Australia

Labor Compliance Guide

Labor Requirements

Australia’s constitution divides governmental power between the federal government and the state governments, and both have the power to enact labor legislation. Since 1996, the federal government has increasingly used its constitutional power to override state labor laws and unify the industrial relations system under federal law. Australia’s workplace relations system is governed by the Fair Work Act 2009, which established Fair Work Australia and renamed the Fair Work Commission in 2012.

Hours & Pay Regulations

Normal Working Hours

Ordinary hours are an employee’s normal and regular hours of work, which do not attract overtime rates. An employee can work a maximum of 38 ordinary hours in a week. The time of the day ordinary hours are worked is called the spread of hours. Time worked outside the spread of ordinary hours can attract overtime rates. An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:

      • For a full‑time employee its 38 hours; or
      • For an employee who is not a full‑time employee, it should be the lesser of 38 hours; and the employee’s ordinary hours of work in a week.

The employee may refuse to work additional hour if they are unreasonable. Awards, enterprise agreements or agreements between individual employers and employees set the spread of hours within which ordinary work hours may be assigned. Typically, awards and agreements also prescribe a minimum period of rest, often 10 hours, between ceasing work one day and commencing work the next day. In addition, awards and agreements may limit the number of overtime hours that may be worked, although the cap of reasonable additional hours applies to all employees.

 

Amendments to the Fair Labor Act require employers to consult employees regarding changes in working hours regardless of whether the change results in a “major workplace change.” The employer is required to provide information to the employees regarding the proposed change, allow the employees to comment and consider the comments in determining whether to implement the change.

 

Flexible Work Arrangements

Certain employees can make a request for a flexible working schedule if they have responsibility for a child who is school-aged or younger. Employees who have been with their employer for more than 12 months can ask for a flexible work arrangement if they are a carer per the Carer Recognition Act, have a disability, or meet other qualifying conditions. Employers can only refuse requests for flexible work arrangements on reasonable business grounds. Fair Work Act 2009 (Cth), No. 28, §§ 62-65.

 

From 1 December 2018 modern awards will include new rules about requests for Flexible Work Arrangements.

 

An employee may request a change in working arrangements if any of the circumstances referred below apply to an employee, and the employee would like to change his or her working arrangements because of those circumstances; then the employee may request the employer for a change in working arrangements relating to those circumstances. The following are the circumstances:

      • The employee is the parent, or has responsibility for the care, of a child who is of school age or younger;
      • The employee is a carer (within the meaning of the Carer Recognition Act 2010);
      • The employee has a disability;
      • The employee is 55 or older;
      • The employee is experiencing violence from a member of the employee’s family;
      • The employee provides care or support to a member of the employee’s immediate family, or a member of the employee ’s household, who requires care or support because the member is experiencing violence from the member’s family.

The employer must give the employee a written response to the request within 21 days, stating whether the employer grants or refuses the request. The employer may refuse the request only on reasonable business grounds. Reasonable business grounds include the following:

      • That the new working arrangements requested by the employee would be too costly for the employer;
      • That there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested by the employee;
      • That it would be impractical to change the working arrangements of other employees or recruit new employees, to accommodate the new working arrangements requested by the employee;
      • That the new working arrangements requested by the employee would be likely to result in a significant loss in efficiency or productivity;
      • That the new working arrangements requested by the employee would be likely to have a significant negative impact on customer service.
      • If the employer refuses the request, the written response must include details of the reasons for the refusal. If the employer and employee could not agree on a change in working arrangements.

Overtime

There are no federal or state laws setting a standard for overtime pay rates, which are established in collective bargaining agreements. Pay rates for overtime, usually defined as any work in excess of 38 hours in a week or outside the ordinary hours listed in the agreement, are typically based on a percentage system; a common award provision requires an overtime rate of time and one-half for the first three hours of overtime and double time thereafter. Other overtime or “penalty” rates are commonly set for work on Saturdays, Sundays and public holidays. The usual rate for Sundays and public holidays is double time or double time and one-half. Fair Work Act 2009 (Cth), No. 28, § 62.

