The Law Handbook 13th EDITION - YOUR PRACTICAL GUIDE TO THE LAW IN NEW SOUTH WALES
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The Law Handbook
YOUR PRACTICAL GUIDE TO THE LAW IN NEW SOUTH WALES
13th EDITION
REDFERN LEGAL CENTRE PUBLISHINGPublished in Sydney
by Thomson Reuters (Professional) Australia Limited
ABN 64 058 914 668
100 Harris Street, Pyrmont NSW 2009
First edition published by Redfern Legal Centre as The Legal Resources Book (NSW) in 1978.
First published as The Law Handbook in 1983
Second edition 1986
Third edition 1988
Fourth edition 1991
Fifth edition 1995
Sixth edition 1997
Seventh edition 1999
Eighth edition 2002
Ninth edition 2004
Tenth edition 2007
Eleventh edition 2009
Twelfth edition 2012
Thirteenth edition 2014
Note to readers: While every effort has been made to ensure the information in this book is as up to date and as
accurate as possible, the law is complex and constantly changing and readers are advised to seek expert advice
when faced with specific problems. The Law Handbook is intended as a guide to the law and should not be used as
a substitute for legal advice.
National Library of Australia
Cataloguing-in-Publication entry
The law handbook : your practical guide to the law in NSW / Redfern Legal Centre.
13th edition.
Includes index
ISBN: 9780455234557
Law – New South Wales – Handbooks, manuals, etc
Legislation – New South Wales
Jurisprudence – New South Wales – Handbooks, manuals, etc
Civil rights – New South Wales – Handbooks, manuals, etc
349.944
© 2014 Thomson Reuters (Professional) Australia Limited
This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the
Copyright Act 1968, no part of it may in any form or by any means (electronic, mechanical, microcopying,
photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior
written permission. Inquiries should be addressed to the publishers.
This edition is up to date as of 1 October 2014.
The Law Handbook is part of a family of legal resource books published in other states:
Vic: The Law Handbook by Fitzroy Legal Service, ph: (03) 9419 3744
SA: The Law Handbook by the Legal Services Commission of SA, ph: (08) 8111 5555
Qld: The Law Handbook by Caxton Legal Centre, ph: (07) 3214 6333
Tas: The Tasmanian Law Handbook by Hobart Community Legal Service, ph: (03) 6223 2500
NT: The Law Handbook by Northern Territory Legal Aid Commission and Darwin Community Legal Services,
ph: (08) 8982 1111
Editor: Ben Brocherie
Product Developer: Karen Knowles
Publisher: Robert Wilson
Indexed and proofread by: Puddingburn Publishing Services
Printed by: Ligare Pty Ltd, Riverwood, NSW
This book has been printed on paper certified by the Programme for the Endorsement
of Forest Certification (PEFC). PEFC is committed to sustainable forest management
through third party forest certification of responsibly managed forests.24
Employment
Bridget Akers Solicitor, Legal Aid NSW
Larissa Andelman Barrister
Simon Howard Senior Solicitor, Legal Aid NSW
Margaret McCabe Solicitor, Legal Aid NSW
Contents
[24.10] Introduction [24.140] Superannuation
[24.20] The concept of [24.150] Suspension and stand down
employment [24.160] Insolvency or bankruptcy of
[24.20] The employment relationship an employer
and contracts
[24.170] Third Parties
[24.30] Independent contractors
[24.40] Volunteers [24.170] Liability to third parties
[24.50] Types of employment [24.180] Liability of third parties
[24.60] The regulation of [24.190] Termination
workplace relations [24.190] Types of termination of
[24.60] National and NSW systems employment
[24.70] Overview of national [24.200] Termination by the employer
workplace relations system [24.200] Termination by the employee
[24.80] Minimum standards and [24.220] Other termination payments
the safety net
[24.80] The purpose of legislation [24.230] References and separation
certificates
[24.90] The National Employment
Standards [24.240] Unfair Dismissal
[24.100] Modern awards [24.250] Protections from unfair
[24.110] Enterprise agreements dismissal
[24.120] Workplace determinations [24.260] Protection of Employees
[24.130] Remuneration [24.260] General protections in the
[24.130] Payment of wages and Fair Work Act
salary [24.270] Unlawful termination736 The Law Handbook
[24.280] Enforcement of the general [24.320] Safety
protections and unlawful [24.320] Health and safety at work
termination provisions [24.330] Bullying and Harassment
[24.290] Other discrimination laws [24.340] Children
[24.290] Unlawful discrimination [24.340] Employment of children
[24.300] Registered industrial [24.350] The Public Sector
organisations [24.350] Public Sector Employment
[24.310] Unions24 Employment 737
[24.10] Introduction
This chapter deals with federal and state overlap of both the federal and state laws
laws including laws about discrimination applying to employees and employers, par
and health and safety applying to the ticularly in the area of discrimination.
workplace in NSW. There is also some The current system under the Fair Work
discussion of the common law relating to Act 2009 (Cth), became fully operational in
contracts of employment. 2010. Also with effect from 1 January 2010,
The vast majority of employees and em NSW, referred its power in regard to indus
ployers are now covered by federal laws. trial relations to the Commonwealth, mean
Employees employed by the NSW Govern ing the whole of the private sector is
ment and local councils are mostly covered regulated by the Fair Work Act.
by NSW laws. However there is still some
The concept of employment
[24.20] The employment relationship and
contracts
Before further considering the federal and regulated nature of employment, the con
state workplace relations systems it is im tract for service remains at the heart of the
portant to understand something of the employment relationship.
