Global Employment Law Guide |
|
Australia |
|
(Asia Pacific)
Firm
Clayton Utz
Contributors
Hilary Searing |
|
What are the different categories of employment status (for example, employee, worker, self-employed individuals, etc)? | In Australia, there are two primary categories of employment status - whether you are an employee or an independent contractor and different rights and obligations flow in relation to that status. An employee is engaged under a contract of service, whereas a contractor is engaged under a contract for services. Employees typically perform work under the direction and control of their employer, while independent contractors typically have a high level of control over the work they perform, including their hours, work location and how they do the work. Although a person may have agreed to be an independent contractor, they may actually be an employee if the relationship is an employment relationship. The employment status is determined by ascertaining the "real substance, practical reality and true nature" of the relationship between the parties, which is not limited to the terms of the contract governing the relationship. For the purposes of ascertaining whether an employment relationship exists, the following should be considered:
· not only the terms of the contract governing the relationship, but other factors relating to the totality of the relationship, including, but not limited to, how the contract is performed in practice. If an employer intentionally or recklessly misrepresents an employee as a contractor, this is considered to be sham contracting and penalties can apply. |
Are there different types of employment contracts (for example, fixed-term, indefinite)? | Employees may be engaged under a full-time, part-time or casual contract, and be engaged on a permanent (indefinite) or a fixed-term contract (noting that there are limitations on the lawful use of fixed-term contracts, as set out below). The different categories of employment include:
|
What requirements need to be met in order for an employment contract to be valid? | There is no need for an employment contract to be in writing, however, we would recommend as a matter of best practice that this occur to avoid uncertainty and to ensure the contract addresses the requirements of the parties. In order to be valid, an employment contract, whether written or oral, must satisfy the following requirements:
Intention to enter into a legal relationship: An employment contract is only regarded as a contract if the parties intend the agreement to be legally binding. The parties must accept and intend that if one party fails to act in accordance with the agreement, the other party will be entitled to take legal action to enforce the contract. The acceptance of the offer must be unqualified. The prospective employer may however withdraw the offer of employment prior to it being accepted. For the employment contract to be valid, each party must also provide some form of 'consideration'. This element is generally satisfied in employment contracts where a person is hired to perform work in return for remuneration. The parties must have the capacity (in a legal sense) to enter into the contract. Vitiating factors: The contract must be entered into with the genuine consent of each party. Consent will not be genuine if the contract was entered into by mistake, misrepresentation, fraud, duress, unconscionability or undue influence. Unlawful: The contract must not be entered into for illegal consideration or have a purpose that is illegal or contrary to public policy |
Are part-time employees afforded the same rights as full-time employees? | Yes - in Australia, permanent employment is either full-time or part-time. They have the same entitlements. However, part-time employees work fewer hours and their entitlements are determined on a pro-rata basis. |
Can employment contracts be assigned? | Employment contracts are personal service contracts and the rights to render and receive services under an employment contract cannot be assigned. |
What rights do employees have (to object, to severance), if any, when the company they work for is transferred as a going concern? | The primary legislation that governs employment law in Australia at the federal level is the Fair Work Act 2009 (Cth) ("Fair Work Act"), which applies to national system employers and their employees. The common law also establishes a range of important principles that apply to the employment relationship. The Fair Work Act includes the National Employment Standards ("NES"). The NES can be enhanced by modern awards which are statutory instruments that provide further terms and conditions. Employers and employees can also negotiate at an enterprise level to create an enterprise agreement. Under the Fair Work Act, a transfer of business takes place if the following requirements are satisfied:
Under the Fair Work Act, if a transfer of business takes place generally an employee's service with the old employer will count as service with the new employer. This means that service-based entitlements will be preserved, such as annual (vacation) leave and redundancy (severance) pay entitlements, and transferred across to the new employer. However, if the new employer is not an associated entity of the old employer, the new employer may choose whether to recognize a transferring employee's previous accumulated service for annual leave or redundancy pay. If the new employer does not recognize service, the transferring employee will be entitled to redundancy pay in accordance with the NES, or any more favourable terms that are included in a modern award, enterprise agreement or contract of employment. An employer must also comply with any consultation obligations under a relevant modern award or enterprise agreement. Modern awards and enterprise agreements contain consultation clauses. These clauses generally require an employer to consult with an employee when there is a major change in the workplace, which would include the transfer of business. While the consultation must be meaningful, and give employees the chance to provide their views, this does not remove managerial prerogative to make a final decision in relation to the workplace change. If an employee's employment is terminated as a result of the transfer of business, that is they are not offered a role with the new employer, then they would be entitled to redundancy pay in accordance with the NES, or any more favourable terms that are included in a modern award, enterprise agreement or contract of employment. An employee also cannot be forced to transfer to another employer and may refuse to accept an offer of employment. However, if an employee has been offered a role with the new employee on terms or conditions no less favourable than their current employment, they may not be entitled to any redundancy pay if they choose not to accept the role and their employment is terminated. |
