In Short
- Understanding employment laws is critical for compliance and avoiding costly disputes.
- Clear employment contracts set expectations and protect your business.
- Regular reviews of employee policies help keep up with changes in the law.
Tips for Businesses
Ensure all employment contracts are up to date and tailored to your business needs. Regularly review your workplace policies to reflect legal changes and best practices. Clear communication and well-documented procedures can help prevent disputes with employees.
Table of Contents
- Understand the Employment Type
- Consider Award Coverage
- Know the Employee’s Leave Entitlements
- Provide an Employment Contract
- Prepare Core Policies
- Review the Employee’s Performance
- Prevent Discrimination and Victimisation
- Consider Any Administrative Steps
- Employment Essentials Checklist
- Frequently Asked Questions
Are you a business owner? This article contains a detailed checklist on employment essentials to help you build your employment compliance capacity.
Understand the Employment Type
There are two key types of employment – permanent employees and casual employees.
Permanent Employee
A permanent employee works regular and systematic work hours and has a minimum number of guaranteed weekly hours of work. For example, a full time-employee is guaranteed 38 hours of work per week, and a part-time employee works anything less than 38 hours per week.
A permanent employee is entitled to paid leave, redundancy payments and notice of termination.
A permanent employee can also be employed for a maximum term, that is, they are employed until a defined end date. Upon the specified end date, the employment automatically terminates without either party providing notice to the other.
Casual Employee
Casual employees are engaged on an ad-hoc and irregular basis with no ongoing expectation of work. They are paid a 25% casual loading on their rate of pay to compensate them for not receiving permanent employment entitlements, like paid sick leave or annual leave.
You must offer permanent employment to a casual employee who has 12 months of continuous service and worked a regular pattern of hours on an ongoing basis in the last 6 months of that period (unless an exception applies). A casual employee may also request permanent employment (subject to certain conditions).
Consider Award Coverage
On top of the minimum terms and conditions outlined in the Fair Work Act 2009 (Cth) (the Act), modern awards provide additional entitlements regarding employee pay and conditions. Therefore, understanding which of the 121 awards (if any) covers your employees is a critical step in ensuring legislative compliance.
If an award covers your employee, you cannot undercut the award even by agreement. Awards include (without limitation) terms relating to:
- minimum rates of pay;
- hours of work, breaks and rostering;
- allowances;
- penalty and overtime rates;
- taking leave; and
- major workplace change.
If no award (or enterprise agreement) covers your employee, the minimum terms and conditions in the Act apply. They are the National Employment Standards.
Continue reading this article below the formKnow the Employee’s Leave Entitlements
A permanent full-time employee is entitled to the following leave entitlements.
| Type of Leave | Entitlements |
| Annual leave and personal/carer’s leave |
20 days of paid annual leave and 10 days of paid personal/carer’s leave (for personal injury/illness or to provide care to an immediate family member) for each year of service accrued progressively during a year of service and accumulating from year to year. You can request evidence for periods during which the employee takes personal/carer’s leave. |
| Compassionate leave | 2 days of paid compassionate leave on each occasion when an illness, injury or unexpected emergency affects an immediate family member or the family member dies. |
| Parental leave | 12 months of unpaid parental leave (subject to conditions including whether the employee has completed 12 months of continuous service). |
A part-time employee is entitled to these leave entitlements on a pro-rata basis.
A permanent employee and a casual employee is entitled to:
- 2 days unpaid carer’s leave;
- 2 days unpaid compassionate leave per occasion;
- 5 days unpaid family and domestic violence leave (in a 12-month period);
- unpaid community service leave.
Provide an Employment Contract
Employment contracts provide certainty for both parties. Key employment contract terms are outlined in the table below.
| Key Term | Explanation |
| Employment type | Consider whether the employment is casual or permanent, full-time or part-time, or maximum term. |
| Ordinary hours of work per week (for a permanent employee) | An applicable award may also require you to specify the weekly pattern of work or whether you will average the hours over a long period of time. |
| Hourly rate of pay or annual salary (and casual loading for a casual employee) | If your employee is covered by an award but paid more than the minimum rate of pay, it is important to have an offset clause. This clause should confirm the rate of pay or salary that compensates them for all hours worked and any award entitlements (such as allowances, overtime and penalty rates). You must ensure you adequately compensate the employee following the NES or award. |
| Confidentiality and intellectual property | The contract should define confidential information and prohibit its disclosure. It should also confirm that all intellectual property created in connection with the employment is assigned to the business. |
| Notice and probation period (for a permanent employee) | If the parties do not agree to a notice period, this can create uncertainty and give rise to disputes. On that basis, the contract should specify a notice period that is in excess of the minimum periods under the NES or an applicable award. You may wish to have a shorter notice period during the probationary period. |
| Restraints | Without restraints in the contract, you cannot prohibit the employee from working for a competitor or soliciting your clients, suppliers or workers after their employment is terminated. Even if the contract includes restraints, they must be enforceable at the time of the conduct. |
Prepare Core Policies
Employers are liable for the acts and omissions of their employees. To assist with discharging your obligations and reduce your liability, you should prepare:
- a work health and safety policy which confirms your obligations (to eliminate or reduce the risk to your employees’ health and safety, so far as is reasonably practicable) and those of your employees;
- an anti-bullying, discrimination and harassment policy which defines and prohibits such conduct; and
- an IT policy that directs how employees use your IT systems.