nature of the employment relationship and A contract of employment may be written,
contracts of employment. oral (ie a spoken agreement), or partly
Employment is based on a contractual written and partly oral. A letter of appoint
relationship between an employer and an ment may also constitute an employment
employee where there is an agreement to contract. A written contract of employment
work in return for wages or salary. Modern seldom (if ever) contains exhaustive provi
employment law has its origins in the sions about every aspect of the employment
common law concept of “master and relationship. Terms may be incorporated
servant”. Over time employment has come into the contract through documents such as
to be regulated by a large body of legislation. workplace codes of conduct and company
Much of this legislation establishes mini policies. In addition to the express terms of
mum standards in reference to which mini the contract, terms may be implied through
mum wages and entitlements are fixed. A industry custom or judge-made common
contractual term which purports to be an law.
agreement to provide less than the legal The courts have repeatedly over the years
minimum is of no effect. Despite the very emphasised that contracts of employment738 The Law Handbook are to be interpreted in accordance with the • Byrne v Australian Airlines Ltd [1995] HCA common law of contract. 24 Three very important High Court of Aus- • Visscher v Giudice [2009] HCA 34 tralia decisions about contracts of employ- • Commonwealth Bank of Australia v Barker ment are the following: [2014] HCA 32. [24.30] Independent contractors The employment relationship is one in and the Fair Work Act general protections which an employee serves the employer. legislative provisions do apply to indepen This is to be contrasted with a “contract for dent contractors. Consequently, there are services” provided by an independent often legal disputes as to the status of contractor. The rights and obligations that persons – employee or independent attach to the employment relationship do contractor. not usually apply when an independent The following table contrasts the charac contractor is providing their services. Al teristics of employees from independent though discrimination, health and safety contractors. Characteristic Employee Contractor A written contract is in place describing the worker as a contractor, Likely subcontractor or independent contractor The worker is controlled in the way they work Likely The worker is treated like an employee at work Likely The worker is required to wear a specific uniform Likely The worker supplies their own tools and materials Likely The worker is paid for each task completed Likely The worker is paid a wage calculated on an hourly rate Likely The worker is paid when on annual leave or if absent on sick leave Likely Income tax is withheld from payments to the worker Likely The worker uses an ABN and renders invoices for payment Likely The worker runs their own business, earning a profit and building “good Likely will” with a customer base The worker is able to work with any number of customers or clients Likely The worker can delegate their work to employees or subcontractors of the Likely worker It is usually the case that no single employees. Such situations are often re characteristic determines the nature of the ferred to as “sham arrangements”. Part 3-1, work relationship. An important consider Division 6 of the Fair Work Act makes sham ation is the right to control the person in arrangements unlawful. regard to key aspects of the work. All of the An important High Court decision distin characteristics must be taken into account. guishing between independent contractors Employees are sometimes required to work and employees is Hollis v Vabu Pty Ltd [2001] as independent contractors yet really are HCA 44.
24 Employment 739
The Independent Contractors Act 2006 (Cth) vices contract is unfair, harsh,
gives the Federal Court of Australia and the unconscionable, unjust, against the public
Federal Circuit Court of Australia jurisdic interest or designed to avoid the provisions
tion to provide a remedy to independent of the Fair Work Act (Cth).
contractors in circumstances where the ser
[24.40] Volunteers
Volunteering is not employment, even Also, work experience students, who work
though work may be performed. Volunteers with an employer during their studies (eg a
are not usually paid for work at all. There is student placement), are usually volunteers,
a clear understanding by everyone con and do not expect payment.
cerned – the organisation and the person The rights and obligations that attach to
doing the work – that the work is performed the employment relationship as well as
as a gift to the organisation. Sometimes, employment legislation, do not usually ap
organisations might pay the costs of some ply when a volunteer is gifting their services.
incidental expenses incurred by the volun Although some discrimination and health
teer (eg transport costs) – but this will not and safety laws do apply.
mean that the volunteer is an employee.
[24.50] Types of employment
Employment may be permanent full time,
permanent part-time or casual. Employment
Part-time
may also take place pursuant to a fixed term Part-time employees usually work less than
contract. 38 hours week on an ongoing (open ended)
contract. The work hours of a part-time
employee are usually regular, with little
change from week to week. Part-time em
Permanent ployees receive all of the entitlements of a
An employee who works full time is usually full-time employee, such as leave and notice,
contracted to work 38 hours a week, or more but on a pro-rata basis.
on an ongoing (open ended) contract. Full
time employees receive:
• paid leave (personal carer’s leave, holiday
Casual employment
pay, sick leave and so on) Casual employees are hired to work
irregularly. That means that there is no
• minimum notice requirements if employ expectation or certainty of ongoing work,
ment is to be terminated and redundancy fixed shifts or hours. Technically, casual
pay in cases of a redundancy employees are hired only from the start of
• redundancy pay in the case of redun their work day or shift, to the end of their
dancy if the employer employs 15 em work day or shift. Casual employees are not
ployees or more. entitled to:740 The Law Handbook
• paid leave (personal carer’s leave, holiday “A” for this service. The workers remain
pay, sick leave and so on) employees of “A”, who is responsible for
• minimum notice requirements, if employ the payment of wages to the workers and
ment is terminated, or redundancy pay. the provision of most other employee en
Casual employees are generally paid at a
titlements to the workers. The workers may
higher hourly rate than part-time or full-
time employees. This is referred to as a be permanent or casual employees of “A”. It
casual loading. is increasingly the case that employers in the
Many employers and employees misun position of “A” treat their employees as
derstand the nature of casual employment. casual. It can also be the case that the
Working regular hours each week is not workers are treated as independent contrac
usually casual employment, even though tors and are therefore neither employees of
the employer and employee may call it
“A” or “B”. The employees of “A” are often
casual employment. Where there is expecta
tion of work each week with similar hours referred to as “agency” or “labour hire
the worker is usually permanent full-time or workers”.
permanent part-time. The advantages for “B” in the labour hire
arrangement are that it is able to access
Fixed term contracts of labour and services only when needed and
may avoid some of the costs and liability
employment associated with outright employment of
Employers and employees may agree upon
workers.
a contract for a fixed period of time, in
which case the contract will stipulate the Labour hire arrangements are to be distin
length of the employment and/or the end guished from recruitment services. A recruit
date. Employment will come to an end at ment agent (sometimes referred to as a
the expiry of the fixed term without the “head hunter”) finds and introduces work
need for the employer or the employee to ers as prospective employees to a client
give notice of termination. Employment organisation, with the intention that a
under a fixed term contract can be full time worker will eventually take up employment
or part time. As well as having an end date, with the client organisation. When this
a fixed term contract may contain provisions occurs the agent receives a fee from the
for early termination (before the end date)
by either party giving notice of termination. client organisation. At no time does the
agent employ the worker.