Do you have statutory rights for employees on change of control of an employer? If so, please give the statute. | Generally no, so long as the employer remains the same. For example, if control of the employer changes by way of a share sale, and all that changes is the shareholders of the company, no rights arise for the employee as the employer will not change (despite the change in control). However, if applicable, the employer must comply with the consultation obligations under a relevant modern award or enterprise agreement. Modern awards and enterprise agreements contain consultation clauses. These clauses generally require an employer to consult with an employee when there is a major change in the workplace. |
In what circumstances can employers unilaterally change the terms of employment, and what remedies (if any) are afforded to an employee? | An employer cannot unilaterally alter the terms of the employment contract (unless the contract specifically allows it to do so and even in those circumstances care would need to be taken). An employment contract can only be varied in accordance with its terms, or with the consent of both parties. To do otherwise could result in the employee claiming that the contract has been repudiated, and bring an unfair dismissal claim (if they are under the earnings threshold or covered by a modern award or enterprise agreement), or a breach of contract claim. |
Is your jurisdiction an employment-at-will jurisdiction? What are the employer’s termination rights? | Australia is not an employment-at-will jurisdiction. There are numerous statutory protections for job security. There is also a statutory regime providing remedies for "unfair" and "unlawful" dismissals. This is discussed further below. |
Are there remedies for dismissal without cause or wrongful termination? | There are statutory and common law remedies available for an employee who has been dismissed wrongfully or without cause. Unfair dismissal: Under section 385 of the Fair Work Act, a person has been unfairly dismissed, if the Fair Work Commission is satisfied that an employee (who is protected from unfair dismissal) has been dismissed and the dismissal:
An employee is eligible to make an application for an unfair dismissal remedy if they have completed the minimum period of employment (6 months for large employers and 12 months for small businesses) and one of the following applies:
If the claim is successful, the Fair Work Commission may order:
General Protections: The General Protections under the Fair Work Act protect employees from adverse action because of a particular prohibited reason (such as on the grounds of race, sex, religion, or pregnancy). Adverse action can include unlawful termination of an employee's employment. An employee can make an application to the Fair Work Commission to deal with the alleged contravention of the general protection provisions. Compensation for this claim is not capped. Breach of contract: An employee may also seek remedies for breach of contract if the dismissal was wrongful or without cause. The employee may be awarded compensation for financial loss as a result of the breach of the employment contract. However, the employee cannot be placed in a better position than that which the employee would have been in had the contract been performed. Alternatively, the court may order the employer to perform their obligations under the contract. This is called specific performance. |
Are there protections for whistleblowers? | Yes, there are protections for whistleblowers in Australia which apply to both private and public sector entities. In terms of the private sector, the Corporations Act 2001 (Cth) ("Corporations Act") and Taxation Administration Act 1953 (Cth), provide a corporate whistleblowing scheme and tax affairs whistleblowing scheme. The laws are designed to discourage white-collar crime and provide a protection regime for corporate, financial and credit sectors. These laws are applicable to any disclosure made after 1 July 2019. Under the Corporations Act, public companies and large proprietary companies were required to have a compliant whistleblowing policy from 1 January 2020 (or otherwise are required to have one within 6 months following the end of the first financial year that a company becomes a "large proprietary company") that addresses a range of mandatory criteria set out in the legislation and to make that policy available to officers and employees. Failure to do so is an offense. The types of matters that can be disclosed include matters that breach a range of Federal laws, as well as any “misconduct or improper state of affairs or circumstances" of the company. Personal work-related grievances are excluded from the scope, except where they relate to retaliation for making a prior whistleblowing report or involve 'significant implications' for the company. Where a whistleblower satisfies the relevant criteria, they will not be subject to any civil, criminal or administrative liability for making a disclosure. There are also confidentiality provisions that will make it an offense to disclose the identity of a discloser, including information that is likely to lead to the identification of the discloser, without the consent of the discloser. There are limited exceptions to this prohibition. Similarly, whistleblowers are protected from dismissal, injury or prejudice to an employee in their employment, as well as discrimination and a range of other actions because they have brought a whistleblowing complaint. |
Do employees have a right to privacy? If so, what are the remedies for a breach? | At common law, employees do not have a right of privacy in the workplace and there is no authority that extends an employer's implied duties to cover employee privacy in the workplace. Generally, the remedies available to an employee for breach of privacy are outside the contract of employment. For example, the law of defamation and an action for breach of confidence may provide some limited protection against the distribution of private information about an employee to third parties. The Privacy Act 1988 (Cth) imposes privacy obligations on both public and private sector employers in relation to the collection, use and disclosure of personal information. However, under the Act, there is an exemption for what is known as "employee records" which covers that information generally contained in an employee's personnel file. This means that employers are not required to comply with the obligations in the Privacy Act in relation to the storage and use of employee records. (We note that this exception is currently being considered and its continued application is subject to change). In the interim, in terms of best practice, the Office of the Australian Information Commission recommends that employers:
