Australia is governed by complex labour legislation that controls employment relations, workplace health and safety, and related matters. The employer-employee relationship is governed by laws, regulations and instruments that every Australian employer should know. In this guide, we explain the Fair Work Act, its importance, National Employment Standards (NES), minimum wage, and modern awards.
Fair Work Act summary
The Fair Work Act 2009 (the Act) is one of the primary pieces of legislation that govern the employment relationship in most of Australia’s private workplaces. It is the foundation of all minimum standards and regulations for employment that fall within the national workplace system. The Act is something employers in all industries and of all business sizes that fall within that system should be familiar with.
The Fair Work Act 2009 and the Fair Work Regulations 2009:
- Provide a safety net of minimum entitlements.
- Enable flexible working arrangements.
- Provide fairness at work and prevent discrimination against employees.
The Fair Work Act aims to provide a balanced framework for workplace relations by:
- Providing for terms and conditions of employment.
- Setting out the rights and responsibilities of employees, employers, and organisations regarding employment.
- Providing for compliance with, and enforcement of, the Act.
- Providing for the administration of the Act by establishing the Fair Work Commission and the Fair Work Ombudsman.
On top of these provisions and guidelines, the Act also gives employees a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions through the National Employment Standards (NES), Modern Awards, and National Minimum Wage orders.
National Employment Standards (NES)
Among the Fair Work Act’s purposes, it includes a provision of legislated National Employment Standards (NES). These minimum standards are mandatory for employees covered by the national workplace relations system regardless of industry, business size, or unique circumstances. The purpose of these standards is to protect the minimum entitlements of employees working in Australia under the national system regardless of their award, registered agreement, or employment contract, and as such they are unbiased and cover the following areas:
Maximum weekly hours of work
Right to request flexible working arrangements.
Parental leave and related entitlements.
Personal/carer’s and compassionate leave and family and domestic violence leave.
Community service leave.
Annual leave.
Long service leave.
Public holidays.
Notice of termination and redundancy pay.
Fair Work Information Statement (FWIS) and Casual Employment Information Statement (CEIS).
Casual employment and the employee choice pathway. Allowing eligible casual employees to transition to permanent (full-time or part-time) employment.
Superannuation contributions.
The right to disconnect. Allowing eligible employees to refuse work-related contact outside of their working hours.
The Fair Work Commission and The Fair Work Ombudsman
Of course, the practical application of the Fair Work Act 2009 and any other underlying entitlements in workplaces is not entirely left to the discretion of employers. Two regulatory agencies oversee the correct adherence to the Act in workplaces around Australia: the Fair Work Commission and the Fair Work Ombudsman. Together, these agencies administer, govern, and cooperate in fair work within Australia.
To be more specific about what the two bodies work to achieve:
- The Fair Work Commission administers the provisions of the Act, making, reviewing, and updating the legislation, awards, or registered agreements including award entitlements, and national minimum wages. It also operates as a tribunal to hear disputes and make rulings for employee claims regarding unfair dismissal and unlawful terminations or bullying and harassment.The FWC is responsible for enforcement of the FWA.
- The Fair Work Ombudsman provides information, advice, and guidance on the Act, ensures compliance and investigates allegations of breaches of the Act in the workplace.
Modern awards
While the National Employment Standards provide a base level of provisions that apply to all employees in the national workplace system, most minimum entitlements for wages and employment conditions are found in Modern Awards or registered agreements. The Fair Work Act 2009 also contains provisions for Modern Awards and registered agreements which provide an additional set of minimum entitlements and conditions for employees, within which employers must operate employment agreements for certain industries, occupations or, in cases of a registered agreement, group of employees within a business or group of businesses.
These awards and registered agreements also provide additional enforceable minimum employment standards for specific job roles within both the industries and occupations that they cover. In short, employers must provide their employees with at least their minimum entitlements under the relevant award or agreement.
If an industry or occupation is not covered by a Modern Award, there is a Miscellaneous Award which generally covers employees who are not covered by any other Modern Award, or else the employee is Award-free, in which case the NES will still apply.
The conditions of Modern Awards and registered agreements are administered by the Fair Work Commission.
Modern Awards and registered agreements such as Enterprise Agreements typically contain terms and entitlements relating to minimum wages, penalty rates, types of employment, flexible working arrangements, hours of work, rest breaks, classifications, allowances, leave and leave loading, superannuation, and procedures for consultation, representation, and dispute settlement.
Modern Awards, and agreements may also cover terms about industry-specific redundancy entitlements – that is, additional provisions regarding what employees being made redundant are entitled to within a certain industry.
National minimum wage
As the name suggests, a minimum wage is the base rate an employee is entitled to be paid for their ordinary hours of work. The minimum wage can be based on a Modern Award, Enterprise Agreement, or National Minimum Wage order.
Minimum wages under modern awards may differ depending on the employee’s employment type, age, or work capacity, and can include:
- Wage rates for adults, in some cases, at different rates according to experience and qualifications.
- Wage rates for juniors, employees with a disability, and employees to whom training arrangements apply.
- Casual loadings.
Regardless of which industrial instrument the employee is working under, they cannot be paid less than the national minimum rate of pay or the minimum award rate of pay for the specific job they do. Even if a lower amount is agreed upon by the employee.
The national minimum wage and pay rates under Modern Awards are reviewed by the Fair Work Commission (FWC) every year. This is to determine if an increase is justified based on national living standards. Any changes to the national minimum wage or pay rates under Modern Awards need to be in effect well in advance of the next financial year. Employers must remain vigilant in being aware of any changes to their relevant Modern Awards or national minimum wage to ensure they are not underpaying their employees.
Fair Work Act and your responsibilities
As a business owner or employer in Australia, you are generally bound by the Fair Work Act 2009. You are responsible for treating all your employees fairly and issuing them correct entitlements. Under the Act, employee entitlements such as the NES, Modern Awards, and Enterprise Agreements set the minimum pay rates and conditions and contracts. You cannot take away the minimum entitlements found in the NES or appropriate Modern Award. So, it is important to be well informed of your obligations under the Act.
Like most legislation, the Fair Work Act 2009 can be complex. Understandably, business owners and employers may find themselves confused by the technical language or legal terminology.
For peace of mind about your obligations, call Peninsula for free initial expert advice.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.