With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

This article publishes the key points of labor & employment compliance in Australia. 

01 Overview of the Labor Law System

1.Legal System

The Commonwealth of Australia operates under a common law system.

2.Resources and Agencies

The Fair Work Act 2009 (Cth) (FW Act) is the principal statute.

Part of the FW Act creates a national safety net of minimum wages and terms and conditions of employment by requiring employers to comply with a set of 13 National Employment Standards (NES). In addition to the NES, the FW Act provides for a number of workplace rights that affect the employment relationship.

Modern awards are instruments made under the FW Act which supplement the NES by setting out additional minimum terms and conditions that apply in a particular industry or occupation, including monetary entitlements such as wages, penalty rates and allowances, hours of work, consultation and dispute resolution provisions. 

Where an employer and some or all of its employees are covered by a modern award, the employer and employees can negotiate an enterprise agreement in accordance with the FW Act which can be approved by the Fair Work Commission (FWC) and override the applicable modern award while it remains in operation.

There are two main bodies that regulate employment and industrial relations in Australia:The first is the FWC, which is Australia’s independent national workplace relations tribunal.The second body is the Fair Work Ombudsman (FWO), which is Australia’s national workplace relations regulator. 

02 Employment Qualifications and Classification

1.Qualifications for Employment

A foreign corporation is permitted to hire local employees in Australia without having a permanent establishment in Australia.

2.Classification of Employment

In addition to the employer and employee relationship, the other common types of working arrangements in Australia include:

•  Independent contractors

•  Employee-like workers

•  Labor hire

•  Volunteers

•  Employer of Record, EoR

3.Foreign Workers

There are no limitations on the number of foreign workers an entity can employ. There are also no ratio requirements between domestic and foreign workers to which an entity must adhere.

However, in order for a foreign citizen to legally work in Australia, they must obtain a valid visa with work rights. There are a range of visa pathways that allow foreign citizens to work in Australia, including short and long term, skilled and sponsored, investment and working holidays.

03 Recruitment and Employment Contracts

1.Background Examination

During the recruitment process, employers are permitted to conduct various checks about prospective employees. These may include background or reference checks, police checks, medical checks and working with children checks (where relevant). The recruitment process is subject to anti-discrimination, adverse action and privacy laws.

2.Contract Types

The main types of employment contracts in Australia include:

•  Permanent

•  Casual

• Fixed term/Maximum term

3.Probationary Period

It is common in Australia for employers to include a probation period in an employment contract during which employment may be terminated by either party on a shorter period of notice that applies after the probation period ends. There is no restriction on the length of probation period an employer can include in an employment contract. However, as the FW Act contains a minimum employment period for the purpose of eligibility to make an unfair dismissal claim which is 6 months (or 12 months if the employer is a Small Business employer who together with any group companies employs less than 15 employees) it is common for probation periods to be 6 months to align with this minimum employment period.

04 Working Standards

1.Remuneration

Under the FW Act, an employer must pay an employee at least monthly. It is common practice for employees to be paid fortnightly. Some modern awards also provide details about the frequency of payment.

Employees who are covered by an enterprise agreement or modern award will have their minimum base rate of pay set by those instruments. Enterprise agreements and modern awards include minimum rates of pay that are no less than the national minimum wage, and also often include other financial entitlements such as overtime rates, penalty rates, loadings and allowances.

2.Statutory Benefits and Social Security

Employees have a number of statutory benefits derived from a number of instruments, including the NES and modern awards.

In addition, federal superannuation laws require employers to make a prescribed minimum level of superannuation (pension) contributions (subject to a cap) for eligible employees in each quarter.

3.Working Hours

An employer must not request or require a full-time employee to work more than 38 hours per week, unless the additional hours are reasonable. The requirement for additional hours to be reasonable also applies to part time employees who are asked to work more than 38 hours in a week.

Under the FW Act, employees also have a right to request flexible working arrangements with their employer. For example, an employee may request an adjustment to their working hours or working days.  An employer may only refuse such a request from an eligible employee after consultation and where they have reasonable business grounds for doing so.

A ‘right to disconnect’ also exists in the FW Act. It is a positive right for employees to refuse to monitor, read or respond to contact, or attempted contact, from an employer outside of their working hours, unless the refusal is unreasonable. This right also extends to refusing to respond to contact from a third party if the contact, or attempted contact, relates to the employee’s work.

4.Rest and Leave

The main statutory leave in Australia includes annual leave, personal (sick)/carer’s leave, community service leave, family and domestic violence leave, compassionate leave, parental leave and long service leave. Employees’ rights to statutory leave are derived from a number of national and state/territory instruments. In addition, employees are entitled to be absent from work on a day that is a public holiday.

05 Occupational Health and Special Protection

In Australia, ‘occupational health and security’ is referred to as work health and safety (WHS).