In New South Wales, some additional privacy protections are afforded to employees. Under the Workplace Surveillance Act 2005 (NSW) employees must be notified in advance of camera, computer and tracking surveillance. However, covert surveillance may be authorized by the court where particular employees are involved in unlawful activities in the workplace. Under the employment contract, employers may enforce strict codes relating to the use of the Internet, email and social media. These codes may allow access to and the monitoring of emails and online conduct by employees. |
Are employees afforded any anti-discrimination protection? | There are two types of anti-discrimination law: anti-discrimination legislation and the General Protections provisions contained in the Fair Work Act. Anti-discrimination statutes prohibit discrimination in a range of areas, including in the workplace, and on the grounds of a number of attributes such as age, race, gender, pregnancy, marital status, and citizenship amongst others. The Fair Work Act also prohibits discrimination on a number of grounds. Anti-discriminations Acts: There is a combination of federal, State and Territory anti-discrimination or equal-opportunity legislation. There are four substantive acts at the federal level that apply to employees:
Under this regulatory framework, specific protected attributes are listed and discrimination on the basis of those attributes is prohibited in a range of fields, including the workplace. General Protections: The General Protections under the Fair Work Act protect employees from adverse action because of a particular proscribed reason. The principal protections have been divided into:
|
Are there statutory rights to vacation, medical leave and parental leave? Have there been any changes to leave benefits in the past 12 months? Is there any proposed legislation that employers should be aware of that will impact leave benefits? | Under the Fair Work Act employees are entitled to certain minimum statutory rights, including annual (vacation) leave, personal (medical) leave and parental leave. The NES outlines the minimum leave entitlements for employees. An award, enterprise agreement or employment contract can provide for other (more favorable) leave entitlements but it cannot be less than the entitlements under the NES. Annual leave: Full-time and part-time employees get 4 weeks of paid annual leave, based on their ordinary hours of work. Shift workers may get up to 5 weeks of annual leave per year. An employee's entitlement to annual leave accrues progressively and accumulates from year to year. Personal leave: Sick and carer's leave enables an employee to take time off to help them deal with personal illness, caring responsibilities and family emergencies. Employees are entitled to up to 10 days of paid personal leave per annum. An employee's entitlement to personal/carer's leave accrues progressively and accumulates from year to year. Parental leave: Employees are entitled to up to 12 months of unpaid parental leave and may request an additional 12 months of leave (up to 24 months in total) unless their partner has already taken 12 months of leave. Parental leave entitlements include:
While the above entitlements have not changed in the last 12 months, there have been recent amendments to the NES in relation to parental leave. The changes mean that when an employee makes a request for an extension of unpaid parental leave, their employer now has an obligation to discuss the request with them. If the employer refuses a request, they will need to provide reasons in writing. They will also need to consider and inform the employee in writing if there is any other period of extension they would be willing to agree to. The employer can refuse the request on reasonable business grounds, which include, amongst a number of other reasons, if the period will be too costly for the employer or the extension will result in a significant loss in efficiency or productivity. Unresolved disputes about extension requests can now be processed by the Fair Work Commission if an agreement cannot be reached. |
Are restrictive covenants recognized and, if so, what are reasonable restrictions as to geography, duration and scope of activity? | During the employment relationship, employees owe a duty of fidelity to their employer which includes refraining from business activities that compete with the employer. This obligation may extend beyond the termination of the employment. The employment contract may also include express terms whereby the employee undertakes to refrain from certain activities for a period of time after the employment contract has ended. Some of the common restrictions, known as a restraint, include:
A post-employment restraint is not enforceable in Australia unless:
A legitimate interest may include trade secrets, confidential information, customer connections or intellectual property. However, an employer is not entitled to freedom from competition in and of itself and without more a restraint clause would generally be invalid. Whether the restraint is reasonably necessary for the protection of the employer's legitimate interests will depend on:
|
Can employees be terminated for refusing to sign a restrictive covenant? What serves as consideration for a restrictive covenant? | No - an employee cannot be terminated for refusing to sign a restraint of trade clause. As discussed above, this would likely amount to a variation in the contract and an employer cannot unilaterally vary a contract of employment. If the employer terminates the employment of the employee for not signing a restraint of trade clause, depending on the circumstances, this could result in a breach of the contract. As discussed above, the employee may seek remedies for breach of contract. When entering into an employment contract, no specific consideration needs to be allocated to the restraint. However, if varying a contract to include a restraint, an employer needs to provide valuable consideration, which is often done by way of a pay increase, and which can assist in the enforceability of the restraint. |
Does your jurisdiction require contributions to a pension or retirement scheme? | Under section 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth), employers are required to make superannuation contributions on behalf of employees. Under the superannuation guarantee scheme, almost all employers are required to make mandatory superannuation contributions. These contributions are usually based on the prescribed minimum percentage of the employee's ordinary time earnings, which is 10% for 2021/2022 but can be higher in some modern awards or enterprise agreements. Employers may also make superannuation contributions above this mandatory minimum percentage. |
