If you own or manage any business in Australia – whether a large corporate or a small business – you need to understand the fundamentals of employment law for business. Employment law sets out both the rights and responsibilities of employers and employees in Australia. Most importantly, it ensures that Australian employers are meeting minimum requirements for working conditions for their employees.
In Australia, there are various pieces of legislation and policies that combine to create our employment law space. The key legislation is the Fair Work Act (2009) which established a national framework of employment law with the introduction of modern awards and the National Employment Standards.
When it comes to meeting your requirements under employment law, you will need to ensure that you’re implementing solid processes. To do this, it’s a good idea to look at it topically. For example, are you meeting your employment requirements in terms of awards and agreements? What about for leave and entitlements? Do you know what those requirements are?
Here are some of the main topics and big questions we get for employment law for business.
The minimum amount that you are required to pay your employees is legislated in Australia. The awards set out the base levels of pay. They are based on the role, the industry and the employment type (i.e., full time part time or casual).
There are more than 100 awards based on industry or occupation that will cover most people and roles. To determine the appropriate awards for your employees head to the Fair Work Ombudsman website.
All employees are entitled to leave. This includes sick leave, carer’s leave and annual leave (in most circumstances).
Employment law – set by the Fair Work National Employment Standards – sets out what your employees are entitled to in terms of leave, and how to ensure access to that leave. Of course, you can always offer more annual leave, but never less.
Employers often question the requirements around flexible working arrangements. Employment law sets out specific rules that govern the introduction of these types of arrangement. And these rules require an employer to take into account ‘the better off’ principle.
The ‘better off’ principle essentially says that the flexible arrangement must result in your employee being better off overall. This test is known as the ‘Better Off Overall Test’ or ‘BOOT’. When you put an Individual Flexibility Agreement (or IFA) into place, this overrides the terms of the legislative awards. However, to be legal, the new IFA must meet the BOOT test.
To ensure you’re meeting the requirements for flexible working, you’ll need to understand those legal requirements and have robust processes in place for managing them.
Employee entitlements, such as legal hours of work, procedures for bullying or harassment and how to join a union, are set out in the National Employment Standards (NES). This means they are protected under the Commonwealth’s employment law legislation.
While you can’t provide your employees with less than what’s in the NES, you can expand those entitlements by registered agreement.
We’re often asked about recouping training costs from employees. While in most cases, there is nothing to stop you from asking your employees to pay for their own training, you should, of course, consider the impact on employee morale and good will. However, if you’ve organised and paid for training already, there are very limited circumstances where you are able to deduct the cost of training from an employee’s pay. These circumstances are set out by the Fair Work Ombudsman.
There is a way to do this, however. That is via a training agreement entered into prior to the commencement of training. The training agreement can set up procedures for the employee paying for the cost of the training. Typically this is set up as a sliding scale where the employee is required to pay a certain amount of money back to you if they resign within a certain time period.
When it comes to buying or selling a business, the question often arises – ‘what happens to our employees?’ This area of employment law for business can be quite complicated and it is dependent on the type of sale. But in general there are two potential paths.
The path that is ultimately taken depends on both the wishes of the employer and the employee, as well as whether the business is sold by a share or asset sale. If the business is sold via a share sale, the entity that operates the business stays the same. So the employees do not transfer to a new entity.
On the other hand, an asset sale means there’s a new owning entity. Here the issue of employees becomes one of negotiation. In most cases, some will transfer and some will leave (whether by their choice or the new employer’s). If the new entity does take on employees, they must comply with Fair Work requirements, including entitlements like flexible working arrangement and leave.
Employment needs to be as fair as possible. This means you need to have anti-discrimination policies in place. These are set out under Fair Work as well, to ensure that you aren’t discriminating (consciously or unconsciously) based on race, colour, sex, sexual orientation, pregnancy, marital status, age, disability, political beliefs, family or carer responsibilities, national or social origin or religion.
Of course we haven’t covered every aspect of employment law for business here. There are requirements around occupational health and safety, for example. As well as for payroll and termination of employment. The top takeaway is to recognise the broad impacts of employment law. And to understand that our team is here to help you navigate all these issues and any others that might arise.
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