The Fair Work Act 2009 (Cth) generally applies to national system employers and their employees in Australia. In South Australia this is all employees apart from state public servants and local government employees. However there are a few provisions of the Fair Work Act 2009 (Cth) which cover all employees in Australia.
The Fair Work Act 2009 (Cth) generally applies in Australia to national system employers and their employees:
National system employer is defined in the Fair Work Act 2009 (Cth) [s 14]. A national system employee is an individual who is employed by a national system employer and is not on a vocational placement [s 13].
All private sector employees in South Australia are national system employees, covered by the Fair Work Act 2009 (Cth).
Entitlements to parental leave, notice of termination and unlawful termination extend to all employees in Australia. This means that those provisions apply to South Australian government and South Australian local government employees also.
The Fair Work Act 2009 (Cth) excludes State and Territory industrial laws that would otherwise apply to national system employers and employees. This includes the industrial relations Acts of the States, as well as other State and Territory laws that apply to employment generally and regulate key aspects of the employment relationship.
A number of State and Territory laws are preserved and will continue to apply to national system employers and their employees. These include laws dealing with work health and safety, workers compensation and discrimination [for the full list of preserved laws, see s 27].
Modern awards and enterprise agreements are subject to these preserved State and Territory laws, but prevail over other State and Territory laws (such as industry-specific employment laws) where inconsistent with those laws.
State or Territory laws dealing with flexible working arrangements and community service leave are preserved if they provide a more beneficial entitlement to employees.
Overview of 10 National Employment Standards
The National Employment Standards under the Fair Work Act 2009 (Cth) are ten legislated minimum standards. The National Employment Standards replace the Australian Fair Pay and Conditions Standard.
What are the 10 National Employment Standards?
1. Maximum Weekly Hours
The National Employment Standards provide maximum working hours of 38 hours per week for full-time employees. For employees who are not full-time employees (part-time or casual employees), weekly hours must not exceed the lesser of the employee’s ordinary hours or 38 hours.
Calculating an employee’s ordinary hours of work will depend on whether a modern award or an enterprise agreement applies to that employee:
1. Where a modern award or an enterprise agreement applies to an employee the ordinary hours of work for that employee will be those hours set out in the modern award or enterprise agreement.
2. Where a modern award or an enterprise agreement does not apply to an employee the ordinary hours of work for an award/agreement free employee are the hours agreed to between the employee and his or her employer.
3. If no such agreement is reached, ordinary hours of work will be the employee’s usual weekly hours of work. Regulations may be made to specify the usual weekly hours of work for an award/agreement free employee who is not a full-time employee and who does not have usual weekly hours of work.
An employee can be required or requested to work reasonable additional hours. There are a number of factors that must be considered in determining whether additional hours are reasonable, including:
- any risk to employee health and safety from working the additional hours;
- the employee’s personal circumstances, including family responsibilities;
- the needs of the workplace or enterprise in which the employee is employed;
- notice given by the employer of any request or requirement to work the additional hours;
- notice given by employee of his or her intention to refuse to work additional hours;
- whether the employee is entitled to receive overtime payments, penalty rates or other compensation for working additional hours;
- patterns of work in the industry; and
- nature of employee’s role and level of responsibility.
- An employee may refuse to work the additional hours if they are not reasonable.
The National Employment Standards allow modern awards and enterprise agreements to provide for the averaging of hours. This does not undercut the weekly hours guarantee, but is relevant in considering if additional hours are reasonable. Employers and award/agreement free employees may also agree on the averaging of hours over a maximum period of 26 weeks [ss 62-64].
2. Requests for Flexible Working Arrangements
The National Employment Standards give employees the right to request a change to working arrangements if they have 12 months continuous service and are parents of, or have responsibility for the care of, a child under school age, or a disabled child under 18. Flexible work can also be requested where the employee is experiencing violence from a family member or is supporting an immediate family member who is experiencing family violence. Further if the employee has a disability or is over 55 years old they are also able to request flexible working arrangements [ss 65(1), (1A), (1B)].