Are certain benefits mandated by your jurisdiction? | Employee benefits are mandated under the NES in the Fair Work Act and additional benefits can be provided under modern awards and enterprise agreements. The NES outlines the following minimum entitlements for employees:
Modern awards apply to industries and occupations and they provide mandatory terms and conditions in addition to the NES. Additional benefits are also provided for under enterprise agreements, however, the enterprise agreement must pass the better-off overall test. That being, the employee must be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee. |
Is it permitted to have a mandatory retirement age in your jurisdiction? | Compulsory retirement ages in employment are prohibited in several Australian jurisdictions. Except in certain areas of public sector employment, there is no legislative compulsory retirement age for Australian employees. As a result, the retirement age of an employee is the age fixed by the employee’s employer, however, this age often coincides with the age at which the social security age pension is payable. However, there are a range of occupations that require licensing and re-qualification which may serve as a barrier to mature-age employees. The Age Pension age is 67 years for people born from 1 January 1957 onwards. To be eligible for a pension, the person must be pension age and meet residence rules, an income test and an assets test. |
Is it possible to cease pension or insured benefits (income continuance/disability insurance, healthcare, life assurance, etc.) when work continues beyond retirement age? | The obligation to pay into superannuation applies as long as the person remains employed, regardless of age. |
Can an employer make the COVID-19 vaccine mandatory for its employees? Are there exceptions that an employer must make? If an employee simply does not want to get the vaccine (without another reason like disability or religious reason), can an emp... | Employers will only be able to require their employees to be vaccinated in circumstances where either:
The legality and reasonableness of mandating the vaccine is still very much an evolving area in the context of COVID-19 in Australia. It would therefore be appropriate for employers to make case-by-case determinations, and if considering implementing a direction or border policy to first undertake a risk assessment. For example, while a direction to mandate vaccinations could be lawful under general work, health and safety legislation, which places a general duty on employers to ensure, so far as is reasonably practicable, the health and safety of its workers, employers will also need to consider whether or not the decision is reasonable. Furthermore, even it was found to be a "lawful and reasonable" direction, there may be some individuals who, for certain health reasons or any underlying vulnerabilities, cannot/should not have the vaccine. It may be discriminatory if employers introduce a blanket policy requiring all employees to have the vaccine without taking those individual circumstances into consideration. Employers will also need to take into consideration privacy concerns and compliance with privacy legislation in regard to employees' health information where they are requiring or receiving information from employees in regard to their vaccination status. |
Can an employer require that employees return to work in the office (absent government order to shut down)? If an employee refuses to return to the office, can the employer terminate the employee’s employment? | An employee cannot refuse an employer's reasonable and lawful direction to perform work, including to perform work at the workplace. However, in some circumstances, employees may be able to refuse to attend the workplace because of a reasonable concern for their health and safety or another legitimate reason. If an employee refuses to comply with an employer's reasonable and lawful direction to work at their usual workplace, the employer may take disciplinary action against them, which may include termination of employment. However, in deciding on the appropriate disciplinary action to take, employers must comply with the general protections and unfair dismissal obligations under the Fair Work Act. Given the risk of unfair dismissal or discrimination claims, care should be taken before any disciplinary action is taken in regard to a refusal to work at the workplace. Employers should ensure they consult with their workforce, and take steps to understand any particular reluctance to return to the workplace. This should assist in managing a return to the workplace. |
Global Employment Law Guide
Australia
(Asia Pacific) Firm Clayton UtzContributors Hilary Searing Lauren Schulz
Updated 04 Mar 2024In Australia, there are two primary categories of employment status - whether you are an employee or an independent contractor and different rights and obligations flow in relation to that status.
An employee is engaged under a contract of service, whereas a contractor is engaged under a contract for services. Employees typically perform work under the direction and control of their employer, while independent contractors typically have a high level of control over the work they perform, including their hours, work location and how they do the work.
Although a person may have agreed to be an independent contractor, they may actually be an employee if the relationship is an employment relationship. The employment status is determined by ascertaining the "real substance, practical reality and true nature" of the relationship between the parties, which is not limited to the terms of the contract governing the relationship. For the purposes of ascertaining whether an employment relationship exists, the following should be considered:
- the totality of the relationship between the parties; and
· not only the terms of the contract governing the relationship, but other factors relating to the totality of the relationship, including, but not limited to, how the contract is performed in practice.
If an employer intentionally or recklessly misrepresents an employee as a contractor, this is considered to be sham contracting and penalties can apply.
Employees may be engaged under a full-time, part-time or casual contract, and be engaged on a permanent (indefinite) or a fixed-term contract (noting that there are limitations on the lawful use of fixed-term contracts, as set out below).
The different categories of employment include:
- Full-time employees typically work 38 hours (or more) each week and are employed on a permanent or fixed-term contract.
- Part-time employees usually work less than 38 hours each week and are employed on a permanent or fixed-term contract.
- Casual employees (see below).
