Thinking of starting a business in Australia and don't know where to start? Here are the basics you need covered.
National Employment Standards
Maximum weekly hours
Full-time employee's maximum weekly hours: 38 hours
Part-time employee's maximum weekly hours: <38 hours
Article page on Maximum Weekly Hours
Requests for flexible working arrangements
Some employees who have worked for the same employer for at least 12 months can request flexible working arrangements, such as changes to:
- Hours of work (e.g., start and finish times)
- Patterns of work (e.g., split shifts or job sharing)
- Locations of work (e.g., working from home)
Employees need to follow certain rules when requesting flexible working arrangements, e.g. making the request in writing and providing details of the proposed changes and the reasons for them.
Employers must give the person a detailed written response within 21 days, stating whether they grant or refuse the request. In responding, employers must make a genuine effort to find alternative arrangements to accommodate the person’s circumstances, and to consider the consequences of refusal.
If a dispute about these requests can’t be resolved at the workplace, the Fair Work Commission (FWC) can help.
Article page on Requests for flexible working arrangements
Offers and requests to convert from casual to permanent employment
Casual employees have the right to request a shift to permanent employment after a period of 6 months, or 12 months if they work for a business with fewer than 15 employees.
To be eligible, the employee must believe they no longer meet the definition of a casual employee, i.e. there is an absence of a ‘firm advance commitment to continuing and indefinite work’ and the employee is entitled to a casual loading or a specific rate of pay for casual employees.
The request must be made in writing.
Employers have to consult with the employee and respond within 21 days.
If the employer accepts, they must engage the casual worker on a permanent full- or part-time basis.
Employers can refuse if the employee meets the definition of a casual employee or there are ‘fair and reasonable operational grounds’ for not accepting the request, e.g. if substantial changes would be required to the way in which work in the enterprise is organised or it would bring significant impacts to the enterprise’s operation.
Article page on Offers and requests to convert from casual to permanent employment
Parental leave and related entitlements
Parental leave is time off that can be taken when and employee has worked for the same employer for at least 12 months and:
- the employee gives birth,
- the employee's spouse or de facto partner gives birth, or
- the employee adopts a child under the age of 16.
In addition to unpaid parental leave, employees can receive parental leave pay from the Australian government and employer-funded paid parental leave.
Article page on Parental leave and related entitlements
Annual Leave
Full-time employees receive 4 weeks' paid leave per annum (pro-rata for part-time employees)
Annual leave accumulates from the first day of employment and continues to accumulate throughout the year, with any unused annual leave rolling over to the next year.
Unused annual leave will be paid out on termination.
Some shift workers and employees covered by some modern awards may be eligible to additional annual leave.
Article page on Annual leave
Personal/carer's leave, compassionate leave and family and domestic violence leave
Personal/carer’s leave can be used by employees to take time off for personal illness, caring responsibilities and family emergencies.
Full-time employees receive 10 paid days per annum and part-time employees receive a pro-rata entitlement based on their ordinary hours of work.
Unused personal/carer’s leave is not paid out on termination, unless required by an award or enterprise agreement.
All employees have entitlement to 2 days of compassionate leave each time they meet the criteria for the entitlement.
All employees are entitled to 10 days of paid family and domestic violence leave each year. This includes full-time, part-time and casual employees.
Article page on Personal/carer's leave, compassionate leave and family and domestic violence leave
Community service leave
Employees, including casual employees, can take community service leave for activities such as voluntary emergency management activities or jury duty.
Article page on Community service leave
Long service leave
Long service leave entitlements generally come from state or territory-based legislation, which will set out:
- how long an employee has to be working to get long service leave (for example, after 7 or 10 years)
- how much long service leave the employee gets.
In some states and territories long serving casuals are eligible for long service leave.
In some cases, pre-modern awards that covered employers and employees before 1 January 2010, will determine the employee’s long service leave entitlement.
Some Australian states and territories have legislation to provide employees in the security, community services, building and construction, coal mining, and contract cleaning industries with access to portable long service leave.
Article page on Long service leave
Public holidays
Employees have an entitlement to be absent from work on a day or part-day that is a public holiday.
Employers may request employees to work on a public holiday if it is reasonable.
Where a full or part-time employee is absent on a public holiday, they receive their base rate of pay for the employee’s ordinary hours of work on the day that the public holidays fall on.
Article page on Public holidays
Notice of termination and redundancy pay
For an employer giving notice to full-time and part-time employees, 1-5 weeks notice (or pay instead of notice) is required, based on length of employment and age.