The request must be in writing and detail the change sought and reasons for the change. A written response must be received from the employer within 21 days and state whether the employer grants or refuses the request.
A request may only be refused on reasonable business grounds , the refusal must be in writing within 21 days of receiving the request and and include reasons [ss 65(4)-(6)]. The National Employment Standards does not provide a complete definition as to what constitutes reasonable business grounds, but provides examples which include that is would be too costly, or that there is no ability to adapt other employees' work arrangements to accommodate this [s 65(5A)].
These provisions are not intended to displace State and Territory laws that provide employee entitlements in relation to flexible work arrangements if they are more beneficial to employees [ss 65-66].
3. Parental Leave and Related Entitlements
The National Employment Standards provide access to up to 24 months unpaid leave in relation to the birth of a child or the placement for adoption of a child under 16. This entitlement extends to same sex couples.
The employee taking leave must have completed 12 months of continuous service before qualifying for this entitlement.
Each member of an employee couple may each take up to 12 months leave. An employee who has taken 12 months of unpaid parental leave may request an extension for a further period of up to 12 months. The available extension period will be reduced by any parental leave or special maternity leave taken by the employee’s partner. A request for extension may only be refused on reasonable business grounds.
Leave cannot be taken concurrently; other than a period of up to 3 weeks around the time of birth or adoption [ss 67-79].
A casual employed on a regular and systematic basis over at least a 12-month period prior to the expected date of birth who has a reasonable expectation of continuing regular employment is also entitled to unpaid parental leave.
4. Annual Leave
The National Employment Standards provide 4 weeks paid annual leave for each year of service. A shift worker (as defined by a modern award or enterprise agreement or, in the case of an award/agreement free employee, the Fair Work Act 2009 (Cth)) is entitled to 5 weeks annual leave.
Modern awards and enterprise agreements may include provisions dealing with cashing out of annual leave. Employers and award/agreement free employees may also agree to cash out. An agreement to cash out annual leave must be in writing and the payment must be for the full amount that the employee would have been paid if the employee had taken the leave. The employee must retain a balance of 4 weeks annual leave after the cash out.
Awards and agreements can also include provisions about taking or directing the taking of annual leave [ss 86-94].
5. Personal/ Carer's Leave and Compassionate Leave, and unpaid Family and Domestic Violence Leave
Under the National Employment Standards, employees (other than casual employees) are entitled to 10 days paid personal/ carer’s leave.
All employees are entitled to 2 days of unpaid carer’s leave per occasion (this entitlement applies to casual employees and other employees who have exhausted their paid leave entitlement).
Employees are also entitled to 2 days of paid compassionate leave per occasion (for casual employees, this is an unpaid entitlement).
Carer’s leave and compassionate leave entitlements may be taken in relation to a member of the employee’s household or ‘immediate family’ (this includes extended and blended families, de facto partners, step-relationships and adoptive relationships).
When taking personal/carer’s leave and compassionate leave, employees must:
- provide notice to their employer as soon as is reasonably practicable (which may be a time after the leave has started);
- state the period, or expected period, of the absence if required by the employer—provide evidence that would satisfy a reasonable person of their entitlement to take the relevant kind of leave. Modern awards and enterprise agreements may include further rules relating to evidence requirements, such as the provision of medical certificates.
Modern awards and enterprise agreements may allow for the cashing out of personal leave, provided certain conditions are met to ensure employees are protected (that is, the employee must retain a balance of 15 days paid leave after the cash out). An award/agreement free employee is not able to cash out personal/carer’s leave [ss 95-106].
To be protected from unlawful dismissal due to temporary absence due to illness [s 352 of the Fair Work Act 2009 (Cth)], a medical certificate should be provided to the employer within 24 hours or as is reasonable in the circumstances [see regulation 3.01 Fair Work Regulations 2009 (Cth)]. It is always advisable to provide a medical certificate to your employer if absent due to illness as soon as possible.
All workers, full-time, part-time, or casual, are entitled to 5 days of unpaid Family and Domestic Violence Leave per year. See further the Fair Work Ombudsman.