- Fixed-term contract employees who are employed for a specific period of time or task. While there are a number of exceptions, generally speaking, fixed-term contracts can only be for a maximum period of two years. In addition, a new fixed-term contract cannot be offered as an employment option if the first 3 points below all apply, and one or more of the scenarios in the 4th point applies:
- the employee's previous contract was also for a fixed term;
- the employee's previous contract and the new contract are for substantially the same work;
- there is substantial continuity in the employment relationship between the previous and new contracts; and
- either:
- the previous contract contained an option to extend which was used;
- the total period of employment for both the previous and new fixed-term contract is greater than 2 years;
- the new fixed-term contract includes an option to renew or extend; or
- there was an initial contract in place (before the previous contract):
- that was for a fixed term;
- that was for the same or similar work; and
- there was substantial continuity in the employment relationship.
There is no need for an employment contract to be in writing, however, we would recommend as a matter of best practice that this occur to avoid uncertainty and to ensure the contract addresses the requirements of the parties.
In order to be valid, an employment contract, whether written or oral, must satisfy the following requirements:
- there must be an "intention" between the parties to create a legal relationship;
- there must be an offer by one party and it must be accepted by the other party;
- the contract must be subject to valuable consideration;
- the parties must be legally capable of making a contract;
- there must be an absence of factors that destroy the validity of the contract (vitiating factors); and
- the contract must not be rendered ineffective by reason of conduct that is illegal or contrary to public policy.
Intention to enter into a legal relationship:
An employment contract is only regarded as a contract if the parties intend the agreement to be legally binding. The parties must accept and intend that if one party fails to act in accordance with the agreement, the other party will be entitled to take legal action to enforce the contract.
Acceptance:
The acceptance of the offer must be unqualified. The prospective employer may however withdraw the offer of employment prior to it being accepted.
Consideration:
For the employment contract to be valid, each party must also provide some form of 'consideration'. This element is generally satisfied in employment contracts where a person is hired to perform work in return for remuneration.
Contractual capacity:
The parties must have the capacity (in a legal sense) to enter into the contract.
Vitiating factors:
The contract must be entered into with the genuine consent of each party. Consent will not be genuine if the contract was entered into by mistake, misrepresentation, fraud, duress, unconscionability or undue influence.
Unlawful:
The contract must not be entered into for illegal consideration or have a purpose that is illegal or contrary to public policy
Yes - in Australia, permanent employment is either full-time or part-time. They have the same entitlements. However, part-time employees work fewer hours and their entitlements are determined on a pro-rata basis.
Employment contracts are personal service contracts and the rights to render and receive services under an employment contract cannot be assigned.
The primary legislation that governs employment law in Australia at the federal level is the Fair Work Act 2009 (Cth) ("Fair Work Act"), which applies to national system employers and their employees. The common law also establishes a range of important principles that apply to the employment relationship.
The Fair Work Act includes the National Employment Standards ("NES"). The NES can be enhanced by modern awards which are statutory instruments that provide further terms and conditions. Employers and employees can also negotiate at an enterprise level to create an enterprise agreement.
Under the Fair Work Act, a transfer of business takes place if the following requirements are satisfied:
- the employment of an employee (the ‘transferring employee’) of the old employer has terminated;
- within three months after the termination, the employee becomes employed by the new employer;
- the work the employee performs for the new employer (the ‘transferring work’) is the same or substantially the same as the work they performed for the old employer; and
- at least one of the following connections exists between the old and new employers:
- an arrangement that the new employer owns or has use of some or all of the old employer’s assets that relate to the transferring work;
- the work the employee does is outsourced by the old employer to the new employer;
- the work previously outsourced is insourced; and/or
- they are associated entities within the meaning of section 50AAA of the Corporations Act 2001 (Cth).
Under the Fair Work Act, if a transfer of business takes place generally an employee's service with the old employer will count as service with the new employer. This means that service-based entitlements will be preserved, such as annual (vacation) leave and redundancy (severance) pay entitlements, and transferred across to the new employer.
However, if the new employer is not an associated entity of the old employer, the new employer may choose whether to recognize a transferring employee's previous accumulated service for annual leave or redundancy pay. If the new employer does not recognize service, the transferring employee will be entitled to redundancy pay in accordance with the NES, or any more favourable terms that are included in a modern award, enterprise agreement or contract of employment.
An employer must also comply with any consultation obligations under a relevant modern award or enterprise agreement. Modern awards and enterprise agreements contain consultation clauses. These clauses generally require an employer to consult with an employee when there is a major change in the workplace, which would include the transfer of business. While the consultation must be meaningful, and give employees the chance to provide their views, this does not remove managerial prerogative to make a final decision in relation to the workplace change.
If an employee's employment is terminated as a result of the transfer of business, that is they are not offered a role with the new employer, then they would be entitled to redundancy pay in accordance with the NES, or any more favourable terms that are included in a modern award, enterprise agreement or contract of employment.
