Five Key Fair Work Obligations for Employers

Aug 23, 2016

Australian Industrial Relations law is incredibly complex. Here are five key areas to comply with to avoid making costly mistakes and incurring penalties.

1. Record Keeping

Fair Work inspectors have the power to hand out on the spot fines of $540 per record keeping breach. Time and wages records must contain all mandatory information which can include whether the employee is full time, part time or casual, their working hours and pay rates. Pay Slips must be issued to all employees within one day of payment being made. Fair Work Information Statements must be provided to every employee employed since 1/1/2010 and is often the first thing that inspectors will look for. Records must be kept for seven years and must be able to be produced on demand if an inspector randomly visits.

2. Unfair Dismissal

If you ever need to dismiss an employee it is critical to get the process right. If you get it wrong you may end up in court with an unfair dismissal claim. Unfair dismissal can only apply if an employee is dismissed after at least 6 months of service or if the business has less than 15 employees after at least 12 months of service. Where the business has less than 15 employees a dismissal is automatically deemed to be fair if the employer follows the checklist in the Small Business Fair Dismissal Code and documents their actions.

3. Finding the Right Award

There are over 120 modern awards and finding the right award for your business can be difficult. It is critical to get it right as penalties for underpayment or missed entitlements can be severe. To find the right award you should follow the following steps:

1) Look through the full list of awards on the Fair Work website and identify all awards that could apply.

2) From those you have identified, review the awards that are industry awards first. Industry awards take precedence over occupation based awards. Look at the coverage (clause 4) and classifications of the relevant awards to see who is included.

3) If not covered by an industry award, review the coverage and classifications of any relevant occupation based awards.

4) If not covered by either of the above then consider the Miscellaneous Award 2010 by again reviewing the coverage and classifications.

5) If none of the above apply, then the employee is award free and only subject to the minimum wage and National Employment Standards.

4. Contracts

While there is no obligation to issue a written contract of employment, it is prudent. Some of the terms normally included in a contract are required to be provided in written form by some awards such as the days and times worked for a part time employee. A contract is also important so that the business has a record of the employment status of an employee (eg casual) and in cases where the pay rate has been increased in place of another entitlement (eg leave loading). To be able to include leave loading or an allowance as part of the agreed pay rate, the contract must stipulate that the rate is inclusive of that entitlement and the combined rate must be equal to or higher than the amount the employee would have otherwise received. If there is no contract stipulating that fact that the entitlement is included, then the entitlement is still payable on top of the agreed rate. It should also be noted that the terms of a contract cannot take away any of the ten minimum national employment standards.

5. National Employment Standards

There are ten minimum National Employment Standards that are non negotiable:

1) Maximum Hours of Ordinary Work (38 hours plus reasonable additional hours)

2) Parental Leave and Related Entitlements (Up to 24 months unpaid)

3) Personal/Carer's and Compassionate Leave (10 days (pro-rata) per year paid Personal Carer's Leave (excluding casuals) which accumulates year on year and 2 days paid Compassionate Leave (unpaid for casuals) in relation to a life threatening illness or injury, or death of a member of an employee's immediate family or household.

4) Long Service Leave (includes casuals)

5) Notice of Termination and Redundancy Pay (No redundancy pay required where the business has less than 15 employees but notice rules still apply)

6) Requests for Flexible Working Arrangements

7) Annual Leave (4 weeks (pro-rata) for most permanent workers, 5 weeks (pro-rata) for some shift workers.

8) Community Service Leave

9) Public Holidays

10) Fair Work Information Statements (Must be provided to any employee starting after 1/1/2010)

There are many more aspects to employment law which are not covered in the above points. Professional advice should be sought to ensure compliance with the law.