There are both state and federal laws governing industrial relations in Australia. Federal laws override the laws of a state, to the extent of any inconsistency.
Federal laws – The Commonwealth Fair Work Act 2009 (FW Act) is the primary piece of industrial relations legislation. Parts of the FW Act took effect on 1 July 2009 while other parts took effect on 1 January 2010. There are also equal opportunity, anti-discrimination and occupational health and safety laws.
The FW Act applies to trading or financial corporations, foreign corporations, all Commonwealth government agencies, and aircrew and waterside workers engaged in interstate trade and commerce. All states, except for Western Australia, have also now referred power to the Commonwealth to enable the FW Act to apply to other private sector employers, such as partnerships and unincorporated associations.
State laws – state industrial relations laws principally cover state public sector (government) employees. However, state laws continue to apply to private sector employers in relation to matters such as long service leave (but not other forms of leave), occupational health and safety, workers’ compensation and anti-discrimination.
Minimum terms and conditions of employment
The National Employment Standards (NES) under the FW Act set the minimum conditions of employment in respect of maximum ordinary hours of work (38 plus reasonable additional hours), annual leave (20 days per annum), personal leave (10 days per annum) and unpaid parental leave (12 months plus the right to request an additional 12 months). It is not possible to contract out of the NES.
There are 10 National Employment Standards. They deal with:
- hours of work
- annual leave
- personal, carer’s and compassionate leave
- parental leave
- flexible work for parents
- community service leave
- public holidays
- notice of termination and redundancy
- long service leave (limited application) and
- information in the workplace.
Long service leave – There are different laws in each state which govern long service leave. After completing a specific period of continuous service with an employer (either 10 or 15 years), employees are entitled to a period of paid leave (eg 2 months after 10 years).
Awards and agreements
Terms and conditions of employment can be controlled through regulated collective awards and agreements.
Awards – These may be specific to an individual employer, apply to a number of named employers or apply across an industry. They contain generally comprehensive base level entitlements that are determined by industrial tribunals.
Enterprise agreements – A collective enterprise agreement can be negotiated directly with employees or with employee unions. They are usually employer specific and contain enhanced conditions to suit the business. They override an award.
Taxation and superannuation
Taxation – There is a raft of taxation legislation in Australia of relevance in the employment context.
Key features are:
- payroll tax is levied by all state governments on the payroll paid to employees in that state
- during employment, employers are required to make PAYG deductions from employees’ remuneration
- employers must deduct a compulsory Medicare levy (currently 1.5%) from employees’ remuneration
- employers also have obligations with respect to fringe benefits tax which arises from most non-monetary forms of remuneration, and
- different tax rates may apply to amounts paid to employees upon the termination of their employment, depending upon the type of payment (ie wages, leave etc) and whether it is a redundancy.
Superannuation – The Superannuation Guarantee legislation requires employers to make compulsory superannuation contributions on behalf of employees, currently at the rate of 9% of employees’ “ordinary time earnings”. Employees are able to choose the superannuation fund into which contributions are made, so long as the fund is a “complying fund”. Australian workers are unable to access their superannuation benefits until they reach a minimum age (generally, age 60) or meet other conditions for payment.
After permanently leaving Australia, and expiry of a temporary resident visa, expatriate employees can apply for a refund of their superannuation (subject to withholding tax and some other conditions).
Termination of employment
Termination of employment with notice – Employment is usually terminable by notice given by either party. The FW Act generally provides for a scaled notice period on the termination of employment, up to a maximum of 5 weeks.
Termination of employment without notice – “Summary dismissal” or termination without notice is only available in very limited circumstances where an employee has committed an act of serious or wilful misconduct.
Redundancy – An employee’s position will be redundant where the employer no longer requires the employee’s job to be done by anyone. Redundancy pay (sometimes called severance pay) is separate from notice and a minimum entitlement prescribed to redundancy pay is in the NES.
Types of employment related litigation
Unfair and unlawful dismissal and general protections The FW Act provides three grounds for an employee
to challenge dismissal:
- Unfair dismissal claims – An ‘unfair dismissal’ occurs when the employee’s dismissal is ‘harsh, unjust or unreasonable’. In a successful challenge, an employee can be reinstated with full back pay or receive up to six months remuneration as compensation.
- Unlawful termination claims – Unlawful termination occurs when termination is based on one or more of a number of prohibited reasons set out in the WR Act, including for example, temporary absence from work for illness or injury, race, colour, sex, sexual preference, or age.
- General protections dispute – The FW Act includes general protections of workplace rights (including entitlements under awards or enterprise agreements) and freedom of association (the right to join a union), and prohibits unlawful workplace discrimination. An employer cannot take adverse action, including injuring an employee in their employment (a wide concept that may range from incorrect pay to demotion or loss of opportunity) or dismiss an employee, in contravention of general protections.
Claims for damages for breach of contract – Most commonly these claims are for damages in relation
to an alleged breach of contract arising from a failure to give “reasonable” notice of termination.
Other avenues for relief – Depending upon the particular circumstances, other avenues for relief may include a claim for underpayment of wages, a complaint, or claim for compensation arising from sexual harassment, victimisation or other unlawful discrimination or a claim for damages arising from breaches of the Trade Practices Act for misleading or deceptive conduct.
Occupational health and safety
Australia has comprehensive state based legislation requiring employers to ensure the health and safety of employees and visitors to their premises. The obligation is strict and non delegable. Directors and managers
of businesses can be personally liable. Large fines are imposed for breaches.