 

Overtime Pay for Casual Employees

On 2 April 2019, the Fair Work Commission came together on a decision to change the Horticulture Award. The decision changes the Horticulture Award for casual employees to include ordinary hours of work, a night loading and overtime entitlements. It also clarifies the penalty rate for working on public holidays for casual employees. The changes apply from the first full pay period on or after 15 April 2019. The ordinary hours of work for casual employees other than shift workers will not exceed 304 ordinary hours averaged over an 8 week period provided that:

      • Ordinary hours of work for casual employees can be worked at any time.
      • Each ordinary hour of work worked by a casual employee on any day of the week (excluding public holidays) between 5.00 am and 8.30 pm will be paid at the employee’s minimum hourly wage for his or her classification plus a casual loading of 25%.
      • In a State or Territory that does not observe daylight saving time, by agreement between the employer and a majority of affected casual employees, the 5.00 am to 8.30 pm daily spread of hours can be moved forward one hour (4.00 am to 7.30 pm) for the period of daylight saving time in other States and Territories.
      • Each ordinary hour worked by a casual employee on any day of the week (excluding public holidays) between 8.31 pm and 4.59 am (or 7.31 pm and 3.59 am) will attract a loading of 15% of the employee’s minimum hourly wage for his or her classification (in addition to the casual loading of 25%).
      • The maximum number of ordinary hours which a casual employee may work per engagement, or on any day, is 12 ordinary hours.
      • All time worked in excess of 12 hours per engagement, 12 hours in a single day or 304 ordinary hours over an eight week period will be deemed overtime.

Payment for Overtime – Casual Employees

Each hour worked in excess of 12 hours per engagement, 12 hours in a single day or 304 ordinary hours over an eight week period will be paid at a rate of 175% of the employee’s minimum hourly wage for his or her classification (inclusive of the casual loading).

Breaks

Rest breaks are intended to allow an employee to rest for a short period of time during work hours. Rest breaks are commonly referred to as ‘crib breaks’, ‘rest pauses’ or ‘tea breaks’.

 

Crib Breaks / Rest Pauses

Employees on continuous shift work are normally entitled to a crib break (usually 20 minutes) during each shift. Such breaks are usually counted as time worked and comprise part of the hours of the rostered shift.

 

Morning/Afternoon Tea Break

Some modern awards and agreements often refer to a paid morning and/or afternoon ‘tea break’ to be taken at a time fixed by the employer.

 

Meal breaks are intended to allow an employee to eat a meal and provide a longer period of uninterrupted time, compared to rest breaks. Providing employees with a meal is not a required entitlement provided under the National Employment Standards, but is often required through the relevant provisions of an applicable:

  • Modern Award;
  • Enterprise Agreement; or
  • An Individual’s Contract of Employment.

If a meal break is required to be provided, the time is not included in the employee’s ordinary hours of work. Unless otherwise provided by an award or agreement, a reference to a meal break is implied to mean an unpaid break and is not counted as time worked in the computation of overtime. Day workers are usually provided with a meal break of at least 30 minutes, and in the case of shift workers, up to one hour. An employee required to work during their meal break is usually entitled to be paid at the appropriate overtime penalty rate, with the penalty rate continuing to apply to time worked until the employee has a break for a meal.

Work On Rest Days

A Rostered Day Off  (‘RDO’) is a day in a roster period that an employee doesn’t have to work. An employee’s day off can be paid or unpaid, depending on how RDOs are set out in an award or registered agreement. When RDOs are paid, it is because an employee has worked extra hours that add up over a set period and this is taken as an RDO.

Public Holidays

The Fair Work Act specifies eight public holidays, but states or territories can add to these or substitute others in their places. Employers can agree to different holidays through collective bargaining agreements or direct negotiations with employees.

 

The eight public holidays specified in the Fair Work Act are:

  • Jan. 1: New Year’s Day
  • Jan. 26: Australia Day
  • Good Friday
  • Easter Monday
  • April 25: Anzac Day
  • Queen’s Birthday: different dates in various parts of the country
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day

The Fair Work Act does not require employers to pay overtime wages to employees who work on a public holiday. Employees have the right to refuse to work on a public holiday on reasonable grounds. Although employees do not have to work on public holidays, an employer may ask an employee to do so if the request is reasonable. An employee is absent from his or her employment on a day or part‑day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work on the day or part‑day.  Fair Work Act 2009 (Cth), No. 28, §§ 114-116.