The primary duty of care is owed by a ‘person conducting a business or undertaking’ (PCBU). A PCBU is a broad concept that captures both organisations and individuals (such as partners in partnerships or in an unincorporated joint venture). The concept does not extend to single worker businesses or volunteer associations.

The WHS Act requires employers to ensure, so far as reasonably practicable, the health and safety of workers and other persons affected by the business or undertaking. This duty of care also requires employers to ensure (among other things), so far as is reasonably practicable, the maintenance of a work environment without risks to health and safety, the maintenance of safe plant and structure and the provision of adequate facilities for the welfare at work of workers in carrying out work.

06 Personal Information and Privacy

1.General Rules

Privacy in the workplace is governed by the Privacy Act 1988 (Cth) (Privacy Act) which includes the 13 Australian Privacy Principles (APPs). The Privacy Act regulates the handling, storage, use and disclosure of personal information by the federal government and large organisations in the private sector.

In addition to the Privacy Act, there are a number of federal, state and territory laws which restrict the use of surveillance and monitoring devices. 

2.Transnational Transfer

As outlined above, the Privacy Act does not apply to the personal data of an employee to the extent the data relates to the employment relationship and is collected and used or disclosed by the employer in connection with the employment relationship. However, if personal data is transferred to an overseas parent or holding company or other third party such as an insurer or travel agent, that overseas entity will need to comply with the APPs and applicable laws.

07 Anti-Discrimination and Anti-Harassment

1.General Rules

In Australia there are a range of laws prohibiting discrimination, including:

• federal legislation prohibiting direct and indirect discrimination based on sex, disability, race and age;

• the ‘general protections’ provisions in Part 3-1 of the FW Act; and

• legislation at the state and territory level which prohibits direct and indirect discrimination on a range of protected attributes.

2.Protective Characters

• sex, sexual orientation, gender identity, intersex status, relationship status, pregnancy, breastfeeding or family responsibilities;

• race, colour, descent or national or ethnic origin;

• disability; or

• age.

There are also federal laws that prohibit discrimination in employment on the grounds of sexual orientation, irrelevant criminal record, medical record, trade union activity, political opinion, religion or social origin.

08 Internal Policies

1.Applicability

In Australia, subject to some limited exceptions, there is no requirement for employers to issue employment policies. However, in some areas, the absence of a policy will make it very difficult, if not impossible, to make out a defence to a claim or prosecution; for example, appropriate workplace behaviour (i.e. sexual harassment, unlawful discrimination and bullying) and workplace health and safety. In states which regulate the use of surveillance it is also generally necessary to have a policy which outlines the nature and type of surveillance being undertaken.

2.Validity

Generally, approval or consent is not required from workers, trade unions, authorities or other third parties to have a valid internal policy. However, if the policy implements a major workplace change, or relates to a WHS matter, then the employer will likely need to consult with any impacted workers about the policy before it is implemented.

3.Whistleblowing

Where an entity is a public company, large proprietary company or a proprietary company that is a trustee of registrable superannuation entities, a whistleblowing policy is mandatory.

09 Transactions

In Australia there is no means to automatically transfer the employment of an employee from one employer to another in connection with the sale or transfer of a business. Employees will only become employed by the purchaser if they are offered and accept employment with them. Where an employee does accept employment with the purchaser and the arrangement falls within the definition of a transfer of business in the FW Act,  the new employer usually has to recognise an employee’s service with their old employer for entitlements such as annual leave, personal leave, parental leave, long service leave, redundancy pay and the minimum employment period for unfair dismissal claims. Although, purchasers are able to exclude the recognition of service for redundancy pay, annual leave and the minimum employment period, if they wish. If they do so the original employer will be required to pay the employees their accrued annual leave and redundancy pay on the termination of their employment.

When an equity sale (or share sale) occurs, the employees continue their employment under the same terms and conditions and the employees’ accrued entitlements remain unchanged.

10 Termination of Employment

1.Termination Grounds

Employers in Australia can dismiss employees without cause where they provide notice of termination or payment in lieu of notice.

2.Termination Protection

Employees who have been dismissed from their employment may be entitled to challenge it on the basis of unfair dismissal, adverse action/general protections, or breach of contract. Dismissal can also be challenged where it was based on a prohibited discriminatory ground under anti-discrimination legislation.

The above types of claims are typically brought by employees in their individual capacity. However, sometimes employees will jointly bring a claim (also known as a ‘class action’) against their employer for terminating their employment because of a collective protected attribute or workplace right.

3.Severance and Compensation

In addition to notice of termination or payment in lieu of notice, employees whose positions have been made redundant are entitled to receive a payment equivalent to between 4- and 16-weeks’ salary, depending on how long they had been employed.

