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Employment law overview Australia

Introduction

The Australian Constitution (“the Constitution”) has had a major impact on labour regulation in Australia. For much of the 20th Century, there was a significant division of responsibility for labour matters between the Federal Government and the six States and two Territories. However, following the 2005 WorkChoices reforms, the responsibility for labour matters has shifted predominantly to Federal regulation.

The Fair Work Act 2009 (Cth) is the primary legislative source of employment regulation in Australia. The Act contains employment standards and conditions, union regulation, and anti-discrimination protection.

The Australian Government has recently also put in place model laws to harmonise work health and safety legislation across Australia. These laws aim to reduce the incidence of work-related death, injury and illness.

Key Points

Employee rights in Australia are protected and regulated in the following ways:

  • The most basic source of employment terms and conditions derives from the employment contract. The contract will contain express terms, and in Australia the courts have recognised some standard terms which will be implied into the contract of employment.
  • The Fair Work Act 2009 (Cth) outlines minimum employment standards, including leave, maximum weekly hours, notice of termination and redundancy pay.
  • Modern Awards set out the minimum conditions of employment for specific industries or occupations, such as rates of pay and allowances.
  • Federal and State anti-discrimination legislation affords employees with rights against discrimination, harassment, vilification and victimisation.
  • Federal and State work health and safety legislation applies to reduce the occurrence of work-related death, injury and illness.
  • State based workers’ compensation legislation provides for compulsory basic insurance of employees who are injured at work.
  • Superannuation Guarantee legislation requires employers to pay contributions to an approved superannuation fund for their employees.

 

Australia is a federation of States and Territories with a Federal Government. The Constitution permits the Commonwealth Parliament (that is the Federal Parliament) to pass legislation, which relates to certain specified matters, whereas State Parliaments have the power to pass legislation in relation to any matter pertaining to that state. Should a clash between State legislation and Commonwealth legislation arise, a valid Commonwealth law will prevail to the extent of any inconsistencies. The Constitution provides for the Federal Government to make laws in relation to industrial disputes extending beyond the boundary of more than one State (the “conciliation and arbitration power”). This formed the basis of the split between State and Federal power for a century, with the Commonwealth legislating for the conciliation and arbitration of industrial disputes crossing State boundaries, and the States legislating for other intra-state areas of industrial relations. In the 1980’s, the Federal Parliament began using the power given to it under the Constitution to make laws with respect to corporations to encroach on areas of law making that were previously the domain of State Parliament. In the 1990’s, this trend extended to the area of employment law and saw the Federal Parliament use its power to make laws with respect to corporations and in relation to employers and employees, instead of relying on the conciliation and arbitration power. The High Court of Australia upheld this approach to industrial relations, and it continues to be used by the current “Fair Work” legislation.

Key sources of employment law in Australia include the following:

  • The Constitution;
  • Common Law;
  • Legislation, in particular, the Fair Work Act 2009 (Cth);
  • Contracts of employment and contracts for services;
  • Awards and enterprise agreements; and
  • International labour

Key Institutions in Australian Employment Law

Key regulatory bodies and other institutions in Australian employment law include the following:

The Courts The Constitution requires matters involving enforcement of Federal laws to be brought before the Federal Court of Australia and the Federal Circuit Court, rather than a non-judicial tribunal, for example, the Fair Work Commission. The State courts, including the Supreme Court, District Court and Local Court, adjudicate employment matters arising from breach of contract, other common law rights or state legislation.

The Fair Work Commission (“FWC”) The FWC is an independent national workplace relations tribunal. The FWC is responsible for providing for the national minimum wage; changes to, or creation of modern awards; hearing workplace related matters brought before it by an individual or organisation for conciliation or arbitration; and making decisions in relation to industrial action, transfer of business, unfair dismissal and enterprise bargaining.

The Fair Work Ombudsman (“FWO”) The FWO is an independent statutory agency, which is responsible for investigating suspected breaches of workplace rights; enforcing workplace laws before the courts; and providing an educative service to employees and employers concerning their rights and obligations in the workplace.

The Australian Human Rights Commission (“AHRC”) The AHRC is an independent statutory organisation that has a variety of responsibilities concerning the operation of federal discrimination laws, including the resolution (by investigation and conciliation) of complaints of breaches of human rights and discrimination under federal laws.

State and Territory Agencies State and Territory agencies that hear matters relating to employment include, for example, the Civil and Administrative Tribunals in both New South Wales and Victoria. In New South Wales, complaints relating to breaches of anti-discrimination legislation are referred to the NSW Civil and Administrative Tribunal (“NCAT”) by the President of the Anti-Discrimination Board (“ADB”). The equivalent body in Victoria is the Victorian Civil and Administrative Tribunal (“VCAT”), which as well as hearing civil and administrative matters also deals with matters relating to equal opportunity, racial and religious vilification and disability discrimination in its Human Rights Division.

