Summary of Workplace Relations in Australia I

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1.1     Sources of employment law
(a)      The rights and duties of employers and employees are derived from a variety of sources.
(b)      The creation of a relationship between an employer and an employer triggers statutory regulation of that relationship. The Fair Work Act 2009 (Cth) (FW Act) is the principal statute governing the employment relationship in Australia. Statutes dealing with long service leave, superannuation, intellectual property and the deduction of tax from wages also operate by reference to the existence of an employment relationship.
(c)      A majority of Australian workers are covered by modern awards or an enterprise agreement. Modern awards cover employees in a particular industry and provide for minimum terms of employment  (see  discussion  below  at  paragraph  4).  Enterprise  Agreements  are  made between an organisation and their employees (or employees’ representatives).
(d)      The terms of the employment for other employees (particularly managerial and professional employees) are sourced from the individual contracts of employment. However, employees covered by an award or an enterprise agreement may also have the terms of their employment supplemented by an individual written employment contract.
1.2     Fair Work Act 2009 (Cth)
The principal legislation governing employment rights and duties in Australia is the FW Act. The FW Act provide for National Employment Standards (NES), which set out universal minimum entitlements of employees, including a national minimum wage and certain types of paid and unpaid leave, public holidays, notice of termination of employment and redundancy pay. 

2.National Employment Standards
The NES are minimum employee entitlements that cannot be undercut by an employment contract. If an employer fails to recognise these entitlements, affected employees can make claims under the FW Act to
recover the underpayment. The Fair Work Ombudsman is a regulatory officer empowered under the FW Act to investigate and prosecute breaches of the FW Act and NES.
2.1     Notice of termination of employment
(a)       The  minimum  period  of  notice  to  be  provided  to  an  employee  upon  termination  of employment is as follows:

An employee must also be given an extra week of notice if they’re over 45 years old and have worked for the employer for at least 2 years.
(b)      If employment is terminated during the notice period or immediately, the employee must be paid the balance of their notice period in lieu. This is payable in addition to any accrued leave entitlements that are owed to the employee (see paragraph 2.2 and paragraph 7 below).
(c)       Notice of termination must be given in writing (in addition, you should note your obligations with respect to unfair dismissal and general protections obligations set out in paragraph 3 below).
(d)      An employer may dismiss an employee without notice or payment in lieu if the employee has committed gross or serious misconduct. For the purposes of the NES statutory notice entitlements, serious misconduct is defined as wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract, including conduct that causes serious and imminent risk to the health and safety of a person, or the reputation, viability or profitability of the employer’s business. Serious misconduct also includes theft, fraud, assault, being intoxicated at work, or refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s employment contract.
(e)      Under the NES, no notice is required where termination of employment occurs by agreement or where the employee resigns voluntarily. However, employees will be required to give notice if it is stipulated in their employment contract.
(f)       A modern award, enterprise agreement, or contract of employment may entitle an employee to a more generous notice period.
2.2     Annual leave
(a)       Employees accrue 20 days annual leave per year on a pro rata basis. The leave accumulates each year and must be paid out on termination of employment for any reason.
(b)      Employees can be required to take annual leave during a period of shut down or where the employee has accrued excessive leave. Generally, an employee that has accrued 8 weeks or more will be considered to have “excessive leave”. You can direct the employee in writing to take annual leave (subject to having a discussion with the employee with the aim of arranging leave to reduce the excessive entitlement). You must give at least 8 weeks’ notice of the date of the leave when giving the direction. If a direction to take annual leave is made, then the remaining annual leave entitlement must not be less than 6 weeks (for example, if an employee only has 8 weeks, then the direction must be for a period of 2 weeks or less).
(c)       It is also possible for employees and employers to make arrangements to “cash out” their annual leave.
2.3     Personal leave
(a)       Personal/carer’s leave accrues annually on a pro rata basis of 10 days per year. Personal leave accumulates each year (ie it carries over onto the next year). However, it is a non-transferable entitlement, which means it cannot be cashed out and it is not paid out on termination of employment.
2.4     Parental leave
(a)       An employee will be entitled to take up to 12 months unpaid parental leave associated with the birth of a child if:

       (i)       the child is a child of the employee or of the employee’s spouse or de facto partner;              

       (ii)      the employee has or will have the responsibility for the care of the child;

       (iii)     the employee has provided written notice to their employer of their intention to take
unpaid parental leave; and 
       (iv)      the employee has (or will have) completed at least 12 months continuous service with their employer immediately before the proposed leave is set to start, or is a long-term casual employee who has a reasonable expectation of continuing employment with their employer after the birth of the child.
(b)      An employee that is pregnant also has an entitlement to be transferred to an ‘appropriate safe job’ due to illness or risk arising out of the pregnancy or other hazards of the position. 
(c)       An employee must take unpaid parental leave in a single continuous period. When an employee who is pregnant takes unpaid parental leave, her leave must commence:
       (i)       on the day of the birth of the child; or
       (ii)      in the 6 week period before the expected birth date.
(d)      Employers must take all reasonable steps to consult with an employee while they are on unpaid parental leave. This means that they have an obligation to communicate with them about any decisions that will have a significant effect on their status, pay, or location of their pre-natal position.
(e)      After a period of parental leave, an employee is entitled to return to the same job they had before they went on leave (or the job they had before they were transferred to a safe job or received no safe job leave). If that position no longer exists, but the employee is qualified and able to perform another vacant job, then the employee is entitled to return to that vacant job.
2.5     Redundancy
(a)       Where an employee’s position is made redundant they may be entitled to a redundancy payment on termination of their employment. Redundancy occurs when an employer no longer  requires anyone  to  perform a  particular  job due  to  changes  in  the operational requirements of its business.
(b)      Redundancy is payable to an employee under the NES as follows: 

(c)       If an employee is protected by the unfair dismissal jurisdiction (see paragraph 6 below), then there are certain requirements that must be met when an employee’s position is to be made redundant. If these steps are complied with, then the dismissal is a ‘genuine redundancy’ and the employee will not have access to the unfair dismissal jurisdiction. The requirements (set out under section 389 of the FW Act) are:
        (i)        the employer no longer requires the position to be performed by anyone due to changes to the operational requirements of its enterprise;
        (ii)       the employer has complied with any obligation to consult with the employee about the redundancy under a modern award;
        (iii)      the employee has considered potential redeployment opportunities in its enterprise or an associated entity of the employer. 
(d)      Under a modern award, enterprise agreement, or contract of employment an employee may have a more generous entitlement to redundancy pay than that provided in the NES. 

Editorial:Charles Power, Lauren Drummond
Charles Power, Partner
T: +61 3 9321 9942

Stephen Trew, Managing Partner, Sydney
T: +61 2 8083 0439

Michael Selinger, Partner
T: +61 2 8083 0430

Paul Venus, Managing Partner, Brisbane
T: +61 7 3135 0613

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