4.Mass Termination and Layoffs

All enterprise agreements and modern awards include a ‘consultation term’ which requires the employer to consult with its employees about any major workplace change that is likely to have a significant effect on the employees. For example, a company restructure that will result in many employees’ roles being made redundant. This means that there are consultation processes that employers must follow prior to implementing the restructure. These processes vary in detail, depending on the modern award or enterprise agreement.

If an employer decides to dismiss 15 or more employees due to redundancy, it must give prior notice to the relevant union of which the employees are members and Australia’s social security agency, Centrelink.

11 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

The Corporations Act 2001 (Cth) provides statutory protection against the misuse of an employer’s confidential information. There are also equitable obligations of confidence which are applicable to trade secrets. However, as an additional mechanism, employers with confidential information may also protect it through confidentiality agreements with employees, or through a restraint clause in an employment contract.

2.Non-Compete and Non-Solicitation

Although post-employment restraints of trade (covenants not to compete) are commonly used, they are presumed to be invalid unless it can be shown that the restraint protects a legitimate business interest of the employer and its goes no further than is reasonably necessary to protect that interest. The party that seeks to show that the restraint is reasonable must prove it to the court.

Non-solicitation of employee restraints are intended to prevent an employee from inducing another employee or contractor of their former employer to leave the organisation to work for a competitor. These restraints are more likely to be enforceable in respect of employees:

• with whom the former employee worked directly and had a personal relationship which was developed during their employment; and

• with whom the former employee had influence over during their employment.

12 Work Representation and Trade Unions

1.Work Representation

Unlike in Europe, the creation of ‘Works Councils’ is not a common concept in Australia. Accordingly, there are no laws or regulations specifically focused on their establishment or operation. Rather, most negotiation around industrial relations issues occurs between employers and trade unions.

Notwithstanding the above, there is the provision for work groups and health and safety representatives (also known as HSRs) under WHS laws.

2.Trade Unions

In order to exercise many of the rights afforded to trade unions under the FW Act, a trade union must be registered under the Fair Work (Registered Organisations) Act 2009 (Cth). This legislation governs, among other things, eligibility for registration, union representation rights, and rules regarding the conduct of union officers and employees.

Under the FW Act, employees may decide for themselves whether they would like to join a trade union that covers the type of work they perform. The FW Act protects both an employee’s right to join, and their right not to join, a trade union.

The collective bargaining system in the FW Act permits employers and employees (with the assistance of their bargaining representative) to make binding enterprise agreements. It is common to see employers of varying sizes and across varying industries and sectors (including the major investment sector) have an enterprise agreement.

13 Dispute Resolution

1.Procedures & Enforcement

The FW Act requires all modern awards to include a term that sets out the procedure for resolving disputes involving matters arising under the modern award or the NES. Similarly, when making an enterprise agreement, the FW Act requires the parties to include a dispute resolution clause.

As to disputes involving matters that do not relate to a modern award or enterprise agreement, the forums available to employees differ depending on the type of claim. The key forums include the FWC and the common law courts.

Where the employer and employee agree, the parties may enter into a ‘deed of release’ or a ‘separation agreement’ releasing one or both parties from liability. In order for these agreements to be legally enforceable, the employer must provide a payment or benefits that are no less than the employee’s minimum legal entitlements under legislation, modern award and enterprise agreement.

2.Waiver & Enforcement

Employees cannot validly waive statutory rights granted by labor law, as these are considered matters of public policy. Any agreement that purports to reduce or waive such rights is null and void.

14 Others

1.Latest Development & Trends

Australian labour law has undergone significant amendment over the past 3 years due to the introduction of the Closing Loopholes legislation under the Australian Labor Party.

The current ‘hot topics’ of Australian labour law are flexible work arrangements, whether employees should have a legislative right to work from home, and the use of restraints of trade in employment contracts.

2.Cultural and Religious Considerations

Anti-discrimination legislation prohibits discrimination on the basis of religion in various aspects of public life, including employment, education and the provision of goods and services.

In addition, the FW Act allows employers and employees to agree on the substitution of a public holiday for another day which may be around a significant religious or cultural day.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

Maree Skinner is a partner at Maddocks, a highly regarded employment lawyer who supports clients in the management of their employee and industrial relations issues. Maree practices in all aspects of workplace relations law assisting multi-national clients with everything from pro-active compliance measures, day-to-day employment issues, and dispute resolution through to high-level strategic advice. 

Bruce Heddle is a partner at Maddocks. He has extensive experience advising multinational clients in industries including transport, energy, mining, construction, education, financial services, insurance, telecommunications, health and manufacturing.

Olivia Hillier is a partner at Maddocks. She has specialist experience in workforce reorganisations, employment issues in mergers and acquisitions and workforce reorganisation, work health and safety and equal opportunity and discrimination, as well as advice and representation in contractual and industrial relations matters.

Translator

Zhou Hao, Master of Laws, Associate at Anli Partners. Areas of expertise: Labor Law, Dispute Resolution, ESG Compliance.