Equivalent bodies in other states and territories include:

  • the Australian Capital Territory Civil and Administrative Tribunal (“ACAT”)
  • the Queensland Civil and Administrative Tribunal (“QCAT”)
  • the South Australian Civil and Administrative Tribunal (“SACAT”)
  • the State Administrative Tribunal of Western Australia (“SAT”)
  • the Northern Territory Civil and Administrative Tribunal (“NTCAT”).

As there is no single amalgamated Civil and Administrative Tribunal in the state of Tasmania, matters relating to breaches of anti-discrimination legislation are heard in the Tasmanian Anti-Discrimination Tribunal.

Trade Unions and Employer Associations Historically, there have been a large number of trade unions in Australia. However, the number of unions has decreased over time. Between 1986 and 1996, the number of unions in Australia decreased by 194, with amalgamations being the main reason for the decline. Specifically, a policy of strategic unionism was adopted which saw the amalgamation of a large number of smaller unions into 20 “super unions”. Since 1992, trade union membership has declined. Between 1992 and 2011, union membership declined from 43% to 18% for male employees and 35% to 18% for female employees.

Employer associations primarily act as lobbyists and provide members with advisory services. The major employer associations in Australia are the Australian Industry Group and the Australian Chamber of Commerce and Industry.

The Fair Work Act, Modern Awards and Enterprise Agreements

The Fair Work Act 2009 (Cth) The Fair Work Act 2009 (Cth) provides the primary statutory framework for employment law and industrial relations across Australia.

The Fair Work Act 2009 (Cth) applies to “national system employers” and “national system employees” (see paragraphs below for discussion of who is a national system employer and national system employee).

A “national system employee” is an individual in so far as he or she is employed, or usually employed by a national system employer, except on a vocational placement.

The Fair Work Act 2009 (Cth) defines a “national system employer” to mean any of the following entities, so far as they employ, or usually employ an individual:

  • constitutional corporations;
  • the Commonwealth and Commonwealth authorities;
  • employers of flight crew officers;
  • maritime or waterside workers who are engaged in “constitutional trade or commerce”;
  • bodies corporate;
  • other persons who carry on commercial, government or other activities in the Territories; and
  • other employers who are covered by the Fair Work Act 2009 (Cth) as a result of State legislation which refers powers over industrial matters to the Commonwealth. (All States and Territories have referred their powers to the Commonwealth in respect of their employees other than those set out in the paragraph below).

Employers which are not national system employers are not covered by the Fair Work Act 2009 (Cth) and instead remain covered by the relevant State legislation. Employers which are not national system employers include:

  • in Tasmania: State public sector employers;
  • in New South Wales, Queensland and South Australia: State public sector employers and local government employers;
  • in Western Australia: State public sector employers, local government employers and private non-constitutional

The Fair Work Act 2009 (Cth) contains the following:

  • the National Employment Standards;
  • regulation of modern awards and enterprise agreements;
  • a good faith bargaining obligation;
  • minimum wages;
  • regulation of transfers of business;
  • rights and responsibilities of employees, employers, and organisations (that is, general protections, protection against unfair dismissal, and regulation of industrial activity).

Until 27 November 2015, when the Fair Work Amendment Act 2015 (Cth) came into force, there had been no significant amendments to the Fair Work Act 2009 (Cth) for a considerable period of time. The Fair Work Amendment Act 2015 (Cth) amended the Fair Work Act 2009 (Cth) in the following ways:

  • when bargaining for a Greenfields Agreement (an agreement between a union and an employer that does not yet have employees), employers are able to make an application to the FWC for approval of a proposed Greenfields Agreement if a deal has not been reached between an employer(s) and a union(s) within a “negotiating period” of six months. This has limited the potential for unions to stall major new projects;
  • if an employer makes an application to the FWC for approval of a proposed Greenfields Agreement, the FWC must approve that agreement if, in addition to the factors already set out in the Fair Work Act 2009 (Cth), it is satisfied that the agreement, considered on an overall basis, provides for pay and conditions that are consistent with the prevailing pay and conditions within the relevant industry for equivalent work;
  • a union will only be able to be a bargaining representative for a proposed Greenfields Agreement if an employer agrees to bargain with that particular union;
  • parties may only be able to commence industrial action once bargaining for a new enterprise agreement has commenced. One of the effects of this is that unions will only be able to pressure employers to reach agreement on an enterprise agreement if a majority of the employees concerned support bargaining for an enterprise agreement, rather than a majority of those employees who are union members;
  • an employer will only be able to refuse a request for an extension of parental leave if the employer has given the employee concerned a reasonable opportunity to discuss the request; and
  • the FWO will now be required to pay interest on certain amounts of unclaimed monies.