An employee also cannot be forced to transfer to another employer and may refuse to accept an offer of employment. However, if an employee has been offered a role with the new employee on terms or conditions no less favourable than their current employment, they may not be entitled to any redundancy pay if they choose not to accept the role and their employment is terminated.
Generally no, so long as the employer remains the same. For example, if control of the employer changes by way of a share sale, and all that changes is the shareholders of the company, no rights arise for the employee as the employer will not change (despite the change in control).
However, if applicable, the employer must comply with the consultation obligations under a relevant modern award or enterprise agreement. Modern awards and enterprise agreements contain consultation clauses. These clauses generally require an employer to consult with an employee when there is a major change in the workplace.
An employer cannot unilaterally alter the terms of the employment contract (unless the contract specifically allows it to do so and even in those circumstances care would need to be taken).
An employment contract can only be varied in accordance with its terms, or with the consent of both parties. To do otherwise could result in the employee claiming that the contract has been repudiated, and bring an unfair dismissal claim (if they are under the earnings threshold or covered by a modern award or enterprise agreement), or a breach of contract claim.
Australia is not an employment-at-will jurisdiction. There are numerous statutory protections for job security. There is also a statutory regime providing remedies for "unfair" and "unlawful" dismissals. This is discussed further below.
There are statutory and common law remedies available for an employee who has been dismissed wrongfully or without cause.
Unfair dismissal:
Under section 385 of the Fair Work Act, a person has been unfairly dismissed, if the Fair Work Commission is satisfied that an employee (who is protected from unfair dismissal) has been dismissed and the dismissal:
- was harsh, unjust or unreasonable;
- was not consistent with the Small Business Fair Dismissal Code (in the case of employees of a small business which is currently businesses with less than 15 full-time (or equivalent) employees); or
- was not a case of genuine redundancy.
An employee is eligible to make an application for an unfair dismissal remedy if they have completed the minimum period of employment (6 months for large employers and 12 months for small businesses) and one of the following applies:
- they earn less than the high-income threshold (which is updated annually, and is currently $167,500 per year);
- a modern award covers their employment; or
- an enterprise agreement applies to their employment.
If the claim is successful, the Fair Work Commission may order:
- for the person to be reinstated if appropriate in the circumstances; or
- the payment of compensation (which is capped at the lesser of: the amount of remuneration received by the person, or that they were entitled to receive (whichever is higher) in the 26 weeks before the dismissal, or half the amount of the high-income threshold immediately before the dismissal).
General Protections:
The General Protections under the Fair Work Act protect employees from adverse action because of a particular prohibited reason (such as on the grounds of race, sex, religion, or pregnancy). Adverse action can include unlawful termination of an employee's employment.
An employee can make an application to the Fair Work Commission to deal with the alleged contravention of the general protection provisions. Compensation for this claim is not capped.
Breach of contract:
An employee may also seek remedies for breach of contract if the dismissal was wrongful or without cause. The employee may be awarded compensation for financial loss as a result of the breach of the employment contract. However, the employee cannot be placed in a better position than that which the employee would have been in had the contract been performed. Alternatively, the court may order the employer to perform their obligations under the contract. This is called specific performance.
Yes, there are protections for whistleblowers in Australia which apply to both private and public sector entities.
In terms of the private sector, the Corporations Act 2001 (Cth) ("Corporations Act") and Taxation Administration Act 1953 (Cth), provide a corporate whistleblowing scheme and tax affairs whistleblowing scheme. The laws are designed to discourage white-collar crime and provide a protection regime for corporate, financial and credit sectors. These laws are applicable to any disclosure made after 1 July 2019.
Under the Corporations Act, public companies and large proprietary companies were required to have a compliant whistleblowing policy from 1 January 2020 (or otherwise are required to have one within 6 months following the end of the first financial year that a company becomes a "large proprietary company") that addresses a range of mandatory criteria set out in the legislation and to make that policy available to officers and employees. Failure to do so is an offense.
The types of matters that can be disclosed include matters that breach a range of Federal laws, as well as any “misconduct or improper state of affairs or circumstances" of the company. Personal work-related grievances are excluded from the scope, except where they relate to retaliation for making a prior whistleblowing report or involve 'significant implications' for the company.
Where a whistleblower satisfies the relevant criteria, they will not be subject to any civil, criminal or administrative liability for making a disclosure.
There are also confidentiality provisions that will make it an offense to disclose the identity of a discloser, including information that is likely to lead to the identification of the discloser, without the consent of the discloser. There are limited exceptions to this prohibition. Similarly, whistleblowers are protected from dismissal, injury or prejudice to an employee in their employment, as well as discrimination and a range of other actions because they have brought a whistleblowing complaint.
At common law, employees do not have a right of privacy in the workplace and there is no authority that extends an employer's implied duties to cover employee privacy in the workplace.
Generally, the remedies available to an employee for breach of privacy are outside the contract of employment. For example, the law of defamation and an action for breach of confidence may provide some limited protection against the distribution of private information about an employee to third parties.