6. Community Service Leave
The National Employment Standards provides a paid entitlement for employees required to attend jury service and unpaid leave for those who engage in a voluntary emergency management activity.
An employee is entitled to be paid by their employer for a period of up to 10 days while they are absent from work during a period of jury service. An employer may require the employee to obtain payments to which they are eligible from the applicable State/Territory or Commonwealth body; these payments will reduce the amount payable to the employee.
These provisions are not intended to displace State and Territory laws that provide employee entitlements in relation to engaging in eligible community service activities, if they are more beneficial to employees [ss 108-112].
7. Long Service Leave
The Federal government will work with the States and Territories to develop a uniform minimum long service leave standard. The National Employment Standards provide transitional arrangements while the new national standard is being developed.
Existing agreement entitlements continue to apply in South Australia [the Long Service Leave Act 1987 (SA)].
If an agreement is terminated, the National Employment Standards entitlement to Long Service Leave (the entitlement in the relevant pre-modernised award or, in some cases, pre-commencement multi-State agreement) or State/Territory legislation will apply in any future agreement.
There is limited scope to discount Long Service Leave where a pre-commencement agreement specifically excluded Long Service Leave [s 113].
8. Public Holidays
The public holidays National Employment Standard allows employees to be absent from work on specified public holidays and to be paid for the hours they would normally work.
Public holidays may be substituted by agreement between an employer and an award/agreement free employee or if permitted under the terms in a modern award/enterprise agreement.
An employer may request an employee to work on a public holiday if the request is reasonable. The request may be refused if it is unreasonable or the employee’s refusal is reasonable. The National Employment Standard provides a non-exhaustive list of factors to be taken into account when determining the reasonableness of a request or refusal [ss 114-116].
9. Notice of Termination and Redundancy Pay
An employer must provide an employee with written notice of the day of termination of employment [ss117-118].
An employer must provide notice of termination or payment in lieu of that notice. The required period of notice is set out in a table in the National Employment Standards.
An employee who has worked continuously for one year or more, whose position is made redundant (as defined in the National Employment Standards) is entitled to a payment based on years of continuous service with an employer. Businesses with less than 15 employees are exempt from this National Employment Standard [ss 119-121].
Exclusions apply including:
- an employee employed for a specified period of time, for a specified task, or for the duration of a specified season;
- an employee whose employment is terminated because of serious misconduct;
- a casual employee;
- in some situations where the employer has found suitable alternative employment for the employee;
- where there is an industry-specific scheme for redundancy in the modern award;
- an employee (other than an apprentice) to whom a training arrangement applies and whose employment is for a specified period of time or is, for any reason, limited to the duration of the training arrangement; [ see generally ss 120-123].
10. Fair Work Information Statement
The National Employment Standards require employers to give each new employee a copy of the Fair Work Information Statement containing information on key elements of the new system. Key elements include the roles of the Fair Work Commission and the Fair Work Ombudsman, the National Employment Standards, modern awards, agreement making and freedom of association. The Fair Work Information Statement must also contain information on individual flexibility arrangements, employee records and privacy and termination of employment.
An employer must give each new employee a copy of the Fair Work Information Statement (to be published and available from the Fair Work Ombudsman) prior to or as soon as practicable after commencement of employment [ss 124-125].
The National Employment Standards apply for employees not covered by awards or enterprise agreements
The National Employment Standards operate even if an employee is not covered by a modern award or enterprise agreement. The national minimum wage also applies to those employees.
The Miscellaneous Award 2010 is the modern award which provides minimum entitlements for employees who are not covered by another (industry or occupation-based) modern award and who are performing work of a similar nature to that which has historically been regulated by award [ see http://www.fwc.gov.au/documents/modern_awards/award/ma000104/default.htm].
Modern awards build on the National Employment Standards and may include an additional 10 minimum conditions of employment, tailored to the needs of the particular industry or occupation. These include:
- minimum wages
- types of employment
- arrangements for when work is performed
- overtime and penalty rates
- annualised wage or salary arrangements
- leave related matters
- procedures for consultation; and
- representation and dispute settlement.