If an award/agreement free employee resigns, employees don’t need to provide notice (except as specified in their employment contract).
Modern awards, enterprise agreements and employment contracts may set out additional notice requirements to the NES.
4- 16 weeks redundancy pay based on length of employment (small business employees are excluded)
Article page on Notice of termination and redundancy pay
Employment information statement
Employers must provide all employees with a copy of the Fair Work Information Statement (FWIS) when they start their new job. The FWIS provides new employees with information about their conditions of employment.
For casual employees, employers must give them the Casual Employment Information Statement (CEIS) before or as soon as possible after they have started employment, and again after 6 months, 12 months, and every 12 months thereafter.
Employers with fewer than 15 employees only need to provide it to new casual employees and then after 12 months.
Every employee engaged on a new fixed-term contract must be given a copy of the Fixed Term Contract Information Statement (FTCIS) when they enter into the contract.
Employers can be fined for failing to provide the FWIS, CEIS or FTCIS.
Industrial Instruments
Modern Awards
Modern awards are legally binding documents that establish the minimum terms and conditions of employment in addition to the National Entitlement Standards (NES).
Modern awards entitlements include:
- minimum rates of pay,
- arrangements for hours of work, rostering and breaks
- allowances
- penalty rates and overtime
- consultation provisions
- and more
There are generally two kinds of modern awards – “industry awards” and “occupational awards”. In some instances, awards may be both industry and occupational.
Industry awards cover employers in particular industries. For example, the General Retail Industry Award covers employers in the general retail industry, defined as the retail sale or hire of goods or services for personal, household or business consumption. If there is a classification for the type of work performed by an employee, they will also be covered by the award.
Occupational awards apply to employees in particular occupations. A typical example is the Clerks – Private Sector Award, which applies to employees wholly or principally engaged in clerical work. If an industry award covers an employer and has classifications that apply to clerical or administrative employees, that industry award will also cover the employee. However, if the industry award does not contain a classification for clerical or administrative, then it’s likely that the Clerks – Private Sector Award will apply to that employee, depending on their duties.
It's important to read the award’s coverage and classification clauses to determine who is covered.
Managers or higher-income employees may not be covered by a modern award even if one applies to the industry in which they work. Where a modern award does not apply to an employee, the National Minimum Wage and the NES will form the minimum terms and conditions of employment.
See the list of awards: https://www.fairwork.gov.au/employment-conditions/awards/list-of-awards
Find your award: https://services.fairwork.gov.au/find-my-award
Enterprise agreements
Enterprise agreements (EAs) are legal documents covering employers and employees that set out minimum employment terms and conditions. EAs replace the terms of any applicable modern award and must result in employees being ‘better off overall’. EAs must be voted on by employees and then approved by the Fair Work Commission, with a number of pre-approval requirements having to be satisfied as well.
Employment Contracts
An employment contract is an agreement between an employer and employee that sets out terms and conditions of employment. Employment contracts cannot reduce the terms of the NES, a modern award or an enterprise agreement.
While an employment contract can be verbal, it’s recommended that it be in writing to avoid disputes. Generally, a contract would include the following terms:
- Details about the employee’s role,
- Remuneration – Whether an hourly rate, annual rate and whether it is base plus superannuation or an inclusive package, bonuses, commissions and incentives,
- The employment type, i.e. full-time, part-time, casual, fixed-term, etc,
- Details around termination, including potential grounds for termination and termination notice periods,
- Duties in relation to confidential information, intellectual property, post-employment restrictions, etc, and
- Requirements to adhere to company policies and procedures
Policies and Procedures
It’s recommended that employer’s in Australia have policies and procedures covering a range of employment and safety matters. As a minimum, it’s recommended that employers have policies in relation to:
- Bullying and harassment
- Work health and safety
- Use of IT, computers, social media, and company assets (such as motor vehicles)
Increasingly, it’s expected that employer’s will have policies and procedures covering a broader range of issues, including:
- Management of leave entitlements
- Work from home and hybrid working
- Drugs and alcohol
- Flexible working
- Workplace grievances
Employees should be inducted into these policies and procedures and it’s recommended that they be reviewed and revised on a regular basis. Policies and procedures should not include contractual language to avoid claims that those policies and procedures give rise to contractual entitlements for employees.
Taxes, Superannuation and Workers Compensation Insurance
PAYG taxes
Employers are required to withhold pay as you go (PAYG) tax contributions from the wages or salary paid to employees.
