In this article, we list the top 7 obligations of Australian employers that you need to know.
Australia’s employment laws are complex. It can be challenging for Australian employers to navigate the highly regulated area of employment law.
The central component of Australia’s employment law includes a set of National Employment Standards for all employees. The Fair Work Ombudsman (FWO) and The Fair Work Commission (FWC) are the two key organisations that administer Australia’s National Employment Standards.
Author: Farrah Motley, Legal Principal of Prosper Law and a workplace lawyer.
1. National Employment Standards – employees’ rights
All employees in Australia are entitled by law to the minimum entitlements set out in the National Employment Standards (known as “NES”).
The NES makes up the minimum entitlements for employees in Australia. An award, employment contract, enterprise agreement or other registered agreement must provide for conditions that are no less favourable than those set out in the NES.
Any employers that do not comply with the National Employment Standards may face penalties.
2. National Employment Standards – minimum entitlements
Maximum weekly hours
An employer must not request or require an employee to work more than the following hours of work in a week, unless the additional hours are reasonable:
- for a full-time employee, 38 hours
for an employee other than a full-time employee, the lesser of:
- 38 hours
- the employee’s ordinary hours of work in a week
The hours an employee works in a week must be taken to include any hours of leave or absence (paid or unpaid) that is authorised:
- by the employer
- under a term of the employee’s employment
- under a Commonwealth, State or Territory law, or an instrument in force under such a law
An employee may refuse to work additional hours if they are unreasonable.
Offer to convert from casual to permanent employment
Employers (except small business employers) need to make a written offer to convert their casual employee to permanent employment within 21 days after the employee’s 12-month anniversary if the employee:
- has been employed by the employer for 12 months
- has worked a regular pattern of hours on an ongoing basis for at least the last 6 months
- could continue working these hours as a full-time or part-time employee without significant changes
The offer needs to be for the employee to convert to full-time (if the hours have been consistent with full-time employment over the last 6 months) or part-time (if the hours have been consistent with part-time employment over the last 6 months.
All employees in Australia are entitled to parental leave.
Employees can take parental leave if they have worked for their employer for at least 12 months and:
- Before the date or expected date of birth if the employee is pregnant
- Before the date of the adoption
- When the leave starts (if the leave is taken after another person cares for the child or takes parental leave)
- Have or will have responsibility for the care of a child
Annual leave (also known as holiday pay) allows an employee to be paid while having time off from work.
Full-time and part-time employees get 4 weeks of annual leave, based on their ordinary hours of work.
Community service leave
Employees can take community service leave for activities such as voluntary emergency management activities or jury duty.
Long service leave
An employee gets long service leave after a long period of working for the same employer.
An employee is entitled to public holidays depending on where they are based for work not where they are working on the day of the public holiday.
Fair work information statement
Employers must give every new employee a copy of the Fair Work Information Statement before, or as soon as possible after, they start their new job.
3. National Employment Standards – record keeping
The Fair Work Regulations 2009 (Cth) state that records related to an employee must:
- Be legible, in English and in a form that is readily accessible to a Fair Work Inspector
- Be kept for seven years
- Be properly maintained and kept accurate at all times.
- Not be altered unless for the purposes of correcting an error
- Not be false or misleading to the employer’s knowledge
Electronic records are acceptable when it comes to record-keeping, but they must be able to be printed out on request.
Under the Fair Work Act 2009 (Cth), employers must keep the following records:
General records, such as the employer’s name, employee’s name, commencement date and basis of the employee’s employment.
Pay records, such as the gross and net amounts paid, the rate of remuneration paid to the employee, any deductions made from the gross amount paid to the employee, details of any incentive-based payment, bonus, loading, penalty rate, or other monetary allowance or separately identifiable entitlement paid
Hours of work, such as the case of a casual or irregular part-time employee who is guaranteed a pay rate set by reference to time worked, a record of the hours worked by that employee must be kept.
Overtime, such as if a penalty rate or loading is payable in relation to overtime worked by the employee, employers must keep records of that overtime.
Leave, such as any leave that the employee takes and the balance of the employee’s entitlement to each relevant type of leave from time to time.
Superannuation contributions, such as the amount of the contributions made, the period over which the contributions were made, the dates on which the contributions were made, the name of any fund to which the contributions were made and the basis upon which the employer became liable to make the contributions.
Further records which must be kept by an employer include individual flexibility arrangements, guarantees of annual earnings, termination of employment and a record of the employment of a child.
Are HR records required to be kept?
HR records such as performance management or disciplinary records are not employee records, therefore an employer is not obligated to share this information with any employee. Performance management and disciplinary records are a kind of employee record that is exempt from disclosure under the Privacy Act 1988 (Cth).
An employer should be cautious in providing documents to a former employee and legal advice is recommended if such a request is received as it may be a ‘fishing expedition’.
