age and have more than two years’ continuous service.

Longer periods of notice can also be specified in enterprise agreements and contracts of employment. An employer should give the longest period of notice legally required.

Redundancy Pay

Redundancy pay (or severance) is payable in addition to minimum period for notice of termination in the FW Act. The FW Act sets out a minimum redundancy payment scale based on years of service. To qualify for a payment, employees must have at least one year's continuous service. The minimum payment is four weeks’ pay for employees with at least one year's service and the highest payment is 16 weeks’ pay for employees with nine years' but less than ten years’ service. After ten years’ service, the required redundancy payment is 12 weeks’ pay. “Pay” is calculated by reference to base pay for ordinary hours and excludes bonuses.

It is possible that an enterprise agreement, employment contract or a legally binding company policy may provide for more generous redundancy benefits.

Consultation obligations must be met with award and enterprise agreement employees (see Grounds for Termination).

There is no legal requirement for external advice or authorisation; however, it is recommended that employers obtain legal advice before proceeding with redundancies.

Dismissal For (Serious) Cause (Summary Dismissal)

Termination without notice is permitted where the employee commits an act of serious misconduct. Serious misconduct is a breach of contract by the employee that is serious enough to warrant immediate termination because it demonstrates an intention by the employee not to be bound by their employment contract. Employment contracts commonly include examples of when termination for serious misconduct will be justified, including but not limited to where the employee is charged with a criminal offence. The Fair Work Regulations 2009 (Cth) also have a definition of serious misconduct which includes examples of theft, fraud, assault, being intoxicated at work and refusing to carry out a lawful and reasonable instruction.

Process

For employees who are able to bring an unfair dismissal claim, they must be given details of the allegations against them, an opportunity to explain their conduct and be told the reason for termination. Procedurally, an unreasonable refusal by the employer to let the employee have a support person at any discussions related to the dismissal is a matter taken into account in an unfair-dismissal claim context.

Termination Agreements

Deeds of release or settlement/termination agreements are permitted in Australia. They can be used at the time of termination and are standard in the settlement of claims. They are most commonly in the form of a deed of release. The deed must be in writing, signed, witnessed (if executed by an individual outside Victoria) and stated to be a deed. It will only become effective on the date the parties indicate (by words and by the conduct and the circumstances surrounding the execution of the deed) that they intend to be bound.

Releases are not able to cover statutory workers' compensation claims (which relate to workplace injuries) or claims under superannuation legislation (which is a compulsory retirement-funding scheme).

Protected Employees

Employees who are covered by a modern award or enterprise agreement or whose earnings are less than the high-income threshold under the FW Act (currently AUD158,500) are able to bring an unfair dismissal claim. Earnings include base salary, salary sacrificed amounts and agreed value of non-monetary benefits. The high-income threshold is indexed annually. Service thresholds also apply; six months for an employee of a business with 15 or more employees and one year for employees of a business with fewer than 15 employees.

Prohibited Reasons

The FW Act also contains prohibitions on termination for specified reasons. These include where the reason is because of a workplace right (such as a right under the FW Act or a right to make a complaint or inquiry in relation to an employee’s employment), discriminatory grounds (including race, sex, age) or an employee’s temporary absence through illness or injury or engagement in industrial action. To avoid an inference of the above unlawful reasons being found to be the reason for termination, it is recommended that employees are notified, in writing, of the lawful reason(s) for termination, such as due to redundancy or because of performance or conduct concerns (also addressed in 8.1 Wrongful Dismissal Claims).

Employment Disputes

Wrongful Dismissal Claims

A breach of contract claim is available where an employee alleges that their dismissal constitutes a breach of an express or implied term of their contract. A breach of contract claim may be commenced in the state, territory or federal courts of the jurisdiction most closely connected to the claim (depending on the value of the claim and the contents of the allegation of breach). Since the commencement of the whistle-blower provisions under the Corporations Act 2001 (Cth), claims under the victimisation provisions of the Corporations Act are can also be made in respect of dismissals (and other forms of detriment suffered by employees).

