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11. Employee Benefits

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11. Employee Benefits

Social Security

Social security refers to welfare payments provided by the Australian Federal Government. These payments generally fall under one of four pieces of legislation:

  • Social Security Act 1991 (Cth) (“the SSA”) provides for payment, to eligible people, certain pensions, benefits and allowances, such as the age pension, unemployment, carer allowance and payment, and disability pension.
  • A New Tax System (Family Assistance) Act 1999 (Cth) provides for family tax benefits, maternity allowances and childcare benefits.
  • Student Assistance Act 1973 (Cth) provides for allowances and benefits for eligible groups of students and apprentices.
  • Paid Parental Leave Act 2010 (Cth) provides financial support to eligible working parents of newborn or recently adopted children.

The responsibility for these payments falls on the Commonwealth Government rather than an employer. Payments under the Paid Parental Leave Scheme do not affect employer-funded paid parental leave, and complement the entitlements under the Fair Work Act 2009 (Cth).

Superannuation

Superannuation in Australia is mandated by the Superannuation Guarantee (Administration) Act 1992 (Cth). Minimum contributions are compulsory for employers, being a percentage of the ordinary time earnings of their employees (including part-time and casual employees) who are aged over 18, and who are paid $450 (before tax) a month.

The current Superannuation Guarantee rate is at 9.5% for the 2019/2020 financial year. Under current legislation the rate will remain at 9.5% until 30 June 2021, and will then increase to 10% from 1 July 2021, and then increase by 0.5% increments each year until it reaches 12% by 1 July 2025.

Employees can only withdraw funds out of a superannuation fund when the employee meets one of the conditions of release contained in Schedule 1 of the Superannuation Industry (Supervision) Regulations 1994. For example, an employee can have their superannuation released if they have a terminal medical condition or face severe financial hardship.

Employees can choose to make extra voluntary contributions to their superannuation funds and receive tax benefits for doing so. There is a cap on the amount of voluntary contributions an employee can make, after which there are tax disincentives.

If individuals contribute more than the cap, they must pay the superannuation excess concessional contributions tax, which is set at 31.5%.

Healthcare and Insurances

Employers are not obliged to provide health insurance for employees in Australia.

Required Leave

Holidays and Annual Leave

The NES entitles employees to be absent on certain public holidays. The NES preserves the right of an employer to make a reasonable request that an employee work on a holiday, as well as the employee’s right to refuse upon reasonable grounds. Under the NES, employees who would usually work on the day on which the public holiday falls are entitled to their base rate of pay for the hours ordinarily worked on that day or part of that day while not at work.

Under the NES, full-time employees are entitled to four weeks of paid annual leave (calculated by reference to the employee’s base rate of pay) and part-time employees to a pro-rata amount. Certain shift workers are entitled to five weeks of paid annual leave. Annual leave accrues over a year according to the employee’s ordinary hours of work (i.e. the hours set out in the relevant modern award or enterprise agreement).

The NES allows modern awards and enterprise agreements to vary the way in which employees take annual leave. This may include requirements that employees take paid annual leave in certain circumstances, subject to such requirements being “reasonable”. Modern awards and enterprise agreements may also permit the cashing out of annual leave, but any cashing out arrangement (which must be contained in a separate, written agreement) must leave the employee with a minimum balance of four weeks accrued paid annual leave. In the four-yearly review of modern awards, the FWC made decisions with respect to award provisions regarding: (i) cashing out of annual leave (ii) electronic funds transfer and paid annual leave (iii) granting annual leave in advance and (iv) excessive annual leave.

The NES also clarifies that if the period during which an employee takes annual leave includes a public holiday, a period of another kind of leave (including sick leave, personal leave or community service leave, but not unpaid parental leave), that holiday or period of other leave is not counted as annual leave. This means that if an employee falls ill during a period of annual leave, for the period that the employee qualifies for sick leave, the employee will have that amount of annual leave credited, and sick leave debited.

Maternity and Parental Leave and Related Entitlements

The Fair Work Act 2009 (Cth) provides for unpaid leave for parents who are giving birth to, or are adopting, a child. In essence, the Act provides for up to 12 months’ unpaid leave (or 24 months with the employer’s consent) for employees with a minimum of 12 months continuous service.

