What is employment law?
Employment law in Australia is a framework of laws and regulations that govern the relationship between employers and employees. These laws are designed to protect the rights of both parties and ensure fair and safe working conditions. Understanding these laws is important for business owners to create a productive and harmonious workplace while avoiding potential legal issues.
It covers a wide range of areas, including:
✅ Minimum wages and conditions ensuring employees are paid fairly and receive basic entitlements like leave and breaks.
✅ Workplace health and safety protecting the health and safety of employees in the workplace.
✅ Discrimination and harassment preventing unfair treatment and promoting equality in the workplace.
✅ Termination of employment providing guidelines for fair and lawful dismissal procedures.
✅ Dispute resolution offering mechanisms for resolving workplace disputes.
Key employment law
Australian employment law is built upon a foundation of key legislation designed to protect both employers and employees. These laws cover a wide range of aspects, from minimum wages and leave entitlements to workplace health and safety and anti-discrimination. Here are some of the most important laws that small and medium business owners should be aware of:
It's important to note that Australia places a strong emphasis on employee rights and protections, making it a desirable place to work.
Employment law and contracts
A written employment contract is essential for establishing a clear understanding between you and your employee. It serves as the foundation of the employment relationship and helps to avoid misunderstandings or disputes down the line.
Here are some key elements that should be included in an employment contract:
✔ Job description and responsibilities to clearly outline the employee's role, duties, and responsibilities.
✔ Salary or wages and payment frequency to specify the employee's pay rate, whether it's an annual salary, hourly wage, or other arrangement, and how often they will be paid (e.g., weekly, fortnightly).
✔ Working hours and overtime requirements to define the employee's standard working hours, including any arrangements for overtime work and how it will be compensated.
✔ Leave entitlements to detail the employee's entitlements to various types of leave, such as annual leave, sick leave, and parental leave.
✔ Termination conditions to outline the procedures for terminating the employment relationship, including notice periods and any applicable redundancy pay.
When creating an employment contract, remember that it must comply with the National Employment Standards (NES) and any relevant awards or enterprise agreements that apply to your industry or occupation.
You should also provide new employees with the Fair Work Information Statement (FWIS) and, if applicable, the Casual Employment Information Statement (CEIS), which outline their basic rights and entitlements.
For independent contractors, the Independent Contractors Act 2006 provides a framework for their engagement and ensures their rights are protected.
National Employment Standards
The National Employment Standards acts as a safety net for employees, ensuring they receive minimum standards of employment regardless of their industry or occupation. These standards cover a wide range of entitlements, including:
Modern awards
In addition to the NES, many employees are covered by modern awards. These are industry or occupation-specific legal instruments that set out minimum pay rates and employment conditions for employees in those sectors. Modern Awards cover things like:
✅ Rates of pay which outline minimum hourly rates for ordinary hours and overtime.
✅ Allowances including payments for specific work-related expenses or conditions, such as travel allowances or uniform allowances.
✅ Penalty rates for higher pay rates for working outside of normal hours, such as weekends or public holidays.
✅ Leave entitlements are provisions for various types of leave, including annual leave, sick leave, and parental leave.
It's important to understand which Modern Award applies to your employees and ensure that their pay and conditions meet the minimum standards set out in the award.
Minimum wage
The Fair Work Commission sets the national minimum wage, which is the lowest rate of pay that employers can legally pay their employees. All employees must be paid at least this minimum rate, regardless of their role or responsibilities. The minimum wage is reviewed annually to ensure it keeps pace with changes in the cost of living.
Workplace Health and Safety
Employers have a legal duty to ensure the health and safety of their employees and anyone else who might be affected by their business activities. This includes regularly assessing the workplace to identify potential hazards and taking steps to eliminate or minimise the risks.
It also involves providing training on workplace safety and emergency procedures to ensure employees are trained on safe work practices, how to use safety equipment, and what to do in an emergency. Employers must also ensure access to necessary safety equipment, providing employees with appropriate safety equipment and personal protective equipment (PPE) and ensuring it is properly maintained.
Employee rights
Employees have a number of rights related to their health and safety in the workplace. They have the right to know about health and safety matters, and employers must provide them with information about workplace hazards, risks, and safety procedures.
Employees also have the right to participate in decisions that could affect their health and safety, meaning employers should consult with them on health and safety matters and involve them in decision-making processes. Employees also have the right to refuse work that could affect their health and safety and that of others if they believe it poses a serious risk.
Termination of employment
When terminating an employee's employment, it's important to follow fair and lawful procedures. This includes providing adequate notice, where the required notice period depends on the employee's length of service and is outlined in their employment contract or the NES.
Employers must comply with unfair dismissal laws. Unfair dismissal occurs when an employee is dismissed for an invalid reason or without a fair process. Employers must have a valid reason for dismissal and follow a fair procedure, which may include providing warnings and opportunities for improvement.
And employers must also pay any outstanding wages and entitlements, ensuring the employee receives all outstanding wages, leave entitlements, and any other payments they are owed in their final pay.
Anti-discrimination
Discrimination in the workplace is illegal. Employers must not discriminate against employees or job applicants based on attributes such as race, gender, age, disability, religion, sexual orientation, marital status, or family responsibilities. This includes discrimination in hiring, promotion, training, pay, and other employment decisions.
State-based legislation
While the Fair Work Act and NES provide a national framework for employment law, some aspects of employment are governed by state-based legislation. This can include areas such as:
✅ Entitlements to long service leave can vary between states.
✅ Each state has its own workers' compensation scheme, which provides benefits to employees who are injured at work.
✅ State governments levy payroll tax on employers, and the rates and thresholds can differ between states.
It's important to be aware of the specific state-based legislation that applies to your business and ensure you are meeting your obligations.
Case studies
Real-life examples can help to illustrate how employment laws are applied in practice. Here are a few interesting cases that highlight key legal issues:
Penalties for non-compliance
Failing to comply with employment laws can result in serious penalties for both employers and individuals. These penalties can include:
In addition to these penalties, employers may also face:
❌ Back-pay orders where courts can order employers to pay employees any unpaid wages or entitlements.
❌ Compensation for employees who have suffered loss as a result of a breach of employment law may be awarded compensation.
❌ Reputational damage where non-compliance can damage a business's reputation and make it difficult to attract and retain employees.
It's important to note that the recent introduction of criminal penalties for serious breaches of the Fair Work Act, including wage theft, demonstrates the increased seriousness of non-compliance.
How Employment Compass can help
Employment Compass can assist your business in managing employment law and ensuring you meet your employer obligations. We offer a range of services to support SMEs, including:
✅ HR health checks. We can conduct a review of your HR policies and practices to identify any potential compliance issues and provide recommendations for improvement.
✅ Advice and support. Our team of HR experts can provide guidance and support on a wide range of employment law matters, including employment contracts, leave entitlements, termination, and dispute resolution.
✅ HR documents and resources. We provide access to a library of HR documents, templates, and resources to help you manage your HR processes effectively and stay compliant.
Final thoughts
Understanding and complying with employment law is essential for all businesses in Australia. By staying informed and implementing best practices, you can create a fair and productive work environment for your employees while minimising legal risks.
This guide has provided an overview of key employment laws relevant to SMEs, but it's important to remember that specific situations may require more detailed legal advice.
If you need further assistance with employment law or other HR matters, our 24/7 Advice Line is available to all Australian business owners. Contact us on 1300 144 002 today for expert advice and support tailored to your business needs.