The Fair Work Act and Legislative Framework Made Simple

blog May 24, 2024

Understanding the Legislation as a Small Business

For many business owners who find themselves hiring staff and building a team, being compliant and doing things ‘right’ can be of real concern. It can feel overwhelming and like an extra layer of complexity you hadn’t considered when setting out on your business journey.

Understanding the entire ecosystem that is the industrial relations framework in Australia might really assist in demystifying and simplifying the complex legislative environment that underpins the employment relationship.

The Fair Work Act

At the highest level the key piece of legislation is called The Fair Work Act 2009, and this is the core which underpins the employer / employee relationship within Australia. The Fair Work Act, often referred to as simply The Act covers almost all employees around Australia.

In some States and Territories certain employees, such as Local and State Government Employees are not covered by the Act.

Additionally, in very select circumstances in some States Sole Traders may not be covered, but other than that if it’s a Pty Ltd Company, and in most cases Sole Traders and Partnerships are covered by the Act.

 

The Fair Work Act provides a framework for the terms and conditions of employment relationships and sets out the rights and responsibilities for both employers and employees.

 

The NES (National Employment Standards)

Within the Fair Work Act we also have a set of minimum employment terms known as The National Employment Standards (NES).

 

These are 12 non-negotiable minimum terms of employment which in effect provide a safety net of minimum employment conditions for all employees covered by The Act. The NES apply whether or not the employees are covered by an Award or registered Agreement.

 

Importantly, the NES is being fairly regularly expanded, so it’s important to ensure you are across any changes that occur to these minimum employment conditions. For example, since the original NES were introduced, it has been expanded to include:

  • Rules around casual conversion for employees who are employed on a regular and systematic basis to allow them to become permanent employees, ensuring their job security;
  • Additional allowances for a wider range of employees to access flexible work arrangements;
  • The addition of Paid Family and Domestic Violence Leave;
  • The addition of the Casual Employment Information Statement;
  • And other additional amendments.

 

Modern Awards

The next layer of legislation is what is referred to as the Modern Awards System. There are over 120 Modern Awards which apply to most employees. Originally the Awards were designed to replace the old State based Award systems and were designed to simplify and Nationalise the Award framework. Most employers would concur that ‘simple’ is not the term they would use to describe the Award system, or the interpretation of these very complex pieces of legislation.

 

Determining which Award applies can be a little tricky, and very often an employer will have more than one Award active within their organisation, with different employees being covered by different Awards – meaning variations in entitlements, hours, allowances and aa range of other factors.

 

Enterprise Agreements

Some businesses will also elect to, with agreement from their employees, create Agreements, referred to as Enterprise Agreements or Enterprise Bargaining Agreements. These Agreements must be approved by The Fair Work Commission and will usually involve a negotiation, voting and approval process.

 

Employers decide to create Agreements often to simplify the complexity of having 3, 4 or 5 different Modern Awards operational within their workplace, and to create consistent terms of employment for all employees.

 

Award and Agreement Free Employees

Almost all employees who are covered by the Fair Work Act will be covered by a Modern Award or Agreement, however there are a few exceptions, employees who due to the nature of their role, are considered to be Award Free. This group of employees is gradually becoming smaller, with broad scope Awards, like the Miscellaneous Award, being expanded to cover more employees.

 

Compliance Enforcement

There are various ‘bodies’ who are responsible for different aspects of the legislative framework. The two key ones you would need to be familiar with are The Fair Work Ombudsman and Fair Work Commission.

 

The Fair Work Ombudsman is responsible for enforcing compliance with the Fair Work Act and related legislation. They provide advice, guidance and educate employers and employees. Their website is www.fairwork.gov.au – if you call through to the hotline to seek advice or are looking up your Award, this is all The Fair Work Ombudsman. They also are the ones who can seek penalties for breaches of the legislation, issue on the spot fines and alike.

 

Conversely, The Fair Work Commission is the independent national workforce relations tribunal. They help employers and employees bargain in good faith to create Enterprise Agreements, they deal with applications for unfair dismissal and other issues such as bullying and general protections.

 

The Commission is responsible for approving, making, varying and terminated Enterprise Agreements, make workplace determinations and assist with mediation and conciliation to resolve workplace disputes. The Commissions website is www.fwc.gov.au

 

In addition, with recent amendments to the legislation via the ‘Closing the Loopholes Act’ protections against discrimination are expanding, and this may mean that the Australian Human Rights Commission may be a involved in disputes involving discrimination in the workplace.

An Invitation
I do hope that has helped demystify some of the complexity of the Industrial Relations Legislative framework, but I appreciate from time to time you may have questions are need some clarification. If you’d like to connect with me, as well as other business owners, leaders and managers in a group focused on all things HR, people and team management we’d love for you to join us over on our free Facebook Group here:
https://www.facebook.com/groups/hrsupportaustralia

 

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