While the legislative provisions under the Fair Work Act 2009 (Cth) are for unpaid leave, there are two circumstances in which leave can be paid:

Firstly, some employers will have their own paid leave scheme, where longer serving employees will be granted paid leave for a period (usually, this is for a short period and not for the entire period of leave). Anecdotal evidence suggests that while this trend is growing (it is seen as a way of retaining good employees) it would still be a minority of employers who would offer such schemes. This type of entitlement is purely contractual: in the absence of any agreement, there is no right to such leave.

Secondly, there are limited entitlements to government funded leave. There is a Paid Parental Leave Scheme (“the PPL Scheme”) under the Paid Parental Leave Act 2010 (Cth), which complements the Fair Work Act 2009 (Cth). The scheme provides financial support to eligible working parents of newborn or recently adopted children. Paid parental leave is paid to the child’s primary carer for up to 18 weeks of pay based on the rate of the national minimum wage. Eligible working fathers and partners (including same-sex partners) also get 2 weeks leave paid at the national minimum wage.

Employers can also provide for paid parental leave in registered agreements, employment contracts and workplace policies. The amount of leave and pay entitlements depends on the relevant registered agreement, contract or policy. Employer-funded paid parental leave does not affect an employee’s eligibility for the Australian Government’s Paid Parental Leave Scheme. An employee can be paid both.

An employee is not entitled to parental leave under the NES unless they have 12 months of continuous service or are a “long term casual employee” (being a casual employee who has been employed on a regular and systematic basis during a period of at least 12 months).

The NES allows both parents to take separate periods of 12 months’ parental leave, including up to eight weeks of leave taken concurrently. Parents may choose when they take the concurrent leave in the first twelve months after the birth or adoption of their child, and any concurrent leave can be taken in separate periods of at least two weeks’ duration (unless otherwise agreed by the employer). Alternatively, one parent can request an extension of up to 12 months in addition to the initial 12-month period. An employer will only be able to refuse such a request once the employer has given the employee a reasonable opportunity to discuss the request and, as with requests for flexible working arrangements, employers may refuse extensions only on “reasonable business grounds”.

The NES extends the parental leave provisions to apply to same-sex couples.

Under the NES, an employer may — during the six-week period before the expected date of the birth of the child — ask a pregnant employee who is entitled to take unpaid parental leave to give the employer a medical certificate as to their fitness for work. The employer may require the employee to take unpaid parental leave if no certificate is provided within seven days of the request, or if the certificate states that the employee is not fit for work. If the medical certificate states that the employee is fit for work, but that it is inadvisable for the employee to continue in her present position, the employee is entitled to be transferred to a safe job, or to be paid “no safe job leave”.

The Fair Work Act 2009 (Cth) addresses the issue of changes occurring during an employee’s period of parental leave. Specifically, the employer must take “all reasonable steps” to consult with an employee whose pre-parental leave status, pay or location are significantly affected by any decision that the employer takes during the employee’s leave period. Furthermore, the continuity of service of any employee who is transferred to a new employer during his or her period of leave continues with the new employer.

Whilst a court order cannot be made in relation to an employer’s refusal of a request for an extension of the period of unpaid parental leave, the FWC may, upon application by a party, deal with the issue if the parties have agreed in a contract of employment, enterprise agreement or other written agreement that Fair Work Australia can do so.

An employer also has an obligation to advise  any employee who is engaged to replace an employee who is on parental leave of the rights of the employee on leave to return to their employment at the end of their period of parental leave, and of other rights of the employee who is on parental leave to bring the leave to an end sooner if the birth does not result in a living child, if the child dies, or the person on leave ceases to be the primary carer of the child.

Sickness and Disability Leave

The NES entitles permanent employees to accrue 10 days of paid personal/carer’s leave per year, and 2 days of compassionate leave per year. The term ‘personal/carer’s leave’ effectively covers both sick leave and carer’s leave. Meanwhile, disability leave is not applicable in Australia.

An employee’s entitlement to this leave accrues over each year of employment according to the number of ordinary hours worked; continues to accrue when an employee takes leave; and accumulates from year to year.

In Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29, the High Court of Australia (by majority) clarified how personal/carer’s leave accrues to permanent part-time employees who worked irregular and longer hours. Relevantly, the High Court explained that a person employed to work 36 hours per week, over three 12-hour shifts, would accrue 72 hours of personal/carer’s leave over the course of a single year (being the product of 36 hours and 52 weeks, divided by 26), and rejected the proposition that such a person would be able to accrue 120 hours of personal/carer’s leave over the course of a single year (being the product of 12 hours and 10 days).

