11 Things You Need to Know About Australian Employment and Labor Laws

If you’re hiring in Australia, you have to adhere to all the minimum conditions of employment in the Fair Work Act 2009 (and its many recent amendments), which governs employment relationships. But the federal level is only the start of your compliance work.

The Commonwealth also has “modern awards” that set different employment standards for different industries, business-specific enterprise bargaining agreements (EBA), and easy-to-miss distinctions in labor laws among its six states and two territories.

So how do you keep track of the most important parts of Australian employment law? Consider this your starter guide, giving you a bird’s eye view of the most important regulations to keep in mind.

1. Australia has more than 100 modern awards that set industry-specific working conditions

The National Employment Standards (NES) set the minimum working conditions for all Australia’s public and private sector employees. But workers may have different wage, leave, and overtime employment rights depending on their “modern award,” a legal document outlining labor standards across different job categories. For instance, there are different awards for retail industry and legal services employees.

You can use the Australian government’s Pay and Conditions Tool to find the award requirements across industries.

2. Enterprise agreements are negotiated through collective bargaining

In addition to national and industry-specific workplace laws, individual Australian businesses may have their own workplace relations requirements set by enterprise agreements. Through collective bargaining, these agreements set the terms of an employment relationship and supersede modern award requirements. Australia’s Fair Work Commission (FWC) will review enterprise agreements to ensure it doesn’t have any unlawful provisions.

According to the Australian Bureau of Statistics, 12.5% of employees are trade union members.

3. At-will employment isn’t recognized

In Australia, you can only terminate an employee without notice in case of serious misconduct, which is defined in the Fair Work Act as willfully risky behavior that negatively impacts the business or threatens someone’s safety (examples include theft, fraud, and assault). Employers can only dismiss employees for poor performance after first trying to improve the situation through less extreme measures, like warnings and extra training.

4. Australian courts fine companies up to AUD 82,500 for misclassifying employees

Employees work exclusively under the direct supervision of an employer for an indefinite time period and are entitled to benefits. Contractors are self-employed, work autonomously for a fixed time-period, and are generally not entitled to benefits. Conflating these worker categories can result in misclassification penalties.

Fines start at AUD 16,500 for individuals and AUD 82,500 for companies. But additional costs can include a failure-to-withhold taxes penalty, backpay, and retroactive benefits administration (with interest) that can cost a company much more. An airport shuttle service had to pay AUD 334,888 in penalties in 2013.

5. Australia has strong anti-discrimination protections

Employers are outlawed from taking adverse action against an employee on the basis of any protected attributes such as race, sex, sexual orientation, and age. Adverse actions can include dismissing, injuring, or punishing an employee or prospective employee. Anti-discrimination laws also prohibit employers from threatening or organizing any sort of workplace discrimination.

The Australian Human Rights Commission investigates anti-discrimination complaints throughout the commonwealth.

6. Some employees can request flexible working arrangements

If they’ve worked for the same employer for at least a year, qualifying employees can request to modify their work schedules. To qualify, employees have to be the parent of a school-aged child, care for a sick or elderly loved one, have a disability, be aged 55 or older, be experiencing domestic violence, or be caring for a loved one experiencing domestic violence.

7. If you fail to offer benefits, you’ll be hit with fines, penalties, and legal consequences

Australian employees are offered 11 minimum benefits under the NES, including maximum weekly hours, public holidays, and different types of paid leave entitlements. Employees are also entitled to superannuation payments (Australia’s pension system). Employers who fail to offer this “super guarantee” can be charged penalties up to 200% of what they were supposed to withhold.

8. Non-disclosure agreements (NDAs) are legally binding in Australia—with restrictions

NDAs can protect a company’s proprietary information such as trade secrets, personal information of clients, and business plans, so long as they’re reasonable and specific. They’re also prohibited from covering up criminal behavior; Australian authorities have recently joined an international push to crack down on NDAs used to cover sexual harassment.

NDAs should clearly indicate what the confidential information is, who can and can’t share it, and establish terms for how long it lasts. It can be included as a confidentiality clause in a contract of employment.

9. Australia has new protections against sexual harassment in the workplace

Australia’s Fair Work Act was amended in March of 2023 to include new provisions that place a bigger onus on employers to be proactive about responding to sexual harassment. The law also authorizes the FWC to respond to workplace sexual harassment claims through mediation, conciliation, arbitration, and other means of dispute resolution. It applies to all employees including independent contractors, students, volunteers, and business owners.

10. Employers are responsible for workplace health and safety standards

Safe Work Australia is a government agency that develops workplace health and safety standards for the Commonwealth as a whole and for its individual states and territories. Employers who violate these work health requirements and fail to provide a safe work environment can face penalties of up to AUD 30,000 per infraction.