Labour hire arrangements It is illegal in NSW under s 49 of the Fair
Trading Act 1987 (NSW) for a person to
and recruitment agencies demand or receive a fee from a worker
A labour hire arrangement involves a firm seeking employment. In other words, a
(“A”) that employs workers. “A” then des recruitment agent or a labour hire organisa
patches the workers to undertake work for a tion must not charge a worker a fee for
client organisation (“B”). “B” pays fees to placing the worker in employment.24 Employment 741
The regulation of workplace
relations
[24.60] National and NSW systems
Whether an employer or employee is regu • other persons who carry on commercial,
lated by the national or NSW system, turns governmental or other activities in the
on whether the employer is considered to be territories; and
a “national system employer”. National sys • other employers who are regulated by the
tem employers, which are regulated (along national system as a consequence of NSW
with their employees) by the national referring its industrial relations powers to
system, are: the Commonwealth. This last category is
significant, as it resulted in the remainder
• “constitutional corporations”, that is, cor
of the private sector employers (including
porations (including foreign corporations) sole traders and partnerships) moving to
engaged in trading and financial activities the national system.
• the Commonwealth and Commonwealth The result is that most employers and
authorities (eg the Australian Public employees in NSW are now under the
Service) national system. All constitutional corpora
tions and other private sector employers are
• employers of flight crew officers, mari
covered.
time employees and waterside employees
However, public sector and local govern
involved in “constitutional trade or
ment employers (and their employees) are
commerce” generally still regulated by the NSW system.
• bodies corporate incorporated in a terri Public sector employment is discussed at
tory [24.350].
Overview of national workplace relations
system
[24.70] Relevant legislation Fair Work (Registered Organisations) Act
2009 (Cth) (and its Regulations) – this
Fair Work Act 2009 (Cth) – this is the main legislation deals with unions and employer
Act under which the national system associations.
operates. It excludes many NSW laws. Fair Work (Transitional Provisions and Con
Fair Work Regulations 2009 (Cth) – these sequential Amendments) Act 2009 (Cth) (and
Regulations accompany the Fair Work Act. its Regulations) deals with the transition742 The Law Handbook
from Workplace Relations Act 1996 to the Fair relation to contracts), instruments of federal
Work Act. law (such as modern awards) and even
Work Health and Safety Act 2011 (Cth) – this NSW law.
Act provides a national framework for
worker and workplace health and safety. Non-excluded state laws
Fair Work (State Declarations) Endorsements NSW did not refer all of its industrial
– lists certain employers declared by a state relations powers to the Commonwealth
law not to be a national system employer. Parliament, consequently, some matters may
Fair Work Commission Rules 2013 – these still be subject to state regulation. Also, the
Rules set out the practice and procedure to Fair Work Act identifies NSW legislation that
be followed by the Fair Work Commission, is not excluded and also subject matters
the national workplace relations tribunal. upon which NSW law may still apply to
Independent Contractors Act 2006 (Cth) – some extent:
this Act removes many independent con • Anti-Discrimination Act 1977 (NSW)
• workers compensation
tracting arrangements from the control of
• occupational health and safety
state and territory employment laws and
• matters relating to outworkers
places them under the regulation of the • child labour
Commonwealth. This Act also provides rem • training arrangements, (but not so as to
edies for unfair contracts. override terms and conditions provided
Industrial Relations (Commonwealth Powers) for in the National Employment Stan
Act 2009 (NSW) - this Act in effect referred dards or a modern award
the NSW Parliament’s industrial relations • long service leave (for some employees)
powers over private sector employers and • leave for victims of crime
their employees to the Federal Parliament. • attendance for service on a jury
• emergency service duties
National system regulation • declaration and prescription of the dates
of public holidays
and excluded matters • provision of essential services or situa
The most significant source of Australian tions of emergency
employment law is now the Fair Work Act • workplace surveillance
2009 (Cth). The Fair Work Act in covering the • business trading hours
field of workplace relations specifically ex • claims for the enforcement of contracts of
cludes a whole range of State laws that employment.
previously regulated workplace relations in Employees employed by the NSW Govern
the respective States. Consequently, the Fair ment or by local councils are covered by
Work Act now regulates most employment NSW laws.
matters in the national system. Other
employment-specific federal legislation also Three bodies involved in the
applies alongside the Fair Work Act, some of national system
which is mentioned above. Other non-
Three bodies are pivotal to the national
employment specific federal legislation may
system: The Fair Work Commission (FWC);
apply, eg provisions of the Corporations Act the courts, which now have special Fair
2001 (Cth) deal with excessive termination Work divisions; and the Fair Work Ombuds
payments to company directors. man (FWO), a body whose main purposes
However, the rights and duties of employ include providing advice and investigating
ers and employees in the national system individuals’ workplace complaints.
are also affected by sources other than
federal legislation, such as what the parties The Fair Work Commission
have agreed in a contract, industry custom, The Fair Work Commission (FWC) is the
judge-made common law (particularly in national workplace relations tribunal. It is24 Employment 743
an independent body. Both employers and resolve the dispute have failed, before the
employees can apply to the FWC to deal court will accept the application in the
with certain matters, eg an employee may matter. In other circumstances, the applicant
make an unfair dismissal application or an can go directly to court, eg where an
employer may make an application to re employee sues to recover wages where the
duce the amount of redundancy pay owing employer has paid less than the minimum
to an employee. The FWC exercises a range wage.
of functions, such as dealing with: The Courts can order a variety of
• unfair dismissal applications, including remedies, such as compensation, reinstate
conducting conciliations and arbitrations; ment of employees, payment of fines, and
• general protections termination of em injunctions to stop or prevent a person from
ployment applications, including contravening a law such as the Fair Work Act
conducting conciliations (and arbitrating or the Fair Work Regulations. For example,
where there is agreement between the the Courts can issue injunction orders to
parties for an arbitration); stop prohibited industrial action that is
• the making and amending of modern underway or prevent a dismissal that might
awards; be in contravention of the Fair Work Act.