An employee may take paid personal/carer’s leave if they are unfit for work because of their own personal illness or injury or to provide care or support to a member of their immediate family or household. An employee is also entitled to two days of unpaid carer’s leave per year.

Employees are entitled to 2 days of compassionate leave to spend time with a member of their immediate family or household who has sustained a life-threatening illness or injury, or after a death of a member of the employee’s immediate family or household.

For all periods of personal/carer’s leave or compassionate leave, an employee must give his or her employer notice. The employer is entitled to request evidence to prove the reason for the leave, and a failure to provide this, if requested, means the employee is not entitled to the leave. Awards or agreements may include terms relating to proof or evidence of the reason for the leave.

Under s 352 of the Fair Work Act 2009 (Cth), an employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations, unless the absence extends for longer than 3 months, or the total absences have been longer than 3 months in a 12 month period and the employee is not on paid personal/carer’s leave.

As with parental leave, paid personal and carer’s leave provisions stipulate that awards and agreements may include terms relating to the cashing out of such leave. In this instance, any cashing out terms in an award or agreement must require that the employee be left with a balance of at least 15 days’ accrued leave after the cashing out. As with annual leave, the cashing out arrangement must be included in a separate written agreement

The NES also entitles casual employees to 2 days of unpaid carer’s leave and 2 days of unpaid compassionate leave, but not personal or sick leave.

Any Other Required or Typically Provided Leave(s)

Community Service Leave

The NES stipulates that employees are entitled to be absent from work for three main reasons (termed “eligible community service activities”):

  • jury service;
  • “voluntary emergency management activity”; and
  • any other activity in the nature of community service that the regulations prescribe.

The leave period includes reasonable travel and rest time prior to, and following, the eligible activity. As is to be expected, the employee must provide the employer with notice “as soon as practicable,” though this may not necessarily be at a time before the absence has begun. Furthermore, upon request from the employer, the employee must provide evidence of his or her engagement in the eligible community service activity.

Long Service Leave

The NES does not specifically provide for a long service leave entitlement. The NES merely provides that an employee is entitled to long service leave as stipulated in the applicable, pre-modernised award. In cases where there is no such applicable award, an employee’s entitlement will be derived from state and territory legislation, except where an industrial instrument modifies or excludes the legislative provisions. Each state and territory in Australia provides an entitlement for employees to have long service leave. These basic entitlements are as follows:

  • New South Wales: two months’ leave after 10 years of service, with one month’s leave for each subsequent period of five years of service;
  • Victoria: employees are entitled to take their long service leave after at least seven years’ continuous employment with one employer, which accrues at a rate of one week for every 60 weeks of continuous employment;
  • Queensland: eight and two-thirds weeks’ leave after 10 years’ of continuous service, with further leave of four and one-third week’s leave to be provided after each additional five years of continuous service;
  • South Australia: 13 weeks’ leave after the first 10 years of service, with 1.3 weeks’ leave for each subsequent year of service;
  • Western Australia: eight and two-thirds weeks’ leave after 10 years of continuous service, with four and one-thirds weeks’ leave for each subsequent period of five years of continuous service;
  • Tasmania: eight and two-thirds weeks’ leave after 10 years of continuous service, with four and one-third’s weeks’ leave for each additional five years of continuous service;
  • Northern Territory: 13 weeks’ leave after 10 years of continuous service, with a further six and a half weeks’ leave after each additional five years of continuous service; and
  • The Australian Capital Territory: one-fifth of a month’s leave for each year of service after seven years of continuous service.

Domestic Violence Leave

All employees, including part-time and casual, who are experiencing family domestic violence, or who are providing care or support to another member of their family/household who is experiencing domestic family violence are now entitled to domestic violence leave under the NES. This includes 5 days of unpaid family and domestic violence leave in a 12-month period (employers may agree to employees taking more than 5 days of unpaid leave).

Pensions: Mandatory and Typically Provided

Age Pension

Under the Social Security Act 1991 (Cth) a pension is paid to residents of Australia who have reached pension age and are assessed as not having adequate levels of income or assets that can be used to support themselves. From 1 July 2017 the qualifying age increased to 65 years and 6 months, to continue increasing by six months every two years for the following six years, reaching 67 years by 1 July 2023. The maximum rate paid for an individual is $916.30 per fortnight and $690.70 for a couple. Unlike pension payments of many other countries, in Australia, workers do not contribute to a pension or insurance within Australia, and the payment is available subject to means testing.

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