The Privacy Act 1988 (Cth) imposes privacy obligations on both public and private sector employers in relation to the collection, use and disclosure of personal information. However, under the Act, there is an exemption for what is known as "employee records" which covers that information generally contained in an employee's personnel file.
This means that employers are not required to comply with the obligations in the Privacy Act in relation to the storage and use of employee records. (We note that this exception is currently being considered and its continued application is subject to change). In the interim, in terms of best practice, the Office of the Australian Information Commission recommends that employers:
- accurately record the information they collect, keep it up-to-date and store it securely;
- limit the use and disclosure of employee health information to what is necessary to manage their legitimate purpose; and
- regularly review whether they still need to retain this information for that purpose.
In New South Wales, some additional privacy protections are afforded to employees. Under the Workplace Surveillance Act 2005 (NSW) employees must be notified in advance of camera, computer and tracking surveillance. However, covert surveillance may be authorized by the court where particular employees are involved in unlawful activities in the workplace.
Under the employment contract, employers may enforce strict codes relating to the use of the Internet, email and social media. These codes may allow access to and the monitoring of emails and online conduct by employees.
There are two types of anti-discrimination law: anti-discrimination legislation and the General Protections provisions contained in the Fair Work Act.
Anti-discrimination statutes prohibit discrimination in a range of areas, including in the workplace, and on the grounds of a number of attributes such as age, race, gender, pregnancy, marital status, and citizenship amongst others. The Fair Work Act also prohibits discrimination on a number of grounds.
Anti-discriminations Acts:
There is a combination of federal, State and Territory anti-discrimination or equal-opportunity legislation. There are four substantive acts at the federal level that apply to employees:
- Racial Discrimination Act 1975 (Cth);
- Sex Discrimination Act 1984 (Cth);
- Disability Discrimination Act 1992 (Cth); and
- Age Discrimination Act 2004 (Cth).
Under this regulatory framework, specific protected attributes are listed and discrimination on the basis of those attributes is prohibited in a range of fields, including the workplace.
General Protections:
The General Protections under the Fair Work Act protect employees from adverse action because of a particular proscribed reason. The principal protections have been divided into:
- protections relating to workplace rights;
- engaging in industrial activities;
- other protections including protection from discrimination; and
- sham arrangements.
Under the Fair Work Act employees are entitled to certain minimum statutory rights, including annual (vacation) leave, personal (medical) leave and parental leave.
The NES outlines the minimum leave entitlements for employees. An award, enterprise agreement or employment contract can provide for other (more favorable) leave entitlements but it cannot be less than the entitlements under the NES.
Annual leave:
Full-time and part-time employees get 4 weeks of paid annual leave, based on their ordinary hours of work. Shift workers may get up to 5 weeks of annual leave per year. An employee's entitlement to annual leave accrues progressively and accumulates from year to year.
Personal leave:
Sick and carer's leave enables an employee to take time off to help them deal with personal illness, caring responsibilities and family emergencies. Employees are entitled to up to 10 days of paid personal leave per annum. An employee's entitlement to personal/carer's leave accrues progressively and accumulates from year to year.
Parental leave:
Employees are entitled to up to 12 months of unpaid parental leave and may request an additional 12 months of leave (up to 24 months in total) unless their partner has already taken 12 months of leave. Parental leave entitlements include:
- maternity leave;
- paternity and partner leave;
- adoption leave;
- special maternity leave; and
- a safe job or no safe job leave.
While the above entitlements have not changed in the last 12 months, there have been recent amendments to the NES in relation to parental leave. The changes mean that when an employee makes a request for an extension of unpaid parental leave, their employer now has an obligation to discuss the request with them. If the employer refuses a request, they will need to provide reasons in writing. They will also need to consider and inform the employee in writing if there is any other period of extension they would be willing to agree to.
The employer can refuse the request on reasonable business grounds, which include, amongst a number of other reasons, if the period will be too costly for the employer or the extension will result in a significant loss in efficiency or productivity.
Unresolved disputes about extension requests can now be processed by the Fair Work Commission if an agreement cannot be reached.
During the employment relationship, employees owe a duty of fidelity to their employer which includes refraining from business activities that compete with the employer. This obligation may extend beyond the termination of the employment.
The employment contract may also include express terms whereby the employee undertakes to refrain from certain activities for a period of time after the employment contract has ended. Some of the common restrictions, known as a restraint, include:
- geographical limitations on where the former employee may work;
- a time limit of employment of a similar nature;
- the non-disclosure to others of certain information and know-how acquired during the employment; and/or
- the non-solicitation of the employer's customers or employees.
A post-employment restraint is not enforceable in Australia unless:
- it is not more restrictive than necessary to protect the employer's legitimate interests;
- it is reasonable in the interest of the party to restrain; and
- it is in the public interest.
A legitimate interest may include trade secrets, confidential information, customer connections or intellectual property. However, an employer is not entitled to freedom from competition in and of itself and without more a restraint clause would generally be invalid.