4. National Employment Standard – flexible work structure
Some employees who have worked for the same employer for at least 12 months can request flexible working arrangements. Requests for flexible working arrangements may apply to things such as changes to hours of work, patterns (split shifts or job sharing) or locations of work.
Employees can request flexible working arrangements if they:
- are a parent, or have responsibility for the care, of a child who is school-aged or younger
- are a carer (under the Carer Recognition Act 2010)
- have a disability
- are 55 or older
- are experiencing family or domestic violence
- are providing care or support to a member of their household or immediate family who requires care and support because of family or domestic violence
An employer then has 21 days to provide a written response that outlines whether the request is approved. If the request is refused, the written response must include the reasons for the refusal.
5. National Employment Standards – superannuation
Part of an employer’s obligations is to pay superannuation.
Superannuation is money set aside over the employee’s lifetime to provide for their retirement. Under the Superannuation Guarantee (Administration) Act 1992 (Cth), most employees are entitled to have superannuation payments made on their behalf by their employer. These payments are in addition to wages.
The Superannuation Guarantee requires that all eligible employees receive a minimum superannuation payment per quarter, payable by their employer into the individual’s nominated superannuation account in a complying superannuation fund.
The minimum superannuation an employer must pay for each eligible employee is 10% of their ordinary time earnings (OTE). However, it’s scheduled to progressively increase to 12% by 2025.
Generally, if you pay an employee $450 or more (before tax) in salary or wages in a calendar month, you must also pay superannuation for them. Salary or wages includes any overtime.
Employees under the age of 18 or a domestic worker, are eligible for this payment if they work more than 30 hours per week.
You must pay superannuation for eligible employees to avoid the superannuation guarantee charge. Payments can be made at least 4 times a year. This applies from the day employees start working for you. Payment due dates occur quarterly.
If you do not pay an employee’s minimum superannuation guarantee amount on time and to the right fund, you must pay the superannuation guarantee charge. The superannuation guarantee charge is more than the super you would have otherwise paid to the employee’s fund and is not tax-deductible.
6. National Employment Standards – termination of employment
Employers need to give notice when they end the employment relationship. There are also rules about what needs to be included in an employee’s final pay.
To end an employee’s employment, an employer must give them written notice of their last day of employment (some exceptions apply).
An employer can give notice to the employee by:
- delivering it personally
- leaving it at the employee’s last known address
- sending it by pre-paid post to the employee’s last known address
The minimum notice period ranges from 1 to 5 weeks.
If the employer pays out the notice period (“payment in lieu”), the employee’s employment ends on the date that payment in lieu of notice is made. The employee doesn’t stay employed during the notice period (or continue to accrue entitlements, such as annual leave).
If the employer doesn’t pay out any part of the notice period, the employee stays employed for the notice period and the employment cannot end on a date earlier than the day the notice is given.
According to the Fair Work Act 2009 (Cth), when an employee is terminated on the grounds of serious misconduct, the employer doesn’t have to provide any notice of termination.
However, the employer does have to pay the employee all outstanding entitlements such as payment for time worked, annual leave and sometimes long service leave. Whether an employer needs to pay out long service leave depends on where the entitlement comes from, usually State or Territory long service leave laws.
Serious misconduct involves an employee deliberately behaving in a way that is inconsistent with continuing their employment. Examples include:
- causing serious and imminent risk to the health and safety of another person or to the reputation or profits of their employer’s business
- theft, fraud, assault, sexual harassment
- refusing to carry out a lawful and reasonable instruction that is part of the job
7. National Employment Standards – unpaid internships
An internship arrangement is when a person works for a business to gain experience in a particular occupation or industry. These arrangements can be a valuable way for prospective employees to make the transition from study to work or explore a new career path. Sometimes these arrangements span several months and can lead to ongoing employment.
An unpaid internship can be lawful if it is a vocational placement (a formal work experience arrangement that is part of an education or training course) or if there is no employment relationship found to exist. In particular:
- the person must not be doing “productive” work
- the main benefit of the arrangement should be to the person doing the placement
- it must be clear that the person is receiving a meaningful learning experience, training, or skill development
Careful attention should be given to any unpaid work experience to ensure it is a legitimate opportunity that falls within the definition of ‘vocational placement’.
Merely classifying individuals as trainees or interns does not necessarily negate the employer’s obligation to pay minimum wages.
In determining whether an intern is an employee, consideration needs to be given to whether this is their status under Common Law. An employer who incorrectly classifies an intern as a non-employee is liable to back pay the intern and pay a range of civil penalties.
If an employer classifies individuals as trainees or interns, it does not absolve the employer of the obligation to pay the minimum wage.
Contributors: Farrah Motley (Legal Principal of Prosper Law), Nada Saleh (Legal Intern), Hadba Alzammam (Legal Intern) and Ziad Baraja (Legal Intern)
Farrah Motley | Legal Principal
PROSPER LAW – Australia’s Online Law Firm
M: 0422 721 121
A: Suite No. 99, Level 54, 111 Eagle Street, Brisbane, Queensland Australia 4000