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HR Glossary

Q: Who does the Fair Work Act apply to?

The Fair Work Act covers most employees and employers in Australia under what's called the national workplace relations system. This includes all employees of national system employers - constitutional corporations (most companies, including Pty Ltd businesses) and Commonwealth public sector workers, plus employees in states that have referred their workplace powers to the Commonwealth (every state except Western Australia). Unincorporated businesses in WA fall under the state system instead. If you run a Pty Ltd anywhere in Australia, the Fair Work Act applies to you.

Q: What does the Fair Work Act actually cover?

The Act covers the full workplace relations framework - minimum entitlements (NES), industry minimums (Modern Awards), enterprise bargaining, unfair dismissal, general protections, anti-discrimination at work, right of entry for union officials, registered organisation rules, and industrial action. It's the umbrella law sitting above your contract, your award, and your workplace policies.

Q: What happens if I breach the Fair Work Act?

It depends on the breach. Minor compliance issues can result in a Fair Work Ombudsman compliance notice or formal caution. More serious breaches - underpayment, sham contracting, retaliation for workplace rights - can result in civil penalty proceedings with fines into the hundreds of thousands of dollars per breach, plus orders to back-pay. Wage theft is now a criminal offence in Australia. Reputational consequences often hit harder than the financial ones, particularly for small businesses operating in tight industries.

Q: How does the Fair Work Act interact with Modern Awards?

Modern Awards sit underneath the Fair Work Act. The Act creates and authorises the awards. Each award sets the minimum pay rates, allowances, penalty rates, overtime rules, and ordinary hours arrangements for a specific industry or occupation. Awards must comply with the Act and the NES - they can't give you less than the NES, but they can give more. Most employees are covered by exactly one award.

Q: Is there a difference between federal and state employment law in Australia?

Yes, but the federal Fair Work Act covers most employment relationships. State laws cover specific carve-outs - including most Western Australian unincorporated businesses, some state public sector employees, and certain workplace health and safety, workers compensation, and long service leave matters (these vary by state). Anti-discrimination law operates at both federal and state level. For most small business owners running a Pty Ltd, the Fair Work Act is the main law that applies.

What Is The Fair Work Act?

The Fair Work Act 2009 is Australia's primary federal workplace relations law. It sets the minimum standards, rights and obligations that govern most employment relationships in Australia - including the National Employment Standards, the Modern Award system, unfair dismissal protections, and general protections. If you employ staff in Australia, in most, but not all cases, the Fair Work Act applies to you.

What The Fair Work Act Actually Means

The Fair Work Act 2009 is the federal legislation that governs workplace relations in Australia. It replaced WorkChoices in 2009 and is now the umbrella law sitting above any other HR laws that apply to most Australian businesses.

The Act established the National Employment Standards, which are the minimum entitlements that apply to all employees who are covered by The Fair Work Act.

At the next layer down is the Modern Award system that sets industry and occupation specific minimum pay and conditions.

The Fair Work Act and associated legislation also sets the rules for enterprise bargaining.

The Act gives employees protection against adverse action for exercising workplace rights (general protections). It establishes the right to challenge unfair dismissals, and it covers right of entry for union officials, registered organisations rules, and industrial action.

There are two bodies who both enforce and interpret The Fair Work Act. The Fair Work Ombudsman is the regulator - they investigate complaints, issue compliance notices, and pursue civil penalties. This is who you contact if you have a question or a problem in most instances.

The Fair Work Commission is the workplace tribunal - they hear unfair dismissal claims, general protections claims, and approve enterprise agreements. They reside over major cases including the National Minimum Wage Review which happens every year, and any Award reviews which take place.

Most employees in Australia sit under the Fair Work Act, in what's called the national system. A small number of state-based public sector workers and certain Western Australian unincorporated businesses fall under state systems instead.

For almost every Pty Ltd small business in Australia, the Fair Work Act is the law that applies.

What this means if you employ staff in Australia

You don't need to read the Fair Work Act. You need to know what it requires of you as an employer.

The Act sits at the top of a hierarchy.

Underneath it sits the NES, then your relevant Modern Award (or registered agreement), then your employment contract, then your workplace policies.

Your employment contracts can offer more than the Act, NES and award require. It can never offer less. That's the rule.

If you employ staff and you don't know which award covers your industry, or the occupation of the role, you're already in difficult territory.

The Act doesn't have an "I didn't know" defence. Ignorance is not a strategy. The Fair Work Ombudsman can investigate, order back-pay, and issue compliance notices. Civil penalties for serious breaches can run into hundreds of thousands of dollars per breach.

Wage theft is now a criminal offence under recent reforms. The four most common owner mistakes I see:

Assuming an annual salary covers everything. It doesn't, unless the salary genuinely equals or exceeds what the award would have paid in wages plus all entitlements, and you have all of the required documentation in place around this. Annualised salary arrangements have very specific requirements.
Treating staff as independent contractors when the relationship is actually employment. Calling someone a contractor doesn't make them one. The Act looks at the substance of the relationship, not the label. Get this wrong and you've got sham contracting exposure.
Not knowing which award applies to the roles in your business. Almost every employee in Australia is covered by an award. If you don't know yours, you can't pay correctly. Most businesses have several awards in operation, depending on their staffing mix.
Skipping the process steps required for performance management and dismissal. The Act doesn't just care about what you did. It cares deeply about how you did it.

You don't need to be a Fair Work expert. You need a system, current contracts and policies, and someone to call when something goes wrong, or you need clarification and advice.

Common Questions About the Fair Work Act

Who does The Fair Work Act apply to?

What does The Fair Work Act actually cover?

What happens if I breach The Fair Work Act?

How does The Fair Work Act interact with Modern Awards?

Is there a difference between federal and state employment law in Australia?

Related Terms

National Employment Standards (NES) · Modern Award · Fair Work Commission · Fair Work Ombudsman · Enterprise Agreement · Sham contracting · General protections claim · Unfair dismissal

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