• disputes about a matter in a modern A small claims option is available for
award or in an enterprise agreement; underpayment claims in the Federal Circuit
• enterprise agreements, including dispute Court. The amount claimed must not be
resolution during the bargaining process, more than $20,000. Small claims proceedings
and later issuing decisions on the are more informal, faster and generally
agreements, ie approvals, variations and cheaper – lawyers are typically not present.
terminations; Section 548 of the Fair Work Act sets out the
• industrial action (such as strikes by em small claims procedures. The small claims
ployees and lock outs by employers) and procedure uses a simplified Court applica
authorising, suspending or terminating tion form.
industrial action;
• making determinations, such as work
place determinations where parties are Fair Work Ombudsman
unable to come to agreement; and The Fair Work Ombudsman (FWO) is an
• conducting annual wage reviews and agency created under the Fair Work Act (Cth)
setting national minimum wages. that provides a free service assisting
employees, employers and contractors by:
Federal Court of Australia and Federal • assisting to identify and calculate the
Circuit Court of Australia: Fair Work proper wages and entitlements payable;
Division • providing information about workplace
rights and responsibilities;
The Fair Work system has created specialist
Fair Work divisions in the Federal Court of • investigating complaints, generally in re
Australia and the Federal Circuit Court of sponse to a request by an employee or
Australia. employer; and
In some circumstances, applicants must • enforcing compliance with workplace
first go through the FWC procedures prior laws by, among other methods, com
to taking the matter to court, eg an em mencing legal proceedings on a party’s
ployee in, general protection court applica behalf.
tions (in dismissal matters) and unlawful The Ombudsman is separate from the FWC
termination applications requires a certifi and makes all of its decisions independently
cate from the FWC stating that attempts to of the government and any other person.744 The Law Handbook Minimum standards and the “safety net” [24.80] The purpose of legislation Federal legislation and, where applicable, The NES apply to all national system em state legislation are capable of overruling all ployees and cannot be overridden by any other terms of the employment contract. For instrument, although terms and conditions example, regardless of what the parties supplementary to the NES are permissible. agree, or what industry custom dictates, an For example, a contract can provide an employee must be paid at least the mini employee with more annual leave days than mum wage because this is stipulated by required in the NES, but the contract cannot legislation and the force it gives to modern restrict the employee’s annual leave to less awards. days per year than required in the NES. National system legislation (mostly the In addition to the NES, various legally Fair Work Act and Fair Work Regulations binding industrial instruments may govern 2009) sets out minimum terms and condi the employment relationship: a modern tions of employment in a so-called “safety award may apply, or the parties may have net” for employees. The safety net com decided to deviate from the terms of the prises: modern award by making an enterprise • the National Employment Standards agreement, or the parties may have failed to (NES); agree on the terms of the enterprise agree • modern awards; and ment and the FWC may have intervened • national minimum wage orders. and made a workplace determination. [24.90] The National Employment Standards The NES are 10 minimum terms and condi continuous service and are: tions of employment that apply to all – parents or carers of a child under employees in Australia (although not all school age entitlements apply to casual employees). – carers under the Care Recognition Act The NES can be summarised as follows: 2010 (Cth) • maximum weekly hours of work – – employees who have a disability 38 hours, and the employee may refuse to – employees who are 55 or older; and work unreasonable additional hours; – employees experiencing domestic vio • written requests for flexible working lence (or caring/supporting an imme arrangements. The employees who can diate family member, or household request a flexible work arrangement in member, who is experiencing domestic clude those who have at least 12 months violence).
24 Employment 745
The employer may only refuse the re • long service leave – employees with
quest on reasonable business grounds. certain existing arrangements are entitled
Reasonable business grounds are set out to long service leave on that basis. A
in the Fair Work Act. If the employer national long service leave standard is to
rejects the request, the employer must be developed. In NSW the Long Service
provide the employee with a written Leave Act 1955 (NSW) still applies to
response within 21 days of the written many employees pending federal legisla
request setting out reasons for the refusal; tion of a national standard;
• parental leave and related entitlements –
up to 12 months unpaid leave for the • public holidays – a paid day off, unless
parent and her or his spouse or de facto reasonably requested to work. Public
partner, (which is also available where a holidays may be substituted for another
child under 16 is adopted). The employee day in a modern award or an enterprise
must have completed at least 12 months agreement;
of continuous service whether permanent • notice of termination and redundancy
or casual. There is also a right to request pay – up to five weeks minimum notice
an additional 12 months unpaid leave, a of termination and up to 16 weeks redun
right to transfer to a safe job in appropri dancy pay. Redundancy provisions do
ate cases or to take no safe job leave, not apply where there are less than 15
consultation requirements, a return to employees employed at the time of the
work guarantee and unpaid pre-adoption redundancy (notice and redundancy pay
leave;
is discussed in more detail at [24.190])
• annual leave – four weeks paid leave per
year, five weeks of paid leave for certain • Fair Work Information Statement – pre
shift working employees. Annual leave is pared and published by the FWO which
cumulative; must be provided by employers to all
• personal/carer’s leave and compassionate new employees before or as soon as
leave – 10 days paid personal/carer’s practicable after the employee has com
leave (which is available on a pro-rata menced employment.
basis for part-time employees), two days For the full text of the NES, see Pt 2-2 of the
unpaid carer’s leave, and two days paid Fair Work Act (Cth) or for detailed fact sheets
compassionate leave. Personal leave is on each NES provision, go to the FWO
cumulative; website www.fairwork.gov.au.