New Developments

Fair Work (Vulnerable Workers) Act 2017 (Cth)

In 2017, in response to a series of high-profile underpayment cases involving immigrant employees, Parliament passed the Fair Work (Vulnerable Workers) Bill 2017 (Cth), which aimed to increase and clarify protections afforded to employees. In particular, the amendments:

  • increased maximum civil penalties for certain serious contraventions of the Fair Work Act 2009 (Cth) to $126,000 for an individual (previously $12,600) and $630,000 for a corporation (previously $63,000);
  • introduced provisions that made franchisors and holding companies responsible for certain contraventions of the Fair Work Act 2009 (Cth) by their franchisees or subsidiaries where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them;
  • clarified that employers cannot unreasonably require their employees to make payments to the employer, or deduct from amounts owed to the employee, in circumstances where the payment or deduction would directly or indirectly benefit the employer or a party related to the employer;
  • provided the FWO with stronger evidence-gathering powers; and
  • prohibited the hindering or obstructing of the FWO or an inspector in the performance of his or her functions or powers, or the giving of false or misleading information or documents.

Domestic Violence Leave

The Fair Work Amendment (Family and Domestic Violence Leave) Act 2018 (Cth) came into effect on 12 December 2018. It inserted sections 106A – 106E into the Fair Work Act 2009 (Cth), entitling employees to unpaid family and domestic violence leave. All industry and occupation awards have been able to provide for this leave since 1 August 2018, but this amendment has made it available to all employees regardless of whether the employee is covered by an award or enterprise agreement, including part-time and casual employees, under the National Employment Standards.  All employees are now able to access 5 days of unpaid family and domestic violence leave in a 12-month period. Note that an employer may agree to an employee taking more than 5 days of unpaid leave.

Changes to Sunday Penalty Rates

In Australia, employees covered by an Award, enterprise agreement or registered agreement have been entitled to a higher pay rate and additional allowances when working on weekends, public holidays, overtime, early in the morning and/or late at night since the post-war period. This has been seen as a vital form of compensation for those who had to work outside of normal business hours, particularly in industries such as hospitality and retail. However, a controversial cut to these rates was recommended in 2017 and passed in 2018. The following reductions to Sunday penalty rates apply from 1 July 2019:

  • Hospitality industry award: for full-time and part-time employees, the Sunday Penalty Rate has dropped from 170% to 160%, casual employees remain at 175%;
  • Retail industry award: for full-time and part-time employees, the Sunday Penalty Rate has dropped from 195% to 180%, and for casual employees, it has dropped from 195% to 185%;
  • Fast-food industry award: for full-time employees, the Sunday Penalty Rate has dropped from 145% to 135%, and for casual employees, it has dropped from 170% to 160%;
  • Pharmacy industry award: for full-time employees, the Sunday Penalty Rate has dropped from 195% to 180%, and for casual employees, it has dropped from 220% to 205%.

Modern Slavery

In November 2018, the Australian Government passed a Modern Slavery Act 2018 (Cth), which came into effect on January 1 2019. The Act requires businesses and other organisations above a certain size (consolidated revenue of A$100 million, affecting over 3,000 Australian entities) to report annually on the risks of modern slavery in their operations and supply chains. Smaller businesses will be able to report voluntarily. Reporting entities will be required to publish annual Modern Slavery Statements detailing their actions to address modern slavery and the effectiveness of their actions. Although penalties and independent oversight were omitted from the Act, the nature of the public register for reports may result in ‘naming and shaming’ and consumer sanctions for businesses who do not comply sufficiently, or at all.

 

Wage Theft Legislation

Over the last year, two state legislatures have passed laws to criminalise wage theft. In June 2020, the Victorian Government passed the Wage Theft Act 2020 (Vic), which establishes three new criminal offences to tackle wage theft. It is now an offence in Victoria to dishonestly withhold an employee entitlement, falsify an employee entitlement record with a view to obtain a financial advantage, or fail to keep an employee entitlement record with a view to obtain a financial advantage. Employers who are found guilty on any of the three offences face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years in jail. In September 2020, the Queensland Legislative Assembly passed the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Qld). The Act amends the definition of stealing under the Criminal Code Act 1899 (Qld) to explicitly include failures to pay an employee in relation to the performance of work by the employee. Under the Queensland Act, employers are also liable for up to 10 years of imprisonment for wage theft. The Australian Capital Territory has also passed similar wage theft legislation.

Comparable legislation has not yet been passed in other jurisdictions but appears to be on the cards. The Western Australian government introduced the Industrial Relations Legislation Amendment Bill 2020 (WA) on 25 June 2020 to create stronger compliance and enforcement provisions to address wage theft. Back in July 2019, Prime Minister Scott Morrison signalled that the Attorney-General was drafting legislation to deal with criminalising wage theft on the federal level. The Attorney-General released a discussion paper outlining a range of reform options in February 2020, but a Bill has yet to be tabled in Parliament. In 2019, the Legislative Council of South Australia formed a Select Committee on Wage Theft but has yet to take any legislative action.

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