THE REGULATION OF EMPLOYMENT CONDITIONS IN AUSTRALIA – Litigation, Employment, Industrial, Commercial, Intellectual Property and Technology Lawyers
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Employment conditions for most employees in Australia are now regulated at the Commonwealth level by the Fair Work Act 2009. Employees covered by the Fair Work Act are referred to as national system employees.

The main exceptions to this are: State public sector employees, employees of local councils or employees of a sole trader or partnership in Western Australia.

For national system employees, the employment relationship is currently regulated in the following way:


A statutory safety net of employment conditions is contained in the National Employment Standards (NES).

The NES prescribes minimum entitlement which cannot be reduced in an enterprise agreement or common law contract.

The matters dealt with in the NES are:

  • Maximum weekly hours;
  • Requests for flexible working arrangements
  • Parental leave and related entitlements
  • Annual leave
  • Personal/carer’s and compassionate leave
  • Community service leave
  • Long service leave
  • Public holidays
  • Notice of termination and redundancy pay
  • Fair Work Information Statement


Modern awards

Modern awards then provide an additional safety net of conditions that are generally not dealt with in the NES such as:

  • Minimum wages and allowances;
  • Hours of work and rostering arrangements;
  • Types of employment;
  • Overtime and penalty rates;
  • Meal and rest breaks;
  • Consultation and dispute resolutions procedures


However, in contrast to statutory NES entitlements, conditions in a modern award can be reduced in an enterprise agreement or common law contract.

This is strictly subject to employees being better off overall under an enterprise agreement than they would otherwise be under a modern award and the common law regarding set-off arrangements for common law contracts.

For example:

An enterprise agreement may prescribe salary rates that are well above the rates in the relevant modern award but has conditions which are inferior to the modern award in other areas such as hours of work or penalty rates. The Fair Work Commission will conduct an assessment of the total conditions in the agreement and the total conditions in the award – if the Commission concludes all employees are better off under the agreement when it is considered on a holistic basis – the agreement can be approved; and

common law contract can prescribe that an above-award hourly rate is paid to an employee in lieu of certain identified award conditions such as overtime or penalty rates. However, the rate will have to be sufficiently high to ensure the employee receives adequate compensation for the forfeited award conditions or the employer will be exposed to an underpayment claim. A mistake commonly made by employers is to assume that by paying an employee well above the award rate they do not have to be concerned with recognising other conditions in the relevant award. This is incorrect. The award conditions will continue to apply unless they have been specifically set-off in an employment contract.



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