• community service leave – unpaid leave Contraventions of an NES provision may
for matters such as voluntary emergency
result in the employer being ordered to pay
service and jury service (the employee is
a fine on top of any other orders the court
entitled to be paid the shortfall of any
jury service pay for up to 10 days of jury may make, including payment of moneys
service); due to the employee.
[24.100] Modern awards
Minimum employment standards in Austra modern awards” and now cover most
lian workplaces have traditionally been in workplaces. Modern awards are industry or
cluded in awards. Awards are enforceable occupation-based, rather than relating to a
documents containing the minimum terms particular employer or organisation, as the
and conditions applicable to employees who goal is one minimum standard for employ
are covered by the awards. Since 2010, ers and employees in the same industry or
“modern awards” have replaced “pre occupation across Australia.746 The Law Handbook
Modern awards must be reviewed, and Modern awards may not apply to high-
where necessary varied, every four years by income employees, especially those em
the FWC, and they may only deal with the ployed as senior managers and
following 10 subject matters: professionals.
• minimum wages and skill-based classifi
cations and career structures and Safety net contractual
incentive-based payments
• type of employment, eg full time, casual entitlements
• arrangements for when work is Where an employer contracts to pay wages
performed, including rostering, etc and provide entitlements that are above the
• overtime rates minimum standards set out in the relevant
• penalty rates modern award and the National Employ
• annualised wage arrangements ment Standards, the payment and provision
of the higher contracted wages and entitle
• allowances
ments are enforceable under the Fair Work
• leave Act. For example, the relevant modern award
• superannuation; and may establish an employee’s minimum
• procedures for consultation, representa hourly rate at $20. However, the employer
tion and dispute settlement. may enter into a contract with the employee
for an hourly rate of $25 per hour. If the
How to find which modern employer subsequently fails to pay the
employee $25 per hour then the employer
award applies will have contravened the Fair Work Act. The
The Fair Work Ombudsman website pro employer will not be able to assert that it
vides information and tools to search for was only ever obliged to pay $20 per hour.
modern awards: The statutory protection of these contractual
www.fairwork.gov.au/awards-and rights is set out in ss 541 – 543 of the Fair
agreements/awards Work Act.
[24.110] Enterprise agreements
What is an enterprise approved by the FWC and pass the “better
off overall test” to ensure that employees are
agreement and what are the not worse off than they would be under the
benefits? modern award. An enterprise agreement
must not contravene the NES but may
Modern awards are part of the “safety net”
include terms supplementary to the NES.
for employees. The intention is to set a Enterprise agreements are made at the enter
minimum standard in order to protect those prise level, that is, they apply to employees
who may not be in a position to bargain for of a particular business (or businesses).
better pay rates and conditions. When em
ployers and employees wish to agree on
better conditions, or exchange an increase in
Process of making enterprise
one benefit for the relinquishing of another, agreements
they may make an enterprise agreement, A summary of the steps involved in making
which is an enforceable document that will enterprise agreements is as follows:
prevail over a modern award. In order to be • bargaining takes place between employ
enforceable, enterprise agreements must be ers and employees or union representa24 Employment 747
tives (the parties can apply for the FWC establish an enterprise and have not
to become involved at this stage if there is yet engaged employees). Greenfields
a dispute, or intervention is required for agreements are agreed between em
some other reason); ployers and the relevant union.
• a draft agreement is finalised;
• the employer must ensure that the terms • an application is made to the FWC for
of the agreement are explained to the approval of the agreement;
employees in an appropriate manner; • in granting approval, the FWC must
• employees then vote on the agreement; a consider certain requirements, such as
majority in favour is required. Different that genuine agreement is present, and
procedures are in place depending on the the “better off overall test” must in most
type of enterprise agreement. The three cases also be satisfied.
types are:
– single-enterprise agreements (a single How to find an enterprise
employer or a situation such as a joint
enterprise) agreement
– multi-enterprise agreements (two or Registered enterprise agreements, variations
more employers that are not single and terminations of enterprise agreements
interest employers) can be found on the FWC website:
– “greenfields” agreements (where one www.fwc.gov.au/awards-and
or more employers are proposing to agreements/agreements/find-agreement
[24.120] Workplace determinations
A workplace determination is an industrial prise level, may apply to the FWC to
instrument that functions similarly to an make a determination when parties are
enterprise agreement, eg it will prevail over unable to reach agreement on the terms of
the relevant modern award. In contrast to an a proposed multi-enterprise agreement);
enterprise agreement, it is created by a • industrial action related workplace deter
determination made by the FWC in a minations; and
situation where parties are unable to reach
agreement. • bargaining related workplace
There are three kinds of workplace deter determinations.
mination: A workplace determination operates from
• low-paid workplace determinations (low the day that it is made until either its
paid employees, who typically face sub termination date arises or an enterprise
stantial difficulty bargaining at the enter agreement comes into operation.748 The Law Handbook
Remuneration
[24.130] Payment of wages and salary
Employees are entitled to be paid remunera A trial or probation period in a new
tion for their work in money, rather than workplace takes place within the employ
goods or services. ment relationship and therefore all wages
The national minimum wage for national and entitlements should be paid. An em
system employees, who are not covered by ployee should also be paid for the time
an award or agreement, is reviewed and set spent in meetings and travelling (excepts
annually (along with modern award wages) where the travel is from home to work and
by the Minimum Wage Panel of the FWC. home again). An employee should also be
There are lower minimum rates for juniors, paid for time spent in training on premises
trainees and employees with a disability. and off premises where the employer has
Employers cannot pay less than the national organised/required the employee to attend
minimum wage, but can pay more. As at training.