 

Public Holiday Pay Rate – Casual Employees

Effective April 15, 2019, all hours worked by a casual employee on a public holiday (both ordinary hours and any overtime) will be paid at a rate of 225% of the employee’s minimum hourly wage for his or her classification (inclusive of the casual loading).

 

The usual rate for Sundays and public holidays is double time or double time and one-half. Fair Work Act 2009 (Cth), No. 28, § 62.

Annual Leave

Full-time employees are entitled to 4 weeks of paid annual leave each year. There is no qualifying period that must be met to be eligible for annual leave benefits. The leave accrues progressively during the year and can be accumulated from year to year. Part-time employees accrue their annual leave on a pro rata basis. Those employees who work on an irregular, short-term basis, also known as casual employees, are not entitled to annual leave. Employers can mandate when leave is taken in certain instances, such as when the business is shutting down or the employee has accumulated excess leave.

 

Shift workers get one extra week of annual leave each year. Shift workers must be employed by a company that has continuous shifts all week, must be regularly scheduled to work those shifts and must regularly work on Sundays and public holidays. Employees get their base rate of pay when taking annual leave. Annual leave may be cashed out, but only if the employee would still have at least four weeks of accrued annual leave (or the pro rata equivalent for part-time employees). Agreements to cash out annual leave must be in writing. The employer must not exert undue influence on an employee to agree to cash out an amount of annual leave, and the employee must be paid at least the full amount that would have been payable had the annual leave been taken.

 

Although not required by law, annual leave loading or getting pay for annual leave above the usual pay rate is a standard employment benefit throughout Australia. Employees usually get paid at a rate of 17.5 percent above their ordinary salary for each week they are on vacation. Fair Work Act 2009 (Cth), No. 28, §§ 87-94.

Minimum Wage

Minimum wages are specified in modern awards and enterprise agreements, although the national minimum wage is considered in setting those rates. The national minimum wage applies to workers not covered by such agreements.

 

From July 1, 2019, all minimum pay rates in all modern awards as well the national minimum wage will increase by 3%. The Fair Work Commission has announced that the national minimum wage will increase by 3% to $740.80 per week (or $19.49 per hour). The weekly rate is based on a 38-hour week for a full-time employee. This amounts to an increase of $21.60 per week, or $0.56 cents per hour.

 

Additionally, the minimum wage rates in all modern awards will increase by 3% from the first full pay period starting on or after July 1, 2019. Employers should check the updated wage rates in the applicable modern award. The 3% increase will also apply to:

      • Junior employees;
      • Employees to whom training arrangements apply;
      • Employees with a disability.

Employers should also check whether there are other additional costs in any piece rates or allowances that use the base rate of pay in the modern award for calculation. The Commission will issue draft determinations and orders about how this decision affects modern awards. It will then update the pay rates in each award.

 

Fair Work Act 2009 (Cth), No. 28, §§ 284-299, 524-529.

Meal Breaks

A reference to a meal break is implied to mean an unpaid break and is not counted as time worked in the computation of overtime unless otherwise provided by an award or agreement. An employee required to work during their meal break is usually entitled to be paid at the appropriate overtime penalty rate, with the penalty rate continuing to apply to time worked until the employee has a break for a meal.

 

A break for a meal is not a condition provided under the National Employment Standards. An employee’s entitlement to a meal break is subject to the relevant provisions of an applicable modern award, enterprise agreement or an individual’s contract of employment. The Australian Labor Law does not consider that a lunch break is part of an employee’s ordinary hours of work, however it is a common provision for a meal break for day workers to be at least 30 minutes and up to one hour or, in the case of shift work or overtime, 20 minutes’ paid crib break.

 

Morning/Afternoon Tea Break

Some modern awards and agreements may refer to a paid morning and/or afternoon tea break to be taken at a time fixed by an employer.

