Australia: Hiring and Managing Employees

For many employers, the key to having a productive and high-performing workforce is recruiting the right people. It is important for employers to be aware that even before an employee commences work, there is a number of legal issues that arise in the process of seeking, interviewing and selecting candidates for a position.

Hiring Job Applicants

Employers are prohibited from discriminating on the basis of an attribute (including sex, race, pregnancy, age, impairment, political belief or activity) against job applicants in determining who should be offered employment. The protected attributes from state to state depend on the state’s legislation. When short-listing or selecting candidates, employers should ensure that any decision is based on consistent selection criteria, which are not discriminatory.

Employers also must not discriminate against a person in the terms upon which employment is offered to them or by refusing or deliberately omitting to offer employment to a person.

Making an Offer of Employment

An offer of employment doesn’t have to be in writing. A verbal offer is still an offer for the purposes of forming a binding contract, once accepted by the employee. However, a written offer signed by the employee is recommended. This written offer should include the date of commencement of the employment, the position, information regarding wages and any other important aspects of the employment relationship that differ from or are not set out in Australia’s employment legislation, the Fair Work Act 2009.

Existing Restrictions

Employers should ensure that the prospective employee does not have any restrictions that may prevent him or her from entering into the employment contract (for example, a post-employment restraint of trade imposed by his/her former employer).

The Employment Contract

In formulating the employment contract, an employer should be aware of the minimum statutory terms and conditions set out in the Fair Work Act, applicable long-service leave legislation and applicable superannuation legislation.

The basic terms usually include the duration, position, duties, probationary period, remuneration including any bonuses, other benefits such as car allowance, leave (including annual leave, personal or caregiver leave, parental leave, long-service leave), superannuation, notice of termination, the right to summarily dismiss, protection of confidential information and intellectual property, post-termination restrictions and governing law and jurisdiction.

Managing Employees

A wide range of matters arise during the employment relationship that requires careful management in order to ensure that a positive ongoing relationship is maintained, and that there is compliance with relevant legal obligations.

Benefits and Entitlements

Modern awards apply to national system employees in a particular industry or occupation. Enterprise awards apply to particular employers. These awards and the National Employment Standards set out the minimum requirements with which an employer must comply in respect of benefits and entitlements for their employees, including the minimum wage. If employees are covered by an enterprise or collective agreement (an agreement negotiated collectively between employees—and/or a union—and the employer), this will set out employees’ benefits and entitlements.

The Fair Work Act’s 10 National Employment Standards

Hours of work. The ordinary hours of work for an employee to whom a modern award or enterprise agreement applies will be the ordinary hours specified in the award or agreement. Under the National Employment Standards, an employee’s maximum weekly hours of work, for a full-time employee, is 38 hours. An employer may require an employee to work reasonable additional hours.

Request for flexible working arrangements. An employee who is a parent, or has the responsibility for care of a child, may ask their employer for a change in working arrangements to assist with caring for the child. The employee must have completed at least 12 months of continuous service to qualify for the request. An employer may refuse a request for flexible working arrangements on reasonable business grounds.

Annual leave. All employees other than casual employees are entitled to four weeks’ paid annual leave for each year of service. Annual leave accrues progressively and must be taken for a period agreed between the employee and employer.

Personal/caregiver’s leave. All employees other than casual employees are entitled to ten days of paid personal/caregiver’s leave (this covers sick leave) for each year of service. An employee may take personal/ caregiver’s leave if he/she is not fit for work because of personal illness or injury, or to provide support to a member of the employee’s immediate family (or a member of their household) who requires care or support because of personal illness/injury or an unexpected emergency. All employees are also entitled to two days of unpaid caregiver’s leave for each occasion, if they have exhausted their entitlement to paid leave. The two days unpaid caregiver’s leave also applies to casual employees.

Compassionate leave. All employees other than casual employees are entitled to two days of paid compassionate leave for each occasion when a member of their family or household dies, contracts a personal illness or sustains a personal injury that poses a threat to life.

Community service leave. Employees other than casual employees who engage in eligible community service (including jury service and voluntary emergency management activity) may be absent from his/her employment to engage in the activity. The employee is also entitled to reasonable travel time associated with the activity and reasonable rest time after the activity.