Each modern award includes a flexibility clause allowing employers and employees to negotiate arrangements to meet their individual needs, creating individual flexibility agreements [ss 145-146]. These agreements vary the effect of the award between the individual employee and employer, but do not effect other employees. If an employee has an individual flexibility agreement they must still be 'better off overall' than if they did not have the agreement [s 144(4)(c)]. Those agreements must also be genuinely entered into voluntarily [s 144 (4)(b)].
Modern awards cover all employees who perform work that has historically been regulated by awards. They are generally industry-specific and can be accessed via the Fair Work Commission's website.
Modern awards do not apply to employees with guaranteed annual earnings of more than $136 700 (as at July 2015, indexed each year and pro rata for part-time employees). This high income threshold will be indexed annually and adjusted in July each year in line with annual growth in average weekly ordinary time earnings for full-time adult employees. These employees and their employers will be free to agree on terms to supplement the National Employment Standards without reference to an award and may still be covered by an enterprise agreement.
An award does not apply to an employee if an employer provides a written undertaking to pay an employee annual earnings at or above the high income threshold over a period of 12 months or more.
A guarantee for a shorter period may apply in the case of a short-term, fixed-term contract or a particular type of work on a short-term basis. A guarantee does not apply to employees to whom an enterprise agreement applies.
The employer and employee must reach agreement about the undertaking before it commences operation. A guarantee may be given as a condition of accepting employment but an employer must not apply pressure to an employee in connection with the offer or acceptance of a guarantee of annual earnings. A guarantee can be given in respect of prospective employees.
The Fair Work Commission will review modern awards every four years to maintain a relevant and fair minimum safety net and to make sure it continues to meet the needs of the community.
The first regular review will take place in 2014, four years after modern awards commence on 1 January 2010. Fair Work Australia may vary, make or revoke modern awards during this process. Each award must be reviewed [s 156].
An additional review of modern awards took place in 2012, two years after modern awards commenced. This review examined whether modern awards:
- achieved the modern awards objective [see s 134], and
- were operating effectively, without anomalies or technical problems arising from the award modernisation process.
In limited circumstances, the Fair Work Commission has the power to vary, make or revoke modern awards outside the system of four yearly reviews (for example, if it is satisfied that to do so is necessary to achieve the objectives of modern awards or to remove ambiguity, uncertainty or discriminatory terms) [s 157].
The main power to vary modern award minimum wages is in annual wage reviews. Otherwise, the Fair Work Commission may only vary modern award minimum wages in a four yearly review or outside a four year review where the variation is necessary to achieve the modern awards objective if the variation is justified for work value reasons, or to update or omit a name of an employer or organisation etc, or to remove or correct an error or uncertainty, or to remove a clause that would be unlawful under discrimination laws [ss 156-157, 159-161, see also ss 162-167].
An application can be made to the Fair Work Commission for a modern enterprise award. An application can be made between 1 July 2009 and 31 December 2013. After this time period no new modern enterprise awards can be made. If an application to modernise an enterprise award is not received by the Fair Work Commission by 31 December 2013 that instrument will cease to operate and the applicable modern award will then apply.
Prior to a decision being made to modernise an enterprise award and before 31 December 2013, existing enterprise awards will continue to cover employees and employees will maintain their existing entitlements.
The 10 National Employment Standards applies to all employees—whether they are covered by an award or not. Modern awards apply to most, but not all employees.
The Minimum Wage Panel makes a national minimum wage order for employees who are not covered by a modern award. The order includes a national minimum wage and special national minimum wages for junior employees, employees to whom training arrangements apply and employees with a disability. It also includes a set safety net casual loading for casual employees who are not covered by either an award or an agreement. Further information about the Minimum wage panel and the current national minimum wage is available on Fair Work Commission's website.
Workplace rights can be broadly described as employment entitlements and the freedom to exercise and enforce those entitlements. The Fair Work Act 2009 (Cth) sets out the following categories of workplace rights:
- entitlements, roles and responsibilities under a workplace law, workplace instrument or order of an industrial body;
- participation in processes or proceedings under workplace laws or instruments; and
- the making of complaints or inquiries (subject to certain pre-conditions being satisfied) [s 341].
