A brief history of industrial relations in Australia
To understand the current industrial relations landscape in Australia, it's helpful to look back at its evolution. The system has undergone major changes over the years, moving from a centralised system with strong union involvement to a more decentralised model with greater emphasis on workplace level bargaining.
Some key milestones in Australian IR history include:
- Establishment of the Commonwealth Court of Conciliation and Arbitration, marking the beginning of a centralised system of industrial relations in the early 1900's.
- Gradual shift towards enterprise bargaining and a greater role for workplace agreements between 1980s and 1990s.
- Introduction of the WorkChoices legislation, which significantly reduced the role of unions and awards in 2005.
- Enactment of the Fair Work Act 2009, establishing the current national workplace relations system with a focus on fairness, flexibility, and productivity.
The Australian industrial relations system
Australia has a national workplace relations system governed by the Fair Work Act 2009. This system applies to most private sector employees and employers in Australia. The Fair Work Act aims to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians. It does this by providing workplace relations laws that are fair to working Australians.
It's important to note that there are two industrial relations systems in Australia: state and national. All South Australian private sector businesses are covered by the Commonwealth Fair Work Act 2009 and are part of the national IR system. The system that applies to your business is determined by how it was set up.
Generally, the national system applies to incorporated businesses - those with "Pty Ltd" or "Ltd" in their name - while the state system applies to sole traders, unincorporated partnerships, and some trusts.
Within this system, the Fair Work Commission and Fair Work Ombudsman play key roles. The Fair Work Commission is the national workplace relations tribunal. It is responsible for setting minimum wages and conditions (awards), approving workplace agreements, and resolving complex disputes through hearings and rulings.
The Fair Work Ombudsman is a statutory office that promotes harmonious, productive, and cooperative workplace relations and ensures compliance with national workplace laws.
Features of the Fair Work system
National Employment Standards (NES) which are 11 minimum entitlements that apply to all employees covered by the national system, and include:
Modern Awards are industry or occupation-based minimum pay and conditions that apply to specific groups of employees.
National minimum wage sets the minimum hourly rate of pay for employees not covered by an award or agreement.
Enterprise agreements are workplace-specific agreements negotiated between employers and employees (or their representatives), which can provide for terms and conditions that are different from the award.
Protection from unfair dismissal where employees have the right to challenge their dismissal if they believe it was harsh, unjust, or unreasonable.
Why is industrial relations important?
Industrial relations play a key role in the success of SMBs in Australia. Essentially, strong industrial relations involve creating a work environment that employees want while adhering to legal frameworks and ethical standards. This has significant implications for a business's bottom line, legal standing, and reputation.
Positive workplace relationships contribute directly to increased employee engagement and productivity. When employees feel valued and respected, they are more likely to be motivated and efficient, leading to improved business performance and profitability.
Equally important is understanding and complying with Australia's industrial relations laws. Non-compliance can expose a business to penalties, legal disputes, and reputational damage. SMBs must stay informed about their obligations and implement appropriate workplace policies and procedures.
Common industrial relations issues?
Small and medium businesses often face particular challenges when it comes to managing industrial relations. One key issue is staying up-to-date with the changing laws and regulations in this area. Falling behind can lead to penalties and legal problems.
Another challenge lies in managing employee performance effectively and fairly. This includes setting clear expectations, providing regular feedback, and implementing a transparent performance management process to address any issues that may arise.
Workplace conflict is also inevitable, and small business owners need to be equipped to handle disagreements and disputes between employees or between employees and management. Having clear conflict resolution procedures, such as mediation or a formal grievance process, can help prevent issues from escalating.
Understanding and applying relevant awards and agreements can be complex, especially for businesses with employees in various roles or industries. Correctly classifying employees and ensuring they receive their proper entitlements under the applicable awards ensures compliance.
Key industrial relations legislation requirements
Australian business owners need to be aware of several key legal requirements related to industrial relations. First and foremost is providing a safe and healthy workplace. This includes complying with workplace health and safety laws, identifying and managing potential hazards, and fostering a workplace culture free from discrimination and harassment.
It's also crucial to pay employees correctly and provide all legal entitlements. This includes paying at least the minimum wage, providing appropriate leave entitlements, and making superannuation contributions according to the relevant award or agreement that applies to your employees. As of 2025, underpayments can now constitute a criminal offence.
Accurate and complete pay slips must be issued to employees within one working day of pay day, including details such as gross and net pay, and any deductions.
Maintaining accurate employment records is another legal requirement. Records of wages, hours worked, and leave taken must be kept for seven years and be readily accessible to Fair Work inspectors.
When terminating employment, business owners must comply with unfair dismissal laws. This includes having a valid reason for dismissal, following a fair procedure, and providing adequate notice.
Final thoughts
Industrial relations is an essential aspect of running a successful business in Australia. By understanding the key principles, legal requirements, and available support services, you can create a positive and productive workplace, minimise risks, and achieve your business goals.
If you need advice on industrial relations strategies for your business, our 24/7 Employer Advice Line is available to all Australian business owners. Call 1300 144 002 today to get all your questions answered today.