The successful party in breach of contract claims will ordinarily be awarded their costs of the proceedings on an indemnity or party/party basis. Because of the cost implications, breach of contract claims are generally commenced for claims seeking a substantial award of damages or are attached to a fair work claim (such as a general protections claim) in an attempt to avoid a cost award.

General Protections

General protection claims under the FW Act that involve dismissal are also commenced before the FWC. If they remain unresolved after a mandatory conciliation conference, a certificate will be issued by the Commission. An employee can then elect to continue their claim before the Federal Court or the Federal Circuit Court of Australia or, if both parties consent, the FWC may also arbitrate the matter. This type of claim usually involves an allegation that an employer has taken adverse action against an employee, such as by dismissing them because the employee has a workplace right, has exercised that workplace right or proposes to exercise that workplace right.

A "workplace right" includes:

  • complaints or inquiries about the employee’s employment (eg, a bullying or harassment complaint about an employee’s manager);
  • the employee being able to participate in a proceeding under a workplace instrument or law (eg, making a request for flexible working arrangements); or
  • the employee having a benefit and responsibility under a workplace law (eg, the role of a bargaining representative or a health and safety officer).

A reverse onus is placed on employers in these claims. An employer is required to establish that the alleged adverse action (such as demotion or dismissal) taken against the employee was not made by reason of the employee’s exercise of a workplace right. There is no minimum period of employment or income threshold that an employee needs to earn to bring a general protections claim.

The remedies available include reinstatement and payment of compensation (which is not capped). Penalties can also be imposed by the court against the employer and individuals who were knowingly involved in the breach of the general protections provisions of the FW Act. The current maximum penalties are AUD66,600 per breach for corporations and AUD13,320 per breach for individuals.

Whistle-Blower Laws

An eligible whistle-blower includes (among other classes of person) a current or former employee or contractor of a company who has made a complaint to an eligible recipient of that company about misconduct or an improper state of affairs or circumstances relating to that company.

An individual can make a claim against another individual or company for breaching the victimisation provision of the whistle-blower laws in the Federal Court or Federal Circuit Court. These claims involve allegations by an individual claiming that they suffered detriment and were victimised by reason that the individual was proposed to be, or was suspected of being, a whistle-blower. The onus of proof is reversed in these proceedings.

The remedies available for breach of the whistle-blower laws include:

  • non-monetary relief reinstatement, injunctive relief to prevent or stop detrimental conduct or an apology;
  • civil penalties against a company (up to AUD555 million) or an individual (up to AUD1.11 million); and
  • criminal sanctions – up to two years' imprisonment for individuals.

Anti-discrimination Issues

Australian federal, state and territory laws prohibit discrimination of employees based on certain grounds or attributes. These grounds and attributes include:

  • race;
  • sex, sexual orientation, gender identity or intersex status;
  • marital or domestic status, family or carer’s responsibilities or pregnancy;
  • age;
  • disability;
  • religion;
  • political opinion; and
  • social origin.

These attributes vary across the Australian, federal state and territory anti-discrimination laws. A claim of unlawful discrimination usually involves a claim that an individual or company has engaged in an act or omission based on one (or more) of the applicable attributes that has resulted in some harm or less favourable treatment.

Direct and Indirect Discrimination

The types of discrimination that apply to most of these protected attributes include the following.

  • Direct discrimination that occurs when a person or group of people is treated less favourably than another person or group in the same (or materially the same) circumstances because of a protected attribute (listed above).
  • Indirect discrimination that occurs when a condition, unreasonable rule or policy that is applied universally disadvantages a group of people who share a particular protected attribute (listed above).
  • Harassment that occurs where an individual behaves in a manner that intimidates, insults, or humiliates, or places an individual in a hostile environment; the most common types of harassment that occur in an employment context are sexual harassment and disability harassment.
  • Victimisation that occurs where an individual is threatened or suffers detriment because they have:
    • lodged or proposed to lodge a complaint of discrimination or harassment;
    • provided information regarding an internal investigation or external agency investigating a discrimination complaint; and
  • reasonably asserted their rights or supported someone else’s rights under anti-discrimination laws.