The workplace rights protections prohibit taking adverse action against a person because they have a workplace right or because they do (or do not) exercise their workplace right.
The general protections provisions protect people from adverse action. This is a key definition that intersects with a number of the protections.
What constitutes adverse action in a particular case depends on the nature of the relationship between the relevant persons. For example, adverse action taken by an employer against an employee includes dismissal, discrimination, refusing to employ a person, or prejudicially altering the position of the person.
The definition covers certain conduct of employers, employees, industrial associations, independent contractors and principals. It also extends to protect prospective employees from adverse action in certain circumstances [s 342].
The industrial activities protections encompass a person’s freedom to be or not be a member or officer of an industrial association and participation or non-participation in certain industrial activities (for example, refusal to take part in industrial action). The protections prevent adverse action being taken against a person in connection with these industrial activities. The protections also prohibit incentives in relation to a decision to become or not become a member of an industrial association [s 350].
Coercion, misrepresentation and undue influence or pressure
Coercion and misrepresentation in relation to workplace rights and industrial activities is also prohibited. For example:
- industrial associations are prohibited from organising industrial action against an employer because the employer refuses to comply with an unlawful request made by the industrial association; and
- employees are protected from undue influence or pressure being exerted by their employer in relation to a decision by the employee to agree to or terminate an individual flexibility arrangement [ss 344, 348-349].
Employees and prospective employees are also protected from workplace discrimination on the grounds of race, colour, sex, sexual preference, age, disability, marital status, pregnancy, family or carer’s responsibilities, religion, political opinion, national extraction or social origin. The general protections prohibit all adverse action (victimisation, refusing to employ, etc.) not just dismissal, on discriminatory grounds.
The unlawful termination protections for discriminatory reasons (e.g. race, colour sex) have been retained for non-national system employers, however the protection is limited to protection from dismissal.
The general protections also prohibit a person from discriminating against an employer for reasons including, that employees of the employer are covered, or are not covered, by a particular type of workplace instrument (for example, coverage by a modern award instead of an enterprise agreement).
In addition, there are also protections to prohibit coercion of a person to make or not make certain employment or management decisions (for example, to allocate particular duties to a particular employee).
There are also protections against sham contracting which relate to circumstances where employers try to disguise genuine employment arrangements as independent contracting arrangements [ss 357-359].
To see if you should be an independent contractor or employee, see the Fair Work Ombudsman's website: www.fairwork.gov.au.
Where a person alleges a contravention of the general protections, the Fair Work Commission is able to hold a conference to attempt to resolve the matter. In cases involving dismissal, the conference is mandatory. In all other cases, participation in a Fair Work Commission conference is voluntary and a person can elect to proceed directly to court instead.
Where a person is dismissed from employment, a Fair Work Commission application to hold a conference must be made within 21 days of a dismissal. If the matter cannot be resolved at the conference, the person is able to apply to the Fair Work Division of the Federal Court or Federal Circuit Court for a remedy.
Available remedies include monetary penalties, injunctions, compensation, and reinstatement in the case of dismissal. Costs will only be awarded if the proceedings were instituted vexatiously, the costs were incurred due an unreasonable act by the other party, or one party unreasonably refused to participate in the Fair Work Commission's proceedings.
A guide to general protections applications is available on the Fair Work Commission's website.
A useful guide for working parents is available at supportingworkingparents.gov.au. This Guide covers when you need to tell your employer that you are preganant, rights and restrictions around pregnancy, returning to work and parental leave.
The Law Handbook chapter on discrimination has a specific section dealing with pregnancy discrimination.
Part 2-8 of the Fair Work Act 2009 (Cth) provides for the circumstances in which a transfer of business can occur.
There will be a transfer of business from an old employer to a new employer if:
(i) the employment of an employee of the old employer has terminated;
(ii) within 3 months after the termination, the employee becomes employed by the new employer;
(iii) the transferring employee performs the same, or substantially the same, work for the new employer as he or she performed for the old employer;
(iv) there is at least one of four connections between the old employer and the new employer. The four connections are: an asset transfer; an outsourcing; an insourcing; or that the new and old employers are associated entities.
