Employment 2023 Comparisons

Australia does not define “blue-collar” and “white-collar” as employee statuses in an employment law context, but these terms may be used in an everyday setting.

Every employment relationship in Australia is regarded as being based on a contractual relationship between the employer and the employee. The agreement does not have to be in writing, as the relationship can be constituted by verbal agreement, written agreement or a combination of both. It may be possible to infer that an agreement has been reached, in the absence of documentation, from the parties’ conduct, such as commencing work or paying wages.

Fixed-term employment contracts are permissible under Australian law. However, from 6 December 2023, they will be limited to no more than two years in duration (subject to some specific exemptions). In Australia, a distinction is drawn between “maximum term” contracts (which allow for termination prior to the nominated end date without cause) and “true” fixed-term contracts (which only allow termination prior to the end date for serious misconduct), but the same limitations on duration will apply from 6 December 2023.

The National Employment Standards prevent employers from requesting or requiring an employee to work more than 38 hours per week unless those additional hours are reasonable. When determining what is reasonable, a court must consider the following:

• any risk to the employee’s health or safety from working the additional hours;
• the employee’s personal circumstances (including family responsibilities);
• the needs of the business;
• whether the employee is entitled to receive overtime payments or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
• any notice given by the employer of the additional hours;
• the usual patterns of work in the industry;
• the nature of the employee’s role; and
• whether the additional hours are capable of being averaged under a modern award and have been averaged in accordance with the modern award.

Employment contracts often stipulate that any reasonable additional hours are compensated for through an employee’s total remuneration.

Employees who are covered by a modern award or enterprise agreement will be entitled to overtime pay in accordance with the relevant industrial instrument. Employees who are not covered by a modern award or enterprise agreement do not receive remuneration for overtime unless their contract of employment provides for these payments. These employees may be required to work reasonable additional hours (as discussed above) above 38 hours per week.

The rate of pay for overtime will vary depending on the terms of the industrial instrument or contract, but overtime is usually paid at a rate of time and a half for the first several hours and double time thereafter. While there is no strict limit on amounts of overtime set out in legislation, some modern awards may prescribe a minimum amount of time between shifts (usually ten hours), which prevents employers from requiring their employees to work successive shifts of overtime within a short period.

Every modern award contains a flexibility provision that allows an employer and individual employees to agree to vary the application of various terms of the modern award, including the application of overtime rates. This agreement is only valid if it is genuine (that is, without coercion or duress) and must be entered into after the employee has commenced employment with the employer. Any agreement that is entered into must result in the employee being better off overall, at the time the agreement is made, than the employee would have been if no individual flexibility agreement had been made. In addition to this, after 12 months’ continuous service, employees who are parents or have responsibility for the care of a child who is school age or younger, are a carer as defined in the Carer Recognition Act 2010 (Cth), have a disability, are 55 or older, are experiencing family or domestic violence or are caring for or supporting an immediate family or household member who requires care or support because of family or domestic violence may request flexible working arrangements in writing.

While there are no mandated flexible working arrangements, the typical types of flexible working arrangements are modifications to:

• hours of work (for example, start and end times);
• work patterns (for example, days of work or job sharing); or
• locations of work (for example, working from home).

All employees are entitled to a minimum wage. The minimum wage is provided by the Fair Work Act 2009 (Cth) and is reviewed each year around 1 July. As of 1 July 2023, the National Minimum Wage is AUD23.23 per hour, or AUD882.80 per week.

Modern awards and enterprise agreements also prescribe a separate minimum wage (and penalties, allowances and other benefits) which may be higher than the national rate. An employee covered by either industrial instrument must be paid at or above the relevant minimum wage.

All full or part-time employees covered by the Fair Work Act are entitled to the following types of leave:

• annual leave;
• paid personal/carer’s leave;
• compassionate leave;
• community service leave;
• long service leave;
• public holidays; and
• family and domestic violence leave.