11. You need to safeguard employees’ personal information

Australia’s Privacy Act 1988 sets requirements for responsibly collecting, storing, and using sensitive personal information. It applies to businesses with a turnover exceeding AUD 3 million, private health services, Australian Government agencies, and some small businesses. The Privacy Act gives employees rights to know why their personal information is being collected and who will see it. They can also freely access the collected personal information at any time.

Workplaces required to comply with this law need to create their own privacy policies. Sensitive personal information workplaces should seek to protect includes (but isn’t limited to) any documentation about an employee’s health, criminal record, trade union partnership, and tax file number.

Frequently asked questions about Australian labor laws

What is the minimum wage in Australia?

Australia's national hourly minimum wage for employees aged 21 and older is AUD 23.23 (2023). Casual employees, who often work irregular hours and don't receive the same benefits as permanent workers, get an additional 25% as compensation for not having an entitlement to personal and vacation leave.

If an employee is covered by a Modern Award, their minimum wage is specified in that award and is typically dependent on their particular job level and job type. While the national minimum wage is accurate as of July 2023, it’s reviewed by the FWC annually to adjust for inflation.

What are the overtime laws in Australia?

The standard Australian workweek is 38 hours. Employers can only ask employees for more hours of work than that when reasonable, otherwise employees can refuse the request.

Overtime rates, as well as when they apply, vary across industries depending on which Modern Award applies. Australia has a Pay and Conditions Tool that calculates the unique overtime rates for all of its job categories. Some Modern Awards allow workers to receive paid time off instead of overtime pay.

If that sounds tricky to monitor, Rippling EOR will automatically track hours and give your Australian employees the correct overtime rate—no matter their state or territory.

What are the required benefits in Australia?

All full-time Australian employees are entitled to the following statutory benefits:

• Superannuation
• Paid vacation (also known as holiday pay or annual leave)
• Workers’ compensation
• Public holidays
• Personal leave (which can be used as sick or carers leave)
• Parental leave (12 months unpaid)
• Long service leave (in eight jurisdictions)
• Family and Domestic Violence Leave
• Compassionate Leave

The super guarantee rate Australian employers must provide is currently 11% of a worker’s salary (as of May 2023). It’s set to increase by 0.5% a year until it hits 12% in 2025.

Long service leave requirements vary depending on an employee’s jurisdiction and their years of continuous service, as shown in the table below:

All Australian workers are covered by government health insurance plans, and employers have the option of offering supplementary coverage via private providers.

For more information on mandatory benefits in Australia, read our complete guide.

How do I terminate employees in Australia?

While terminating employees might be far from your mind, it’s important to be aware of Australia’s termination laws before building out your team. See the breakdown of mandatory notice periods and termination pay for Australian employees in our guide.

At-will employment isn’t recognized in Australia, and there are ways an employee can be involuntarily terminated:

• Misconduct: Australian employees can be involuntarily dismissed due to breaches of conduct. Lesser offenses, like showing up to work late or missing a deadline once, require a more lenient disciplinary procedure. Severe offenses, like theft, fraud, or assault, can result in summary dismissal, meaning immediate termination of employment without a notice period of pay in lieu of notice.
• Performance: Employers can dismiss Australian employees for unsatisfactory performance, but only after first warning them of the issue and providing attempts to fix the situation, like offering training or reiterating job expectations.
• Redundancy: If a job no longer needs to be performed because of new technology, insolvency, a business slowdown, or some other reason outside an employee’s control, that employee can be terminated. An employer must be able to provide proof that the it is a genuine redundancy or face significant fines.
• Probation: Employers can dismiss an employee during their first 6 months of employment without the need for a performance plan if the employee is deemed to be unsuitable for the role. Care should be taken to ensure that anti-discrimination laws are not breached if terminating during the probation period.

Fired employees can file an unfair dismissal claim and vie for reinstatement when an employer fires an employee in a manner that is harsh, unjust, or unreasonable.

Unfair dismissal laws come into effect after an employee has completed 6 months of employment.

Australian employees are entitled to a notice period, meaning they’re given advance written notice of the day they’ll be dismissed, or paid out at their full pay rate throughout their notice period.

Minimum notice periods vary depending on an employee’s length of service, as shown in the table below.

Employees dismissed due to a redundancy are entitled to redundancy pay, equal to their base rate of pay for a certain amount of weeks after their dismissal. The weeks’ worth of redundancy pay is determined based on the length of an employee’s tenure. For instance, employees who’ve worked with the company for one year get four weeks’ redundancy pay, while those who’ve worked for up to 10 years get 16 weeks.

Employers must pay out annual leave, and sometimes long service leave, on all terminations. For the brass tacks on Australian termination requirements—including notice periods and wrongful dismissal claims—consult our guide.

Hire and onboard Australian employees with Rippling

If you're hiring employees, independent contractors, or remote workers in Australia, you need Rippling.

Rippling allows you to manage HR, IT, and Finance in one unified system. We make it easy to onboard, manage, and pay employees and contractors around the world—in a single system that helps keep you compliant with local employment laws and regulations.

Rippling and its affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.