This connection requires that, in addition to the matters in (i) to (iii) above being satisfied:
- there is an arrangement between the old and new employers (or their associated entities)
- under the arrangement, the new employer owns or has the beneficial use of some or all of the assets that the old employer used in relation to (or in connection with) the transferring work.
This connection requires that in addition to the matters in (i) to (iii) above being satisfied, the old employer outsources work to the new employer. This will cover a situation, for example, where A (the old employer) outsources some of its work to B (the new employer) and B engages some of A’s employees to continue performing the work. This connection will apply irrespective of whether there is a transfer of assets between the old employer and the new employer. This connection is only intended to apply to the initial outsourcing of work and not the situation where work that has already been outsourced is retendered. In other words, it could apply when A initially tendered the work to B but would not apply if A retenders the work and awards the new contract to C rather than B [s 311].
The intention of this connection is that a transfer of business occurs where a new employer decides to in-source the work previously done by the transferring employee of the old employer [s 311].
This connection requires that the new employer is an associated entity of the old employer. The definition of ‘associated entity’ is the same as that used in the Corporations Act 2001(Cth). This connection is intended to cover some corporate restructures (for example where a company transfers some of its employees from one part of the company to another) [s 311].
The transfer of business provisions in Part 2-8 set out the default rules that apply to the coverage of transferable instruments (for example an enterprise agreement that has been approved by the Fair Work Commission, a workplace determination or a named employer award) when a transfer of business occurs.
The default rules provide that a transferable instrument that covered the old employer and a transferring employee immediately before the employee’s employment was terminated covers the new employer and the transferring employee. The intention of this rule is that a transferring employee should continue to have the benefit of their existing workplace instrument.
This means, for example, that an enterprise agreement or named employer award that already covered the new employer would not cover a transferring employee who is covered by a transferable instrument [s 313].
These rules have the effect that a transferable instrument covers a non-transferring employee of the new employer in certain circumstances. It allows new employees who are not transferring employees and to whom no other instrument applies to be covered by the same workplace instrument as the transferring employees [s 314].
The Fair Work Commission will have powers to make orders on application, in relation to transfers of business. For example, the Fair Work Commission may order that a transferable instrument cover existing or new employees of the new employer, not just transferring employees. The Fair Work Commission may also order that the transferable instrument not cover the new employer and the transferring employees.
In deciding whether to make such orders, the Fair Work Commission must take into account a range of matters including the views of the new employer and the relevant employees, whether any employees would be disadvantaged by making the order, and the financial position of the new employer [ss 317-320].
The transfer of employment provisions in the Fair Work Act 2009 (Cth) protect employee entitlements in a broader range of corporate restructuring, including outsourcing/in-sourcing arrangements.
On a transfer of employment a new employer will be required to recognise employees’ service with the old employer when calculating certain National Employment Standard entitlements (for example personal/carers leave, parental leave and the right to request flexible work arrangements).
If the new employer and the old employer are not associated entities the new employer has a choice whether to recognise an employee’s prior service and their associated annual leave and redundancy pay. If the new employer does not agree to recognise service, the old employer must pay out these entitlements.
The new employer must inform transferring employees of any change to entitlements, including the requirement for a new minimum employment period for unfair dismissal. If the employer fails to inform the transferring employees in writing, previous service for the minimum employment period is recognised and the employees will not be required to serve out a new minimum employment period.
Where an employee is transferred to an employer that is an associated entity of the previous employer, the employee’s service with the previous employer will be deemed to be continuous for the purposes of service-related National Employment Standard entitlements and the unfair dismissal minimum employment period.
Further terms and conditions that are derived from an instrument may also transfer in a transfer of employment. Transferable instruments include enterprise agreements (whether or not in operation) that have been approved by the Fair Work Commission, workplace determinations and named employer awards. An employer or an employee will be covered by a modern award if they are included in the specified class, so there is no need to include provisions providing for the transfer of modern awards that operate on an industry basis.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.