Casual employees are not entitled to the above types of paid leave (except for family and domestic violence leave); however, they may take unpaid forms of compassionate leave, carer’s leave, community service leave and public holidays. Casual employees may also be entitled to long service leave depending on the terms of the relevant state legislation.

All employees in Australia (including casual employees) are entitled to unpaid parental leave if they have worked for their employer for at least 12 months. Under the National Employment Standards, employees are entitled to 12 months of unpaid parental leave following the birth or adoption of a child, and a request can be made for an additional 12 months of leave.

Restrictive covenants, or restraints of trade, will be upheld by the courts provided they go no further than is reasonable and necessary to protect an employer’s “legitimate business interests”. Restraints include preventing a former employee from taking up work with a competitor or soliciting or accepting work from the employer’s clients.

The most common forms of post-employment restrictive covenants are non-solicitation, non-dealing and non-compete covenants. Non-compete covenants prohibit former employees from approaching clients, working for competitors or establishing their own businesses during the period of restraint.

Non-dealing covenants prevent dealing with or doing business with anyone who has a business connection with the former employer (such as customers, clients or employees) irrespective of whether former employees seek out the clients or the clients approach the employees for services. Non-solicitation covenants prevent former employees from pursuing clients, customers or suppliers with whom they had dealings during their employment.

The Privacy Act 1988 (Cth) requires organisations (other than small businesses) to adhere to a set of Privacy Principles in their collection and management of “personal information”. The Principles include the requirements for organisations to take reasonable steps to protect personal information from misuse, interference, loss or unauthorised access.

An important exception to compliance with the Principles covers “employee records” of current or former employees but only when used by the employer in relation to their employment. An employee record is defined quite broadly to include personal or health records relating to employment, which can go so far as to capture documents concerning the termination of an employee. This exemption does not cover prospective employees, contractors or employees of other companies (such as labour hire employees or employees of a subsidiary).

It is important that employers ensure that prospective employees have a legal right to work in Australia. Significant penalties may apply to employers who employ individuals who do not have a right to work in Australia legally (including financial penalties and withdrawal of sponsorship status).

The Fair Work Act, and the obligations that arise under it, do not apply to foreign employment relationships. Instead, the legislation only applies to “national system employees” who are employed by “national system employers”. Foreign corporations will be considered national system employers if there is a sufficient connection between the employment relationship and Australia.

Foreign workers can work in Australia in accordance with the stipulations in their visa. Registration requirements will depend on what type of visa the employee is on. For example, an employer who hires a person on a “working holiday maker” visa must register for pay as you go withholding.

Employers still owe a duty of care to their employees who are working remotely, and it is best practice for employers to conduct a work health and safety check on their employees’ physical work spaces at home to ensure the safe use of equipment and evaluate ergonomics and mental health risks. This is commonly done via an online checklist which the employee would be required to complete.

Employees who work remotely are also required to comply with their employer’s privacy policy and the Privacy Act 1988 (Cth). This includes obligations such as ensuring sensitive business information and intellectual property are protected when working remotely.

Sabbatical leave is not a statutory entitlement under employment legislation in Australia. This means that an employer has the discretion to offer such an entitlement.

Many employees are placing greater importance on their work/life balance and are seeking jobs that offer flexible work practices. In addition, the COVID-19 pandemic has seen working from home become the most common flexible working arrangement due to the various government-mandated lockdown periods and movement restrictions which occurred throughout 2020 to 2021. Accordingly, it is more common for employers to have ‘flexible’ physical workplaces, which can include desk-sharing (as a result of hybrid working arrangements which see different employees in the office at different times), and to allow employees to alter their working hours or work from outside of the office, as well as introducing more mental wellbeing benefits.

Unions in Australia can represent employees to assist in resolving workplace disputes and act as a representative during bargaining negotiations. Bargaining negotiations occur when an employer and its employees negotiate the terms and conditions of an enterprise agreement which will cover the employees’ employment.

Representative bodies in Australia in an employment context include unions, who represent their members’ workplace rights.