Special Leave

Maternity Leave

Australia’s Paid Parental Leave program is fully funded by the government, although benefits are paid through the employer, and provides eligible employed parents with 18 weeks of parental leave paid at the national minimum wage. A pregnant employee may begin her leave up to six weeks before the expected birth of her child. The weekly Paid Parental Leave benefit is A$720.00. It is the employee’s responsibility to submit a claim for Paid Parental Leave. To be eligible for PPL, an employee must:

  • Be the primary caregiver of a newborn or recently adopted a child;
  • Meet Australian residency requirements;
  • Be employed and have been working continuously for at least 10 of the 13 months prior to the birth or adoption of the child and for at least 330 hours during those 10 months;
  • Not have worked between the birth or adoption of the child and the Paid Parental Leave start date; and
  • Have had an adjusted taxable income of no more than A$150,000 in the previous year.

PPL is designed to supplement or complement other paid or unpaid leave programs already available. The Fair Work Act 2009, for example, provides a maximum 52 weeks’ unpaid parental leave for each parent or “de facto” partner which can include gay or lesbian partners for the birth of a child or the adoption of a child under the age of 16. Many Australian employers provide paid parental leave on a voluntary basis through an employment contract, an enterprise agreement or a workplace policy. Paid parental leave can be taken in conjunction with or in addition to employer-provided paid or unpaid leave. Fair Work Act 2009 (Cth), No. 28, §§ 67-85.

Prenatal Leave

A pregnant employee may begin her leave up to six weeks before the expected birth of her child. If a pregnant employee wishes to continue working but fears her present job poses risks because of her pregnancy, she can ask her employer to be put in a safe job during the pregnancy at the same rate of pay. If there is no safe job available, the employee is entitled to paid leave. Following parental leave, an employee is entitled to return to his or her former job or, if that job no longer exists, the closest similar job that is available that the employee is qualified to do. Fair Work Act 2009 (Cth), No. 28, §§ 67-85.

Extended Leave

A parent can request an extension of unpaid leave to a maximum of 24-months, which the employer can refuse if reasonable business grounds exist. If a parent who is married or has a de facto partner is granted additional unpaid leave, the extra time is subtracted from the other parent’s leave entitlement.

Special Maternity Leave

Special maternity leave can be taken by a female employee for a pregnancy-related illness, to recover from a miscarriage that occurs up to 28 weeks before the expected date of birth or in the event of a stillbirth. The employer can ask for evidence, such as a medical certificate, that the leave is needed. If the leave is needed because of an illness, whatever special leave the worker takes decreases the amount of leave she may take for the birth of the child. Fair Work Act 2009 (Cth), No. 28, §§ 67-85.

Pre-Adoption Leave

An employee seeking to adopt a child may take up to two days’ unpaid leave to attend any interviews or examinations required to obtain approval for the adoption. If the employee has other leave available, however, the employer can require the employee to use that leave instead. Fair Work Act 2009 (Cth), No. 28, §§ 67-85.

Paternity Leave

There is no specific statutory requirement for paternity leave, but the father is eligible to take 18 weeks of parental leave paid at the national minimum wage under the Paid Parental Leave program. The program is fully funded by the government, although benefits are paid through the employer. The weekly Paid Paternity Leave benefit is A$720.00. It is the employee’s responsibility to submit a claim for Paid Paternity Leave. To be eligible for PPL, an employee must:•

      • Be the primary caregiver of a newborn or recently adopted a child;
      • Meet Australian residency requirements;
      • Be employed and have been working continuously for at least 10 of the 13 months prior to the birth or adoption of the child and for at least 330 hours during those 10 months;
      • Not have worked between the birth or adoption of the child and the Paid Paternity Leave start date; and
      • Have had an adjusted taxable income of no more than A$150,000 in the previous year.

Paid Parental Leave is designed to supplement or complement other paid or unpaid leave programs already available. The Fair Work Act 2009, for example, provides a maximum 52 weeks’ unpaid parental leave for each parent or “de facto” partner which can include gay or lesbian partners for the birth of a child or the adoption of a child under the age of 16. Many Australian employers provide paid parental leave on a voluntary basis through an employment contract, an enterprise agreement or a workplace policy. Paid parental leave can be taken in conjunction with or in addition to employer-provided paid or unpaid leave. Following parental leave, an employee is entitled to return to his or her former job or, if that job no longer exists, the closest similar job that is available that the employee is qualified to do.  Fair Work Act 2009 (Cth), No. 28, §§ 67-85.