Public holidays. An employee is entitled to be absent from work on a day (or part-day) that is a public holiday in the place where the employee is based for work purposes. The National Employment Standards list eight public holidays. Additional days may be prescribed under a law of a state or territory.

An employer may ask an employee to work on a public holiday if that request is reasonable. The Fair Work Act describes factors that must be taken into account when determining whether a request is reasonable, for example, the personal circumstances of the employee, including family responsibilities.

Unpaid parental leave. Unpaid parental leave includes birth-related leave and adoption-related leave. The leave must be associated with the birth of a child to the employee or the employee’s spouse or de facto partner, or the placement of a child with the employee for adoption. The employee must have responsibility for the care of the child in order to take the leave. The employee must have completed at least 12 months of continuous service with the employer to be entitled to unpaid parental leave. An employee alone can take up to 12 months’ leave, or each member of an employee couple may take separate periods of leave of up to 12 months.

A paid parental leave scheme has recently been introduced in Australia, giving those eligible an entitlement to 18 weeks’ paid parental leave at the national minimum wage, to be paid by the government via employers.

Notice of termination and redundancy pay. An employer must not terminate an employee’s employment unless it has given written notice of the day of termination. The length of notice depends on the duration of service of the employee. The National Employment Standards also entitle an employee to redundancy pay where employment is terminated for specific reasons.

Fair Work Information Statement. Employers are obliged to provide a Fair Work Information Statement to all employees who commence employment. The statement contains information about a number of matters, including an explanation of the National Employment Standards, modern awards, collective agreement in the workplace, termination of employment and the right of a trade union to enter the workplace.

Wages

Employees may be paid weekly, fortnightly or monthly. Employers must issue pay slips (in hard copy or electronically) to each employee within one working day of their pay day, even if they are on leave.

Those employees covered by a modern award (or enterprise award) are entitled to be paid at least the minimum wage set out in that award. The National Employment Standards set out the national minimum wage applicable to employees who are not covered by a modern award. This includes senior employees, such as managers and executives, as well as professional employees such as accountants, marketing and information technology specialists. Employers may express an employee’s wage as an overall annual salary, which has entitlements such as overtime and penalties built into it.

Modern awards often have provisions related to the manner and timing of the payment of wages.

The Fair Work Act prohibits employers from deducting money from employees without their written authorization. The agreement must specify the amount of the deduction. The deduction must also be principally for the employee’s benefit.

Superannuation

Employers are required to pay superannuation for all employees, except casual employees, in accordance with superannuation legislation. The current minimum rate of superannuation required to be paid into a superannuation fund for full-time and part-time employees is 9 percent of the employee’s salary.

Long-Service Leave

Long-service leave is dealt with by state and territory legislation. Depending on the jurisdiction, employees become eligible to take long-service leave after completing between seven and 15 years of continuous employment with the same or a related employer.

Taxation

All employees who earn income in Australia are required to pay income tax. Employers deduct income tax installments from employees’ wages. Deductions go to the Australian Tax Office (ATO). The amount of the deduction depends on the income of the employee and varies depending on the level of earnings of an employee. The more an employee earns, the greater the income tax they are required to pay. Employees are responsible for lodging their individual tax returns at the end of the financial year with the ATO.

Varying Terms and Conditions

Parties to an employment contract may at any time agree to vary the terms of the contract. Employers must not vary the employment contract unilaterally. Employment contracts often include a term stating that variation to the terms of the contract can only be made in writing and signed by both parties. Unauthorized variations of an employment contract by an employer may be considered a repudiation of the contract by the employer, giving the employee the option of accepting the repudiatory conduct and suing the employer for damages.

Occupational Health and Safety

Each state and territory has separate occupational health and safety legislation. Generally, employers are required to ensure, so far as is reasonably practicable, the health, safety and welfare of their employees while they are at work. Occupational health and safety legislation sets out an employer’s duties. Investigations and prosecutions are conducted by the relevant statutory body.

Recordkeeping

Employers must keep certain written records in relation to their employees for seven years, including records about time and wages.

Andrew Ball, partner at DLA Piper, has extensive experience across all areas of employment and workplace relations.

Republished with permission. © 2013 DLA Piper. All rights reserved.

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