The use of enterprise agreements (in a variety of forms) has ebbed and flowed over time, swaying one way or the other depending on the political persuasion of the government of the time. Not only is the use of enterprise agreements, particularly versus the use of statutory or common law individual contracts of employment, a source of debate in Australia, but also the content of enterprise agreements has come under significant scrutiny.

A recent change in government power led to significant workplace reforms in 2022, which included a restructure of the bargaining framework in Australia to provide unions and employees with greater scope to compel employers with common interests to come together and negotiate an enterprise agreement. The Fair Work Commission also has the power to intervene and issue an intractable bargaining workplace determination if the parties have reached an impasse during the bargaining period. The determination would decide the terms and conditions of the enterprise agreement.

The process of creating an enterprise agreement in Australia involves a period of bargaining which includes conducting a “better off overall test” to determine whether an enterprise agreement has been genuinely agreed to by the employees and whether the terms and conditions of the enterprise agreement are more beneficial than the minimum terms and conditions prescribed by legislation. Once approval is provided by the Fair Work Commission, an enterprise agreement generally remains in effect for a few years. It is common practice for employers and employees/unions to recommence bargaining upon the expiry of an enterprise agreement.

An employer must take care to ensure that it has a valid reason for terminating an employee’s employment if notice is given, particularly if the employee is eligible to make an unfair dismissal claim. The concept of a “valid reason” is most relevant in the context of an unfair dismissal application. If an employer cannot demonstrate that it has a valid reason to terminate an employee’s employment, the employer may be subject to a successful claim for unfair dismissal or a general protections application by the employee. Termination without notice typically occurs if an employee is found to have engaged in “serious misconduct” in their employment with the employer.

A redundancy occurs if an employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour. Ultimately, the processes adopted by an employer in a redundancy situation will depend on the circumstances, including the relative seniority of the employee whose role is being made redundant and the risks for the employer that are attached to the particular process. An employer must also take care to ensure that if an employee’s separation from their employment is characterised as a redundancy, it is a “genuine redundancy”. Often employees will request that their separation from their employment be characterised as a redundancy because of the concessional tax benefits that flow from a redundancy. In agreeing to this arrangement, an employer assumes a considerable amount of risk, including that it may potentially be in breach of its obligations with respect to withholding tax and therefore could be subject to penalties.

Both employers and employees are required to provide notice in writing and in accordance with the notice period stipulated in the employment contract. An employer may make a payment in lieu of notice to an employee if the employer does not require them to work out their notice period. In the absence of an express provision, a term may be implied requiring reasonable notice.

However, the National Employment Standards (and applicable modern awards) stipulate the minimum notice periods which apply to all employees. The National Employment Standards confirm the following notice periods based on an employee’s continuous service:

• one year or less: one week;
• one year and up to the completion of three years – two weeks;
• three years and up to the completion of five years – three weeks;
• five years and over – four weeks; and
• employees who are over 45 years old who have completed at least two years of service – additional week on top of their notice period.

Summary dismissal means the termination of the employment of an employee without notice. An employee will typically be summarily dismissed where they are found to have engaged in “serious misconduct” in their employment with the employer. “Serious misconduct” is defined at common law and in legislation. Under the Fair Work Regulations, serious misconduct is defined to include:

• wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract, such as theft, fraud, assault, intoxication at work, or disobedience of lawful and reasonable orders; and
• conduct that threatens the health or safety of others, or the reputation, viability or profitability of the employer.

When an employee is summarily dismissed, the employer is only required to pay the employee for work performed up to the time of dismissal (including any outstanding wages) plus their accrued but untaken statutory leave entitlements and superannuation. As there is no requirement to give notice where an employee is summarily dismissed, there is no corresponding requirement to pay notice.

Termination agreements are not legally required in Australia and it is left to the discretion of the employer to manage such an agreement. If an employer negotiates an exit with an employee, it may choose to issue a Deed of Release to protect itself from future claims from the employee.