Work Health and Safety (WHS)
Every business should have a policy that clearly outlines how it meets its obligations under the Work Health and Safety Act 2011 (Cth). WHS policies serve as a valuable tool to effectively and consistently communicate operational matters to employees.
If an employee is injured and claims the employer is liable for failing to comply with their WHS obligations, an employer can be assisted in defending such a claim where it has a consistently administered WHS policy in place. It will be important that an employer can demonstrate they took all reasonable steps to prevent the injury from occurring. This includes providing and communicating directions in a WHS policy.
Common WHS policies will incorporate clauses relating to:
- a company’s, managers’ and workers’ obligations;
- working from home safely;
- consultation commitments; and
- drugs and alcohol.
Anti-Discrimination, Harassment and Bullying
Implementing an ADHB policy can help a business comply with its WHS and anti-discrimination obligations. A good ADHB policy should set out:
- who it covers;
- that a breach may result in disciplinary action, including termination;
- your obligations as the employer;
- the meaning of discrimination, harassment and bullying;
- a direction against discrimination, harassment and bullying; and
- a complaints procedure.
IT Policies
An IT policy typically sets out:
- who it covers;
- that a breach may result in disciplinary action, including termination;
- when workers can use emails and social media (this excludes emailing or use of social media without any connection to the employment);
- prohibited uses (like using IT to bully, harass and discriminate);
- ownership of intellectual property (IP), including email and social media content; and
- workplace surveillance.
Review the Employee’s Performance
Reviewing and addressing an employees’ performance early on can reduce the likelihood of a claim, such as an unfair dismissal claim. It can also put you in a better position to defend a claim if it arises.
If the employee is covered by the unfair dismissal jurisdiction (including if they have completed 6 months of continuous service or 12 months for a small business employer as well as some other criteria), you should:
- review the employee’s performance;
- alert them if their performance is poor;
- set targets for improvement; and
- notify them that failure to meet the targets may result in termination.
If the employee is not covered by the unfair dismissal jurisdiction, it is nonetheless useful to document and alert the employee to poor performance from a commercial perspective and also to assist with defending a general protections claim (detailed below).
Prevent Discrimination and Victimisation
If an employee believes that they have been discriminated against or victimised, they may bring a general protections claim against your business. An employee can bring this claim if they can demonstrate that you, or someone in your business, took adverse action against them (such as dismissal) because they:
- exercised a workplace right;
- engaged (or not engaged) in industrial activity; or
- had a protected attribute (e.g. race, sex, carer’s responsibilities, health, etc.).
Additionally, an employee may have another protected ground to make a claim against you. Importantly, they may also make a discrimination claim under state/territory or federal legislation.
Consider Any Administrative Steps
Before a new employee begins work, there are some administrative steps to follow:
- register for pay-as-you-go (PAYG) withholding;
- set up payroll processes;
- take out workers compensation insurance; and
- make superannuation contributions on behalf of the employee.
In relation to the employee, you should also:
- collect the employee’s superannuation and tax forms;
- provide a Fair Work Information Statement; and
- provide a Casual Employment Information Statement to casual employees.
Employment Essentials Checklist
There are a few employment essentials to consider and understand if you are wishing to build your employment compliance capacity. As an employer, you must:
- understand the employment type;
- consider award coverage;
- know the employee’s leave entitlements;
- provide an employment contract;
- prepare core policies;
- review the employee’s performance;
- take care not to discriminate or victimise; and
- consider any administrative steps.
For more information regarding your employment obligations, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.
Frequently Asked Questions
Yes, casual employees can request or be offered permanent employment after 12 months of continuous service if they have worked a regular pattern of hours during the last 6 months.
Permanent full-time employees are entitled to 20 days of paid annual leave, 10 days of paid personal/carer’s leave, and unpaid leave such as 2 days of carer’s leave and 2 days of compassionate leave.
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