1 July 2014 the national minimum wage was Generally, a full-time or part-time appren
$16.87 per hour or $640.90 per week for a 38 tice or trainee should be paid for time spent
hour week. attending any training or assessment related
Employees should check their modern to their traineeship.
award or enterprise agreement to find out if If there is any uncertainty as to whether
they are also entitled to other amounts, such an employee is entitled to be paid for work,
as overtime; penalty rates (eg for working or work-related activities such as meetings
on weekends); casual or part time loadings or training, contact the Fair Work
(an extra percentage paid to compensate for Ombudsman.
the casual employee’s lack of entitlements
such as annual leave); or allowances, (eg Deductions from employee's
where the employee works with dangerous
chemicals, or uses their car for work pay
purposes). An employer is permitted to make deduc
tions from an employee’s pay in certain
quite limited circumstances, but does not
How to calculate pay have a general right to make deductions. For
The Fair Work Ombudsman website pro example, it is highly unlikely that an em
vides various pay tools, to assist in finding ployer will ever have the right to deduct
the applicable pay rates for employees, or to money from an employee’s wages where
calculate an employee’s weekly pay. See there have been breakages or where a
www.fairwork.gov.au/pay. customer has left without paying their bill.
Employees should check their modern
award or enterprise agreement, and any
All work must be paid work other written agreement, for any mention of
Generally, employees should be paid in full deductions. Generally, even where deduc
for work performed. There are limited ex tions are permitted by law, the deduction
ceptions for circumstances such as volunteer must be for the employee’s benefit and must
work and student work placements. be reasonable.24 Employment 749
Pay slips, cash and records evidence of relevant events, or evidence that
an employment relationship existed.
Employers must issue pay slips to each The employer must keep accurate em
employee within one working day of pay ployee records for seven years. The records
day. The Fair Work Ombudsman has made that an employer must keep are:
available online pay slip templates to assist • the employee’s personal details and cer
employers in providing pay slips that con tain information about their employment
tain all the necessary legal requirements.
• gross pay and deductions
The obligation to provide a pay slip is a
strict legal obligation, ie there is no legiti • bonuses, loadings, penalty rate payments,
mate excuse for an employer not to provide other allowances
pay slips. An employer can be fined for • overtime records
failing to give pay slips. The obligation to • records regarding the averaging of hours
provide a pay slip is set out in s 536 of the • leave records
Fair Work Act. • records of superannuation contributions.
It is not illegal for an employee to be paid Where there is transfer of a business to a
cash in hand - but still the employee must new employer, the old employer must trans
be given a payslip and tax must be withheld fer the employee records to the new
(deducted) from gross wages and remitted employer.
to the Australian Taxation Office (ATO). If an Section 535 of the Fair Work Act and
employee receives cash without a payslip Regulation 3.42 of the Fair Work Regulations
there is a real risk that the employer is not 2009 give employees the right to inspect and
complying with relevant laws and copy their employee records. An employer
obligations. For example, the employer may must provide the documents within 14 days
not be remitting tax to the ATO or contribut from the request. An employer who refuses
ing superannuation. If a dispute arises be to make the records available or does not
tween an employer and an employee and provide them within the specified time
there are no payslips it may then be difficult without a reasonable explanation may be
for the employer or employee to provide fined.
[24.140] Superannuation
Workers who earn $450 or more per month fund that complies with the relevant legisla
(before tax) are entitled to superannuation tion – generally all “industry super funds”
contributions, provided they are 18 or over. are complying funds.
If they are under 18 and working more than The Australian Taxation Office adminis
30 hours per week they are also entitled to ters the statutory superannuation scheme
superannuation. This includes independent whereby employers make contributions for
contractors who mainly provide their intel employees. In the event that superannuation
lectual or physical labour. The employer (or is not contributed on behalf of the employee,
principal in the case of a contractor) must the Australian Taxation Office will impose a
contribute an additional 9.50% of wages/ “charge” on the employer and in effect
salary to a superannuation fund. Also, over collect the unpaid superannuation contribu
seas students and workers on any other type tions for the employee. Employees should
of visa are entitled to superannuation. The regularly check their superannuation state
employer is required to forward the super ments to ensure that superannuation contri
annuation contributions to a superannuation butions are being made. Most superannua750 The Law Handbook
tion funds facilitate member access to Complaints about a failure by an employer
statements online through the fund’s to make superannuation contributions
website. should be made to the ATO.
More information about superannuation www.ato.gov.au/super
can be obtained on the website of the ATO.
[24.150] Suspension and stand down
Under the common law, an employer cannot In practice the situations in which an em
“stand down” an employee without pay. ployer may lawfully stand down employees
Furthermore, an employer cannot “suspend” without pay are quite limited, eg during a
an employee without pay. If the employer natural disaster. It is certainly the case that
no longer wishes to pay the employee then employees cannot be stood down just be
cause there is not enough work or because
the appropriate course is to terminate the
of a decline in the employer’s business.
employment of the employee. It flows from Employees on leave cannot be stood down
this, that at common law an employer may while on leave.
stand down or suspend an employee for An employee cannot be suspended with
almost any reason, providing the employer out pay for misconduct or wrongdoing,
continues to pay the employee. although they may be suspended with pay
However, the Fair Work Act allows for the and be directed not to attend the workplace
stand down of employees without pay in and to await further instructions from the
the circumstances of: employer. It is relatively common for em
ployees to be suspended on pay while an
• industrial action (for example a strike or a
lock-out) investigation takes place into misconduct
alleged against the employee.
• breakdown of equipment – if the em Section 70 of the Government Sector Em
ployer cannot be reasonably held respon ployment Act 2013 (NSW) entitles a NSW
sible for the breakdown government sector agency to suspend an
• a stoppage of work for any cause for employee in specific circumstance and on
which the employer cannot reasonably be specific terms. Similar provisions exist for
held responsible. Australian public sector employers.