The general protections jurisdiction in Australia allows an employee to bring a claim against their employer for taking steps that resulted in a detriment or hardship (adverse action) to the employee in circumstances where, among other things, that employee has sought to exercise a “workplace right”. These provisions also extend to protection from adverse action in relation to an employee’s participation in industrial activity (including their choosing not to participate in such activity), discrimination against protected attributes (such as age, sex, race and disability), dismissal due to temporary absence or illness, and coercion.

On termination of their employment, eligible employees may make an unfair dismissal application to the Fair Work Commission on the grounds that their termination was unfair as it was “harsh, unjust or unreasonable”. An employee will be eligible to make an unfair dismissal claim if they:

• have served the minimum employment period (which is six months);
• are covered by a modern award or enterprise agreement, or alternatively earn less than the high income threshold (currently AUD167,500 per annum); and
• were dismissed by the employer.

The Fair Work Commission has discretion to award remedies such as reinstatement of the employee or a payment of compensation if the circumstances are appropriate to do so. The maximum compensation level for unfair dismissal claims is 26 weeks’ worth of wages. However, this amount is capped at half of the high-income threshold at the time of the dismissal.

In Australia, there are four main federal anti-discrimination laws that protect against discrimination on the grounds of race, sex, age and disability. Under each of these grounds, there are a number of sub-categories of protected grounds. For example, the Racial Discrimination Act 1975 (Cth) also contains grounds relating to colour, nationality, descent, ethnic, ethno-religious, national origin and social origin discrimination. Similarly, the Sex Discrimination Act 1984 (Cth) contains a number of additional grounds, including pregnancy, breastfeeding, sexual activity, marital or domestic status, transgender status, gender identity, sexuality, family and carer’s responsibility discrimination. The other two laws are the Disability Discrimination Act 1991 (Cth) and the Age Discrimination Act 2004 (Cth).

The Australian Human Rights Commission Act 1986 provides for additional protected attributes at a federal level, including irrelevant medical record, irrelevant criminal record, political belief, religious belief and trade union activity. The burden of proof lies on the complainant to prove that, on the balance of probabilities, they were directly discriminated against based on a protected attribute. Specifically, in a general protections claim, once the employee proves the existence of objective facts which are said to provide a basis for the alleged adverse action, the onus is reversed to the employer to prove that a person was not adversely affected in the workplace as a result of discrimination. If this onus is not discharged, it is to be assumed that the action in question was taken for a prohibited purpose.

Complainants can obtain monetary compensation and an apology. If the Federal Court or Federal Circuit and Family Court of Australia determines that a person has contravened the discrimination protections under workplace legislation, the court may make any order that it considers appropriate, including orders for injunctions, reinstatement and/or compensation.

The Fair Work Commission conducts many conciliation conferences and hearings by phone or videoconference. However, some cases may be required to be dealt with ‘on the papers’, and attendance in the Commission is required. Generally, in-person attendance is required for proceedings in the Federal Circuit and Family Court of Australia.

There are no specialised employment forums, but class action claims may be available for groups of employees. For example, class actions have occurred over the past few years over contentious issues such as workers in the gig economy seeking to be classified as employees, casual employees claiming leave entitlements which are usually provided to permanent employees, and independent contractors alleging that companies were involved in sham contracting. Representations in court can be done via a union or legal representatives.

The Fair Work Commission may arbitrate a matter if the parties cannot come to an agreement during the conciliation conference. However, it is commonly required that the employer and employee must mutually agree to the arbitration. ‘Without prejudice’ agreements cannot be used in further legal proceedings, but a judgment arising from an arbitration may be considered by a court in further proceedings. However, it is in the court’s discretion whether to consider these types of judgments.

The default position is that parties to an unfair dismissal or general protections proceeding in the Fair Work Commission cannot claim costs. However, the Commission may order a person to pay the other party’s costs if it is satisfied:

• that the person’s application or response to an application was made vexatiously or without reasonable cause; or
• that it should have been reasonably apparent that the person’s application or response to an application had no reasonable prospect of success.