You may also have to withhold amounts from other payments, e.g. long service leave and holiday pay, commissions, bonuses, allowances, and payments when an employee leaves.
Find out more about PAYG at the Australian Taxation Office website: https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/payg-withholding
Payroll tax
Every jurisdiction in Australia has a different obligation in relation to the payment of payroll tax. This is calculated based on wages paid to employees (and in some cases, fees paid to contractors) by a business.
Learn more: https://www.payrolltax.gov.au/
Superannuation
Employers are required to make superannuation (‘super’) contributions, currently at a rate of 11.5% of an employee’s ordinary time earnings up to a maximum contribution base, which increases each year.
The superannuation guarantee rate will be increasing to 12% from 1 July 2025. Superannuation can also be payable on fees paid to contractors in certain circumstances.
To avoid the super guarantee charge (SGC), super payments must be received by the employee's fund on or before the quarterly due dates. Payments can be made at least 4 times a year. This applies from the day employees start working.
From 1 July 2026, employers will be required to make super contributions on payday (i.e. the date you make an Ordinary Time Earnings (OTE) payment to an employee). Each time OTE is paid, there will be a new 7 day 'due date' for contributions to arrive in the employees' superannuation fund.
Learn more about employer superannuation obligations: https://www.ato.gov.au/businesses-and-organisations/super-for-employers
Workers compensation insurance
Most employers will be required to hold workers compensation insurance in relation to their employees (and in some cases, their contractors).
Workers compensation covers employees in case they get sick or injured because of work.
The amount of workers compensation premiums will vary between jurisdictions.
Read more about workers compensation: https://www.safeworkaustralia.gov.au/workers-compensation
Employee Protections
Unfair dismissal
Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner.
Employees can apply to the Fair Work Commission, who decide on unfair dismissal cases, within 21 days of the dismissal taking effect.
Employees need to be employed for at least 6 months (or 12 months in the case of small business employers) before they can apply for unfair dismissal.
The maximum compensation that can be paid is half of the employee’s annual wage or the compensation cap, which is $83,750 for FY 2023-24 and changes on 1 July each year.
General protections
Under the Fair Work Act, a person cannot take adverse action against another person, because that other person has a workplace right, exercises a workplace right, or proposes to exercise a workplace right.
A person has a workplace right if they have an entitlement under a workplace law or a workplace instrument such as an award or enterprise agreement, is able to initiate a proceeding under a workplace law or workplace instrument or is able to make a complaint or inquiry in relation to their employment.
Adverse action includes dismissing or refusing to employ someone, discriminating against them, or otherwise injuring them in their employment (e.g. demotion, reducing hours of work, etc.)
The Fair Work Ombudsman can investigate allegations of contraventions of the general protections provisions and issue fines and penalties. Workers can bring claims against employers. There is no limit as to how much a worker can claim for a general protections dismissal.
Discrimination
Under the FW Act, it is unlawful for an employer to take adverse action against a person who is an employee, former employee or prospective employee because of the person's race, colour, sex, sexual orientation, breastfeeding, gender identity, intersex status, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
Sham contracting
Sham contracting happens when an employer attempts to disguise an employment relationship as an independent contracting arrangement.
Under the Fair Work Act, it’s illegal to represent to an employee they are an independent contractor when they aren’t.
Independent contractors provide services for other businesses, but are not employed by them. Contractors don’t have the same rights and obligations as employees.
There are different tests to determine whether a worker is a contractor or an employee, depending on whether the worker was engaged before or after 26 August 2024.
If challenged, the onus is on the employer to prove they reasonably believed they engaged a person as an independent contractor.
Courts can impose penalties against businesses or individuals for sham contracting. The maximum penalty is $18,780 for individuals and $93,900 for corporations, per contravention.
Learn more about the differences between employees and contractors: https://blog.myhr.works/en-au/blog-contractors-vs-employees
Work Health and Safety
Most Australian regions have embraced the 2011 Commonwealth Work Health and Safety Act (WHS Act) as the standard. Victoria and Western Australia, however, maintain their distinct state-level laws. While the WHS Act was heavily influenced by Victoria's safety regulations, it does incorporate notable distinctions. These work health and safety laws establish responsibilities for individuals engaged in business activities and extend to employees, laborers, contractors, and business directors. Severe consequences, including potential imprisonment in the most egregious instances, are imposed for violations of safety legislation.
Find your WHS regulator at Safe Work Australia: https://www.safeworkaustralia.gov.au/law-and-regulation/whs-regulators-and-workers-compensation-authorities-contact-information