[24.160] Insolvency or bankruptcy of an
employer
The law of corporate insolvency and per Consequently, employees will become en
sonal bankruptcy is technically complex in titled to notice and redundancy payments in
the way it deals with amounts owed to addition to any wages, leave, superannua
employees of the insolvent corporation or tion and other amounts already owing.
bankrupt person. Generally, the relevant legislation gives some
The liquidation or bankruptcy of the priority to the payment of employee credi
employer will often result in the dismissal of tors from the available remaining assets of
employees on the basis of redundancy. the employer (if any).24 Employment 751
The Liquidator or Bankruptcy Trustee is • unpaid amounts in lieu of notice up to a
usually not personally liable for the debts to maximum of five weeks’ pay; and
employees, however if the Liquidator or • unpaid redundancy pay up to a maxi
Trustee continues with the employment of mum of four weeks per completed year
employees after appointment there can be
of service (and pro rata for less than a full
circumstances where the Liquidator or
year’s service).
Trustee becomes liable.
The Fair Entitlements Guarantee (FEG) is In calculating all entitlements under FEG, a
a safety net scheme established by the maximum rate wage is used. If the em
Federal Government to pay some outstand ployee earns more than this rate, then FEG
ing employee entitlements that might not be assistance will be calculated as if the em
paid because of the liquidation or ployee earned only the maximum wage. The
bankruptcy. maximum wage is indexed every financial
To obtain assistance from FEG, the em year. As at 1 July 2014 the maximum wage is
ployee must be employed by an employer $2,451 per week.
who has entered liquidation or bankruptcy, FEG does not pay superannuation. But if
ie a Liquidator or Bankruptcy Trustee has there are sufficient assets to pay employees,
been appointed. then the Liquidator or Bankruptcy Trustee
A person will not be eligible for FEG must pay out superannuation contributions.
assistance if they are an “excluded em In order to access the FEG scheme the
ployee” (including company directors and FEG claim must be made no later than
their relatives), a contractor, or are owed 12 months after the termination of
money that is not an eligible employee employment, or the date of the insolvency
entitlement. event (whichever is later).
As at 1 July 2014, FEG will usually pay: More information is available on the FEG
• up to 13 weeks of unpaid wages website:
• unpaid annual leave www.employment.gov.au/fair
• unpaid long service leave entitlements-guarantee-feg
Third parties
[24.170] Liability to third parties
Under the Employees’ Liability Act 1991 However, this rule does not apply where the
(NSW) employees are entitled to be indem conduct of the employee was:
nified by their employer for torts committed • serious and wilful misconduct; or
by the employee in the course of their • did not occur in the course of, and did
employment. Also, the employee is not not arise out of the employment of the
liable to indemnify the employer. For employee.
example, an employee who is negligent and It is important to note that mere negligence
causes a car accident while on duty may is not serious and wilful misconduct.
seek indemnity from their employer if the At common law an employer is usually
employee is sued for compensation by the vicariously liable for the conduct of
other driver. The employer cannot require employees. Again, for such liability to arise
the employee to pay for the damage. the conduct must have occurred in the752 The Law Handbook
course of employment. The Law Reform business of the employer.
(Vicarious Liability Act) 1983 (NSW) en In light of the provisions of the Fair Work Act
shrines this principle by making an em regarding deductions from wages, it is
ployer liable where the employee commits a unlawful for an employer to deduct from an
tort: employee’s wages compensation and costs
• in the course of the service of the in connection with a tort committed by the
employee employee. This prohibition also includes the
• incidental to the service of the employee deduction of any excess that might arise for
• incidental to the carrying on of the payment under an insurance policy.
[24.180] Liability of third parties
A third party such as a director, manager or claim the underpayment of the wages and
an advisor may be liable for the employer’s entitlements from the third person as well as
contraventions of the Fair Work Act in from the employer. The employee may also
circumstances where the person (including a seek the imposition of a fine on the third
corporation) was knowingly involved in the person as well as the employer.
contravention. Section 550 of the Fair Work Where an employer is insolvent or bank
Act is the basis of this potential liability of rupt this option may allow the employee to
third parties. recover money from the third person
On the basis of s 550, an employee may directly.
Termination
[24.190] Types of termination of
employment
It may be difficult for the parties in an An employer intending to dismiss an
employment relationship to say exactly how employee must follow certain procedures,
the employment relationship was but is justified in dismissing an employee
terminated. This can be even more challeng without notice (summary dismissal) in cer
ing for a court or tribunal to determine. tain circumstances. Where a dismissal at the
Where an employee resigns, there may be initiative of the employer is not in accor
issues of constructive dismissal (ie that the dance with the law, the employee may have
employee was forced to resign). Where an a claim under the unfair dismissal, general
employer makes an employee redundant, protections, or unlawful termination provi
there may be a question as to whether the sions of the Fair Work Act.
redundancy was genuine – if it was not, the Either party may have repudiated the
employee may challenge it as an unfair contract, such as where an employer fails to
dismissal. pay wages, or an employee fails to turn up24 Employment 753
for work. Which party repudiated first? This ployment period (a necessary element for
situation highlights the importance of the making some claims) has been satisfied, and
timing of events surrounding termination, amounts of money payable for matters such
and of keeping records of the events as they as final pay.
unfold. The date of termination is also An important High Court decision on the
crucial for matters such as time limits on repudiation of the contract of employment is
making a claim, whether a minimum em Visscher v Giudice [2009] HCA 34.
Termination by the employer
[24.200] Notice and payment
in lieu of notice
Minimum periods of notice required to be
given by the employer are set out in the NES
in s 117 of the Fair Work Act as follows:
Period
Employee’s period of continuous service with the employer at the end of Period
the day the notice is given
1 Not more than 1 year 1 week
2 More than 1 year but not more than 3 years 2 weeks
3 More than 3 years but not more than 5 years 3 weeks
4 More than 5 years 4 weeks
The notice period is increase by 1 week if the employee is over 45 years old and has completed at least 2 years of
continuous service with the employer at the end of the day the notice is given.