Whether the restraint is reasonably necessary for the protection of the employer's legitimate interests will depend on:
- the seniority and knowledge of the employee subject to the restraint;
- the length of time of the restraint;
- the geographical areas in which the restraint operations;
- the restrictions that are imposed on the employee;
- the size and nature of the industry;
- the effect of the restraint on the employee’s ability to earn a wage;
- the bargaining power of the contracting parties; and
- the effect on the business should the restraint be unenforceable.
No - an employee cannot be terminated for refusing to sign a restraint of trade clause. As discussed above, this would likely amount to a variation in the contract and an employer cannot unilaterally vary a contract of employment. If the employer terminates the employment of the employee for not signing a restraint of trade clause, depending on the circumstances, this could result in a breach of the contract. As discussed above, the employee may seek remedies for breach of contract.
When entering into an employment contract, no specific consideration needs to be allocated to the restraint. However, if varying a contract to include a restraint, an employer needs to provide valuable consideration, which is often done by way of a pay increase, and which can assist in the enforceability of the restraint.
Under section 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth), employers are required to make superannuation contributions on behalf of employees.
Under the superannuation guarantee scheme, almost all employers are required to make mandatory superannuation contributions. These contributions are usually based on the prescribed minimum percentage of the employee's ordinary time earnings, which is 10% for 2021/2022 but can be higher in some modern awards or enterprise agreements.
Employers may also make superannuation contributions above this mandatory minimum percentage.
Employee benefits are mandated under the NES in the Fair Work Act and additional benefits can be provided under modern awards and enterprise agreements.
The NES outlines the following minimum entitlements for employees:
- maximum weekly hours;
- requests for flexible working arrangements;
- offers and requests to convert from casual to permanent employment;
- parental leave and related entitlements;
- annual leave;
- personal/carer's leave, compassionate leave and paid family and domestic violence leave;
- community service leave;
- long service leave;
- public holidays;
- superannuation contributions;
- notice of termination and redundancy pay; and
- Fair Work Information Statement and Casual Employment Information Statement.
Modern awards apply to industries and occupations and they provide mandatory terms and conditions in addition to the NES. Additional benefits are also provided for under enterprise agreements, however, the enterprise agreement must pass the better-off overall test. That being, the employee must be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
Compulsory retirement ages in employment are prohibited in several Australian jurisdictions. Except in certain areas of public sector employment, there is no legislative compulsory retirement age for Australian employees. As a result, the retirement age of an employee is the age fixed by the employee’s employer, however, this age often coincides with the age at which the social security age pension is payable. However, there are a range of occupations that require licensing and re-qualification which may serve as a barrier to mature-age employees.
The Age Pension age is 67 years for people born from 1 January 1957 onwards. To be eligible for a pension, the person must be pension age and meet residence rules, an income test and an assets test.
The obligation to pay into superannuation applies as long as the person remains employed, regardless of age.
Employers will only be able to require their employees to be vaccinated in circumstances where either:
- a specific law requires an employee to be vaccinated, i.e. a state or territory public health order and that order is itself lawful;
- the requirement is permitted by an enterprise agreement, other registered agreement or employment contract (noting employers should consider whether the term complies with anti-discrimination laws); or
- it would be lawful and reasonable for an employer to give their employees a direction to be vaccinated.
The legality and reasonableness of mandating the vaccine is still very much an evolving area in the context of COVID-19 in Australia. It would therefore be appropriate for employers to make case-by-case determinations, and if considering implementing a direction or border policy to first undertake a risk assessment.
For example, while a direction to mandate vaccinations could be lawful under general work, health and safety legislation, which places a general duty on employers to ensure, so far as is reasonably practicable, the health and safety of its workers, employers will also need to consider whether or not the decision is reasonable.
Furthermore, even it was found to be a "lawful and reasonable" direction, there may be some individuals who, for certain health reasons or any underlying vulnerabilities, cannot/should not have the vaccine. It may be discriminatory if employers introduce a blanket policy requiring all employees to have the vaccine without taking those individual circumstances into consideration.
Employers will also need to take into consideration privacy concerns and compliance with privacy legislation in regard to employees' health information where they are requiring or receiving information from employees in regard to their vaccination status.
An employee cannot refuse an employer's reasonable and lawful direction to perform work, including to perform work at the workplace. However, in some circumstances, employees may be able to refuse to attend the workplace because of a reasonable concern for their health and safety or another legitimate reason. If an employee refuses to comply with an employer's reasonable and lawful direction to work at their usual workplace, the employer may take disciplinary action against them, which may include termination of employment.
However, in deciding on the appropriate disciplinary action to take, employers must comply with the general protections and unfair dismissal obligations under the Fair Work Act. Given the risk of unfair dismissal or discrimination claims, care should be taken before any disciplinary action is taken in regard to a refusal to work at the workplace.
Employers should ensure they consult with their workforce, and take steps to understand any particular reluctance to return to the workplace. This should assist in managing a return to the workplace.