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The Complete Guide to Australian Employment Law

Key Takeaways

1. Australian employment law is covered by a few different piece of legislation including Fair Work Act 2009, Work Health and Safety Act 2011, and Superannuation Guarantee law. In addition, there are federal laws giving protection against discrimination, bullying, and harassment in the workplace.

2. Employers need to ensure compliance with minimum wage laws. In order to comply, employers must keep updated with the changes in the minimum wage.

3. Under Australian labor law, employees are entitled to certain rights such as minimum wages, paid leave, safety in the workplace, compensation, and a pension fund. Contributions must be made through the payroll system to abide by the law.

4. It must be noted that private health insurance is not a mandatory benefit for employees in Australia, though a lot of employers provide this.

Australia is a major destination for international expansion and hiring: Strong economic growth has been propelled not just by the resources and tourism sectors, but a robust e-commerce and tech start-up environment. People who work in Australia are subject to Australian labor law which provides workers with rights and protections under legislation like the Fair Work Act 2009: This Act is in place to ensure that within the workplace, healthy working relationships exist. This includes making sure that employers give their employees basic rights such as a minimum wage, paid leave periods, compensation where applicable, and a safe working environment.

In addition, the Work Health and Safety Act 2011 was passed to enforce rules surrounding workers’ health, safety, and wellbeing in the workplace, particularly for those who work in notoriously dangerous industries. The Work Health and Safety Act 2011 is effective in the Australian Capital Territory, Northern Territory, Queensland, New South Wales, South Australia, and Tasmania.

This Act gives employees a right to worker’s compensation, basic health insurance, and medical allowance in cases of employment-related injuries and sickness. Where applicable, safety equipment should be provided and health inspections made.

Furthermore, there are federal laws within Australia that give employees protection against racial, religious, gender, disability or age discrimination, bullying, and harassment at the workplace (find out more about how these laws operate internationally at What Is Equal Employment Opportunity?

Here we explain the key elements of Australian employment law that you need to be aware of when hiring in Australia

Australian employment law and employment contracts

In Australia, depending on the industry in which a company operates, there are different ways of making agreements between employers and employees. The Fair Work Act 2009 lays out the rules of how agreements should be made.

An agreement will set out the working conditions and obligations between the employer and employee and according to Australian labor law.

Under the national workplace relations system, there are two types of agreements:

  1. Enterprise agreements
  2. Agreement-based transitional instruments

Enterprise agreements are made through collective bargaining for a group of employees with a single employer or multiple employers. Under the Fair Work Act 2009, “an enterprise” is defined as any kind of business, activity, or project. An enterprise agreement can also be made before an employee is hired, which is known as ‘greenfields enterprise agreement.’ This is usually negotiated between the company and applicable union representatives.

An enterprise agreement usually covers the following:

  • The terms of the relationship between the employer and employee
  • The applicable wage deductions
  • The conditions of the agreement
  • The date on which the agreement will end
  • A dispute settlement procedure should a dispute arise
  • Individual flexibility arrangements to account for the genuine needs of both parties
  • Confirmation that the employer will notify employees of any workplace changes that are likely to affect them

Within agreements, certain “awards” or employment conditions are set out. An award is a legal instrument that is made by an industrial tribunal outlining the minimum standards that an employer must provide within a certain industry. This can include conditions surrounding minimum pay, allowances, entitlements, and contributions.

For employees outside the national workplace relations system, an employment contract is also required. Under current law, this does not need to be in writing (though it is highly recommended). 

Minimum employment rights under Australian Labor Law

Under the Fair Work Act 2009, Australian workers are provided basic rights such as a minimum wage, paid leave periods, compensation where applicable, and safe working environments.

In Australia, compensation laws state that employees should not work more than 38 hours each week.

Annual leave

According to employment laws in Australia, employees are entitled to 4 weeks of paid holidays, known as “annual leave”. An employee accumulates the holiday entitlement based on the number of hours worked throughout the year and is able to take their vacation days when it has been accumulated. Usually, the employer will confirm when the employee can take their leave. In addition to annual leave, employees will also be entitled to take public holidays off work.

Personal leave

Within Australian labor law, employees are entitled to 10 days of personal paid leave annually. This includes sick leave. 

Maternity and paternity leave

Employees are also entitled to a period of 12 weeks of paid maternity leave which is paid at the minimum wage. Spouses or partners are allowed to take 2 weeks of paid leave also under the minimum wage.

Contributions

Under the Fair Work Act 2009, all Australian employees are required to make mandatory contributions, which are usually made through the payroll system.

Withheld income taxes and contributions must be submitted by employers to the Australian Tax Office. The taxes are called pay-as-you-go or PAYG contributions. If an employee also receives other benefits such as a company car or private health insurance, these are known as “fringe benefits” and must be taxed under the fringe benefits tax.

Contributions must also be made to compensation schemes that cover any injuries suffered in the workplace or whilst carrying out the job.

Pension

In Australia, the majority of employees are entitled to retirement pension, otherwise known as Australian Superannuation made on behalf of the employer over the employee’s lifetime. The Superannuation Guarantee law is in place to ensure employees receive at least the minimum required amount of superannuation funds. A contribution of 10% of the employee’s salary must be made each quarter for those employees who earn at least AUD $450 per month.

Health care

As Australia has a national healthcare system, funded out of general taxation, there is no requirement that employer’s provide health insurance for employees. 

However, while it is not a compulsory benefit entitlement, many employers do provide employees with an allowance to purchase private health insurance. 

All employees that earn a taxable income will pay 2% towards Medicare which is Australia’s primary healthcare system. 

Minimum wage in Australia

The Fair Work Commission’s (FWC) Expert Panel reviews the wages received by employees in the national workplace relations system every year.

The minimum wage is the lowest amount that an employer can pay an employee. It is in place so that the standard of pay is fair across the board and to avoid employee exploitation. 

This minimum wage applies across the board under Australian employment law — both to those within the national workplace relations system and outside it. 

As of 2022, the national minimum wage in Australia is $20.33 per hour or $772.60 per every 38 hour week.

In order to comply with Australia’s employment laws, it is important for employers to be up-to-date on changes in the minimum wage as they are susceptible to review.

Public holidays in Australia

Employees are entitled to have paid public holidays under Australian employment law through both federal and state legislation. Public holidays that apply across Australia include:

  • New Year’s Day
  • Australia Day
  • Good Friday
  • Easter Monday
  • Anzac Day
  • Labour Day
  • Queen’s Birthday
  • Christmas Day
  • Boxing Day.
Note, the individual states and territories also apply their own public holidays. 

Horizons Ensures Compliance with Australian Employment Law

At Horizons, we are here to help businesses hire in Australia to ensure that companies are complying with Australian employment law. We provide expert advice. If you would like to receive further information, please do not hesitate to contact us.

Frequently Asked Questions (FAQ)

Under Australian employment law or labor law, employees are entitled to certain rights such as being paid at least the minimum wage, receiving paid leave, having a safe place to work, compensation and a pension fund.

 

Under Australian employment law, employees are protected by the Fair Work Act 2009 which lays out basic rights and protections, the Superannuation Guarantee law covers retirement funds, and the Work Health and Safety Act 2011 ensures safe working conditions for employees are met.

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