Unpaid Leave

Each eligible member of an employee couple may take a separate period of up to 12 months of unpaid parental leave. However, if only one person is taking leave, or if one member of an ‘employee couple’ wishes to take more than 12-month leave, the employee may request a further period of up to 12 months, from their employer. An ‘employee couple’ is defined as two employees (not necessarily of the same employer) who are in a spousal or de facto relationship.

Sick Leave

“Personal leave” is the term used in Australia for sick leave. “Carer’s leave” is time off to provide care and support for an immediate family or household member. Employees get 10 days of paid personal/carer’s leave each year, which can be accumulated from year to year. For part-time employees and those within the first 12 months of employment, this leave is available on a pro rata basis. Casual employees are not eligible for personal/carer’s leave.

 

If an employee has exhausted personal/carer’s leave but an immediate family or household member gets sick or has an emergency, the worker is entitled to an additional two days of unpaid leave per situation. Casual employees are also entitled to unpaid carer’s leave. When a member of an employee’s immediate family or household has a life-threatening illness or injury or dies, the worker is entitled to two days of paid compassionate leave per occasion. Compassionate leave operates separately from personal/carer’s leave, and it is not necessary to exhaust personal/carer’s leave entitlements to use compassionate leave. Casual employees can take compassionate leave, but it is unpaid. Fair Work Act 2009 (Cth), No. 28, § 95-107.

Community Service Leave

Employees can take community service leave for certain events such as voluntary emergency management activities and jury duty. With the exception of jury duty, community service leave is unpaid. For each time employees are summoned for jury selection and potential jury duty, they must be paid an applicable amount for the first 10 days of jury selection and jury duty. The applicable amount they must be paid is the difference between jury-related payments they received from the government, excluding allowances for expenses, and their base pay rate for the regular hours they would have worked for their employer had they not been required to attend jury selection or jury duty. Fair Work Act 2009 (Cth), No. 28, § 113.

Long Service Leave

Employees who have worked for the same employer for a number of years may be entitled to paid long-service leave. Entitlement to long-service leave, which usually is detailed in awards or workplace agreements, accrues after a prescribed period of continuous service or employment. While provisions regarding long-service leave eligibility vary, the states and territories commonly require about eight to 13 weeks of paid leave, generally after 10 years of service, with some jurisdictions requiring additional weeks of paid leave upon achievement of higher thresholds of continuous years of employment with an employer. Some jurisdictions allow employees access to prorated long-service leave after seven years of continuous employment with an employer.

Reservist Leave

Under the Defense Reserve Service (Protection) Act 2001, an employer cannot hinder a worker from becoming a member of the reserve or a reservist from carrying out defense service. When reservists carry out service, the employer cannot compel them to use annual or long-service leave and must treat the employee as though on leave without pay during call-out and some forms of voluntary, continuous, full-time service. After reservists finish their service, the employer is required to reemploy them in the same capacity.

 

The employer is not required to pay the employee or make contributions to workers’ compensation or other benefits during the employee’s service. Employers can get a payment under the Employer Support Payment Scheme for most periods of continuous defense service by their employees. Defence Reserve Service (Protection) Act 2001, No. 11, Part 5.

Family and Domestic Violence Leave

Employees on modern awards can take up to 5 days of unpaid leave to deal with family and domestic violence. There is no length of service requirement for the leave and it does not accumulate from year to year. Employees must provide notice of the leave as soon as practicable (which may be after the commencement of leave). Employers may seek evidence of the need for the leave and must ensure that the notice of the taking of leave and any evidence are kept confidential. Fair Work Commission Decision, Family and Domestic Leave, 2018.

Paid Study Leave for Lawyers

The Fair Work Commission has varied the study leave provisions of the Legal Services Award. Paid study leave has changed from a cap of 4 days for each subject to 20 days in a 12 month period.  This leave can be taken to attend a course or prepare for and attend exams that relate to the practical legal training required for the employee’s admission. The new law took effect on the first full pay period on or after 13 August 2018.

Last updated on: June 11th, 2019