Employment contracts are the cornerstone of Australian workplace relationships. However, no matter how carefully drafted, they must comply with the National Employment Standards (NES) outlined in the Fair Work Act 2009 (Cth).
This article, prepared by our employment lawyers explain how contracts and the NES work together, recent legal changes affecting contract terms, and what employers can do to stay compliant..
This article has been updated in June 2025.
Key Takeaways
The NES set out 11 minimum entitlements for Australian employees
Employment contracts cannot reduce or override NES entitlements
Modern awards and enterprise agreements may add benefits but can’t undercut the NES
Recent High Court rulings focus on the written contract over practical realities
New rules for fixed term contracts and casual conversion now apply
Non-compliance can lead to penalties, underpayment claims, or unfair dismissal disputes
What Are the National Employment Standards (NES)?
The NES are 11 minimum entitlements that apply to most employees in Australia, regardless of any contract, award, or enterprise agreement. These standards cannot be displaced or reduced by any other employment instrument.
Learn more about the Fair Work Act in our guide: The Fair Work Act: A guide for Employers.
The 11 Minimum NES Entitlements
- Maximum weekly hours
- Requests for flexible working arrangements
- Offers and requests to convert from casual to permanent employment
- Parental leave and related entitlements
- Annual leave
- Personal/carer’s leave, compassionate leave, and unpaid family and domestic violence leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Fair Work Information Statement and Casual Employment Information Statement
How Do Employment Contracts Interact with the NES?
Employment contracts must not provide less than what the NES guarantees. If a contract tries to offer a lower entitlement, the NES will override it.
Modern awards and enterprise agreements may provide additional entitlements but cannot undercut the NES.
If a contract is silent on an issue, the NES still applies.
Examples
A contract allowing termination without notice will be overridden if the NES requires a minimum notice period.
Silence in the contract doesn’t mean exemption—the NES still applies.
Modern Awards and Enterprise Agreements
Modern awards cover specific industries or roles and include:
Minimum pay
Rosters and hours
Breaks and penalties
Overtime and allowances
Enterprise agreements, negotiated at the workplace level, must meet the Better Off Overall Test (BOOT) – employees must be better off than under a modern award. The Fair Work Commission can only approve enterprise agreements that pass the “better off overall test”.
Both instruments must meet or exceed NES entitlements. Where there is inconsistency, the NES prevails.
Courts Now Prioritise the Written Contract
Recent High Court decisions have significantly shifted the legal approach to determining whether a worker is an employee or independent contractor.
The Court now places primary emphasis on the terms of the written contract — not just how the work relationship plays out day-to-day.
Key Cases:
WorkPac Pty Ltd v Rossato (casual employment and entitlements)
CFMMEU v Personnel Contracting Pty Ltd (independent contractor vs employee)
ZG Operations Australia Pty Ltd v Jamsek (contractor classification)
Where the contract is comprehensive and genuinely agreed, courts will assess employment status based on the contract’s terms, unless there is a claim that the contract is a sham or has been varied in practice.
What This Means for Employers
Your written contracts must accurately reflect the nature of the working relationship.
Courts will enforce what’s on paper unless there’s fraud, sham contracting, or significant variation.
Poorly drafted or outdated contracts increase the risk of reclassification, underpayment claims, or NES breaches.
Tip: Always keep your contracts aligned with the latest legal definitions and clearly set out the rights, obligations, and status (employee vs contractor vs casual).
Key Legal Updates Impacting Employment Contracts and NES Compliance
While these developments don’t change the NES itself, they affect how contracts must be drafted to remain compliant.
1. Casual Employment and the Right to Convert
Casual employment now has a clear legal definition: no firm advance commitment to ongoing work, based on the contract. Casual employees:
Can request conversion to permanent employment after 6 or 12 months.
Must receive a Casual Employment Information Statement at hiring.
Why it matters: Contracts must reflect the casual definition to avoid misclassification.
2. Fixed Term Contracts
From December 2023, fixed term contracts:
Are generally limited to 2 years, including extensions.
Require a Fixed Term Contract Information Statement.
Have limited exceptions (e.g. sports, higher education, live performance).
Why it matters: Inappropriate use may trigger NES entitlements like redundancy pay.
3. Labour Hire and Worker Classification
Courts and lawmakers are cracking down on:
Misclassifying workers (contractors, casuals)
Unequal pay for labour hire staff
Tripartite arrangements that blur legal responsibility
For employers, this means that misclassified workers may still be entitled to NES benefits, exposing employers to backpay and penalties.
Compliance and Enforcement
Breaching the NES or Fair Work Act can result in:
Fines and civil penalties
Orders to backpay underpaid entitlements
Unfair dismissal or general protections (like adverse action) claims
The Ombudsman is responsible for publishing mandatory information statements and investigating compliance issues.
Employer Checklist: Stay NES Compliant
- Review all employment contracts to ensure compliance with the NES
- Provide relevant information statements to all new employees (including casuals and fixed term)
- Check that modern award or enterprise agreement entitlements are met or exceeded
- Remain up to date with legislative changes and High Court decisions
- Seek advice before making significant changes to employment terms or engaging staff on fixed term or casual contracts
If you need tailored advice on employment contracts or workplace compliance, contact our experienced team today. We offer fixed fee and affordable hourly rates to support businesses and individuals across Australia.
Frequently Asked Questions (FAQs)
Can an employment contract override the National Employment Standards?
No. Any term in an employment contract that provides less than the NES is invalid. The NES always prevails.
For more on why clear, legally accurate contracts matter, read our article on why employment contracts should be drafted by lawyers — not artificial intelligence.
What happens if a contract is silent on an NES entitlement?
The NES will apply automatically, ensuring the employee receives at least the minimum entitlement.
Are casual employees entitled to the NES?
Yes. Casual employees are covered by most NES entitlements, including casual conversion rights
What is the "better off overall test"?
The BOOT ensures that employees under an enterprise agreement are better off than they would be under the relevant modern award.
This often includes comparisons involving pay, penalties, and entitlements -especially where annualised salaries or set-off clauses are used. Learn more in our article on annualised salaries and set-off clauses in employment contracts.
What should employers do if they are unsure about compliance?
Employers should regularly review contracts and policies against current legislation and seek professional advice if needed.