(See also allegations of victimisation under whistle-blower provisions in Wrongful Dismissal Claims and Introduction in relation to proposed changes to discrimination legislation.)

In Australia, successful claims of discrimination must be proved on the balance of probabilities. Complainants alleging direct discrimination are generally required to establish all the elements of the offence. The onus in claims of indirect discrimination under the Disability Discrimination Act 1992 (Cth), Sexual Discrimination Act 1984 (Cth) and Age Discrimination Act 2004 (Cth) is on the employer to prove that the condition, rule or policy was reasonable, having regard to the circumstances of the case.

Damages available in discrimination proceedings generally include:

  • economic loss – past and future income loss of the complainant;
  • general damages – non-economic loss resulting from the complainant’s pain, disability, loss of enjoyment of life, disfigurement or loss of expectation of life;
  • pecuniary loss – the complainant’s out-of-pocket expenses for medical and other treatment expenses, aids and appliances and domestic and personal care;
  • aggravated or exemplary damages – awarded where increased distress is suffered by the complainant because of the defendant’s conduct or where the court intends to deter other potential wrongdoers.

Other relief in discrimination claims include declarations, injunctions, a variation of contract (in limited circumstances), apologies and retractions.

Dispute Resolution

Judicial Procedures

The FWC is a specialist employment tribunal which is responsible for conciliating and arbitrating collective and individual employment disputes.

As previously noted, the FWC has jurisdiction to conciliate and arbitrate unfair dismissal claims. The conciliation of general protections claims is usually commenced in the FWC, which may arbitrate the claim if both parties consent.

Class actions or “representative proceedings” for employment law matters are becoming increasingly common in Australia. Class actions in the Federal Court may be commenced where seven or more people have a claim against the same person. The claims must (i) be in respect of or arise out of the same, similar or related circumstances, and (ii) give rise to a substantial common issue of law or fact, both being requirements which Australian courts have interpreted broadly to permit representative proceedings. Australian class actions generally operate on an “opt-out” system where all members within the relevant class are bound by the judgment (without needing to obtain their consent to be part of the group) unless they opt out. The court can also order that proceedings should not continue on a representative basis if it is in the interests of justice to do so (for example, where the costs of individual actions would be less than the class action).

Representation

In court proceedings, a party is generally entitled to be represented by a legal practitioner. In some employment proceedings, a party is not entitled to be represented, such as claims under the FW Act or a modern award where the amount which may be awarded by the court is less than AUD20,000.

Similarly, a party is not entitled to be represented by a legal practitioner in proceedings before the FWC without the permission of the FWC.

Alternative Dispute Resolution

The parties are generally free to agree to have disputes arising between them determined through arbitration. This includes pre-dispute agreements including employment contracts. Where the parties have agreed to settle a particular dispute through arbitration and an action is nonetheless brought before a court, the court will generally stay those proceedings and instead refer the dispute to arbitration in accordance with that arbitration agreement.

Awarding Attorney’s Fees

The FWC has a general power to order a party to pay the legal costs of another party where (i) the applicant’s claim (or the other party’s response to the claim) was vexatious or without reasonable cause, and (ii) it should have been reasonably apparent to the party that its position in the proceedings had no reasonable prospect of success.

The Federal Circuit Court or Federal Court of Australia has similar powers to make an order of costs in favour of the successful party for claims arising out of the FW Act.

The FWC has additional powers to award costs in respect of particular proceedings. For example, the FWC may award costs in respect of an unfair dismissal claim against a party if their unreasonable act of omission in relation to their conduct in the proceedings caused the other party to incur costs.

There are similar limitations on the court’s power to award costs in matters arising under the FW Act (such as a general protections' claim).

In claims for breach of contract, successful parties may receive a costs award in their favour on an indemnity or party/party basis for claims made in the state, territory or federal Court (see 8.1 Wrongful Dismissal Claims).