The actual notice required may be more employee’s serious misconduct entitled the
than the statutory minimum set out in the employer to instantly or summarily dismiss
NES, as the relevant modern award, enter the employee.
prise agreement or contract of employment
may specify more. Summary dismissal
The NES provides that the employer can
Summary dismissal is the instant dismissal of an em
make a payment in lieu of notice so long as ployee without notice or payment in lieu of notice –
it is at least equal to the full rate of pay the typically the employee is told to leave the workplace
employee would have received if they had immediately, sometimes without even the opportunity
had worked out the notice period. to collect their personal possessions, which are sent on.
Under the NES, certain employees are not The usual reason is an allegation of serious misconduct.
required to be given notice of termination, The Fair Work Act and Regulations contain a definition of
serious misconduct. (see s 12 of the Fair Work Act and
such as employees employed for a specified
Fair Work Regulations, reg 1.07). Employers should take
time and casual employees. care to ensure their reasons for, and conduct
surrounding, summary dismissal are justifiable, particu
Where notice is not required larly in light of unfair dismissal rights of employees.
The only situation where notice (or payment
in lieu) is not required is where the754 The Law Handbook
Inadequate notice from the Redundancy
employer Where an employee is terminated by an
employer because the employee’s job is no
An employee who is dismissed without
longer required to be done by anyone or
proper notice may take legal action in the
Federal Circuit Court or the Federal Court to there has been a restructure of the workforce,
recover money owed by the employer. This or because the employer has become insol
usually amounts to the wages that would vent or bankrupt, the employee is entitled to
otherwise have been earned during the redundancy pay at the rates set out in the
notice period. NES in s 119 of the Fair Work Act as follows:
Redundancy pay period
Employee’s period of continuous service with the employer on termination Redundancy pay
period
1 At least 1 year but less than 2 years 4 weeks
2 At least 2 years but less than 3 years 6 weeks
3 At least 3 years but less than 4 years 7 weeks
4 At least 4 years but less than 5 years 8 weeks
5 At least 5 years but less than 6 years 10 weeks
6 At least 6 years but less than 7 years 11 weeks
7 At least 7 years but less than 8 years 13 weeks
8 At least 8 years but less than 9 years 14 weeks
9 At least 9 years but less than 10 years 16 weeks
10 At least 10 years 12 weeks
Redundancy pay may accrue prior to have a reasonable expectation of continued employ
1 January 2010 if the employer was covered ment may be entitled to reasonable notice and be
by an award prior to that date. Genuine covered by unfair dismissal laws.
redundancies are excluded from the unfair
dismissal provisions of the Fair Work Act
and cannot be the subject of an unfair
dismissal claim.
Common law claim for
Certain employees are not entitled to wrongful termination
redundancy pay, such as casual employees,
If an employee is dismissed prior to the end
apprentices, or those employed by a small
of a fixed term contract, or is dismissed
business employer (who employs fewer
where there is an ongoing contract, there
than 15 employees). An employer may
apply under s 120 of the Fair Work Act to the may be a claim for damages based on the
FWC to reduce the amount of redundancy notice specified in the contract, or “reason
pay owing to an employee where the em able notice” where there is no reference to
ployer has found acceptable employment notice in the contract. This applies whether
for the employee or cannot pay the amount. or not the contract is in writing. The
question of what is reasonable will depend
Casual employees on numerous circumstances such as length
People employed on an hourly or daily basis may be of service, age, seniority and salary.
given notice on that basis. However, casuals who have The damages claim is limited to the salary
been employed on a regular and systematic basis and the employee would have earned had notice24 Employment 755
been given, taking into account whether the A common law contract can be terminated
employee had earned wages subsequent to without notice by an employer where there
the dismissal. is serious misconduct.
[24.210] Termination by the employee
An employee can resign from employment employee will be taken to have repudiated
with notice in accordance with their modern the contract, not the employer.
award, enterprise agreement or employment
contract. They may also resign without Inadequate notice from the
notice where there are sufficient grounds.
Such grounds will be found where an employee
employer has, by their conduct, repudiated If an employee leaves without proper notice,
the contract, such as where an employer has the employer may be permitted by a mod
failed to pay wages or where a worker is ern award or enterprise agreement to deduct
directed to carry out dangerous work with from the employee’s termination pay an
out the necessary safety procedures and amount equivalent to the wages that would
equipment. have been earned in the notice period.
Where an employee is forced to resign However, the employee must be paid the
due to the employer’s conduct, this is full balance of any other money owed.
known as “constructive dismissal” and it
can give rise to the right to make a claim Must employees give reasons?
against the employer in the same way as
An employee is not obliged to give reasons for
other wrongful or unfair dismissals. Em resignation. However, to be entitled to a pro rata long
ployees should be aware that some conduct service payment on termination (under the Long Service
of the employer will not be sufficient to Leave Act 1955 (NSW)), an employee with five to ten
years' service must give a reason establishing that the
repudiate the contract, and if the employee
resignation is necessitated by ill-health, or some press
mistakenly assumes that the contract has ing domestic or other necessity.
been repudiated and acts upon this, then the
[24.220] Other termination payments
Termination pay should include wages An employee or a person acting on the
owing, but also other payments such as employee’s behalf can require the employer
untaken annual leave, loadings and long to produce employment records during em
service leave. ployment or following termination of
The actual amount owed may be in employment. See s 535 of the Fair Work Act
dispute, because entitlements can depend on and reg 3.42 of the Fair Work Regulations
the reason for the termination. 2009.
Employees are legally entitled to a written “Employee record” is defined in s 12 of
notice of termination and a proper written
the Fair Work Act.
breakdown of their termination pay.You can also read
