Employment law in Australia can feel overwhelming, but most businesses only need to master the basics. This guide covers the essential employment law concepts every Australian employer should understand.
The Australian Employment Framework
Australian employment law operates at multiple levels:
- National Employment Standards (NES): 11 minimum entitlements that apply to all employees
- Modern Awards: Industry-specific minimum conditions
- Enterprise Agreements: Negotiated agreements for specific workplaces
- Employment Contracts: Individual agreements between employer and employee
- Workplace Policies: Internal rules and procedures
Each layer builds on the one below—you can provide more than the minimum, but never less.
National Employment Standards (NES)
The NES provides 11 minimum entitlements:
- Maximum weekly hours: 38 hours (plus reasonable additional hours)
- Flexible working arrangements: Right to request for certain employees
- Parental leave: 12 months unpaid (plus right to request additional 12 months)
- Annual leave: 4 weeks paid leave per year
- Personal/carer’s leave: 10 days paid per year
- Compassionate leave: 2 days per occasion
- Family and domestic violence leave: 10 days paid per year
- Community service leave: Jury duty and emergency services
- Long service leave: As per state/territory laws
- Public holidays: Paid day off (or penalty rates if worked)
- Notice of termination: Based on length of service
- Fair Work Information Statement: Must be provided to new employees
Modern Awards
Most employees are covered by a Modern Award that sets minimum conditions for their industry or occupation, including:
- Minimum pay rates
- Overtime and penalty rates
- Allowances
- Leave arrangements
- Rostering requirements
Finding the Right Award
- Check the Fair Work Commission’s Award Finder
- Consider both industry awards and occupation awards
- When in doubt, apply the award most beneficial to the employee
Award-Free Employees
Some employees aren’t covered by any award (typically managers earning above the high-income threshold of ~$175,000). These employees are entitled to NES minimums only, with other conditions set by their contract.
Employment Contracts
Every employee should have a written employment contract that includes:
Essential Terms
- Position and duties
- Employment type (full-time, part-time, casual)
- Start date
- Hours of work
- Remuneration and superannuation
- Leave entitlements
- Notice periods
- Applicable award or agreement (if any)
Recommended Clauses
- Probation period
- Confidentiality obligations
- Intellectual property assignment
- Post-employment restraints (if appropriate)
- Workplace policies reference
Common Mistakes to Avoid
- Setting pay below the applicable award rate
- Including unlawful restraint clauses
- Failing to specify employment type
- Not referencing the correct award
- Omitting superannuation obligations
Types of Employment
Full-Time Employees
- Work 38 hours per week on average
- Entitled to all NES benefits
- Ongoing employment unless fixed term
Part-Time Employees
- Work fewer than 38 hours per week
- Regular, agreed hours
- Entitled to NES benefits on a pro-rata basis
Casual Employees
- No guaranteed hours
- Receive casual loading (typically 25%) instead of paid leave
- Can request conversion to permanent after 12 months
Fixed-Term Employees
- Employment for a set period or task
- Subject to restrictions on consecutive fixed-term contracts (generally max 2 years)
Contractors vs Employees
Misclassifying employees as contractors is a serious issue. The key factors are:
| Employee | Contractor |
|---|---|
| Paid for time | Paid for results |
| Uses employer’s tools | Uses own tools |
| Works set hours | Controls own schedule |
| Can’t delegate work | Can subcontract |
| Part of the business | Independent business |
Getting this wrong can result in back-payment of entitlements, superannuation, and penalties.
Hiring Process
Legal Requirements
- Right to work: Verify the person can legally work in Australia
- Fair Work Information Statement: Provide before or as soon as possible after starting
- Tax file number declaration: Employee must complete
- Superannuation choice form: Offer choice of fund
- Employment contract: Provide written terms
Best Practices
- Conduct consistent, documented interviews
- Perform reference checks
- Consider background checks where appropriate
- Keep interview notes in case of disputes
Discrimination
You cannot discriminate in hiring based on:
- Race, colour, national origin
- Sex, gender identity, sexuality
- Age
- Disability
- Religion
- Family or carer responsibilities
- Pregnancy
- Political opinion
- Social origin
During Employment
Pay Obligations
- Pay at least the minimum wage (or award rate)
- Pay superannuation (11.5% as of 2025)
- Pay on time (usually weekly, fortnightly, or monthly)
- Provide pay slips within 1 day of payment
- Keep accurate time and wage records
Leave Management
- Track leave balances accurately
- Approve/decline leave requests reasonably
- Pay out annual leave on termination
- Understand rules around cashing out leave
Performance Management
- Set clear expectations
- Provide regular feedback
- Document performance issues
- Follow fair process for warnings
- Give opportunity to improve
Workplace Health and Safety
- Provide a safe workplace
- Consult with workers on safety matters
- Maintain appropriate insurance
- Report serious incidents
Ending Employment
Notice Periods
| Length of Service | Minimum Notice |
|---|---|
| 1 year or less | 1 week |
| 1-3 years | 2 weeks |
| 3-5 years | 3 weeks |
| 5+ years | 4 weeks |
Add 1 week if employee is over 45 and has 2+ years of service.
Types of Termination
Resignation: Employee ends employment with notice.
Termination with notice: Employer ends employment with notice (or payment in lieu).
Summary dismissal: Immediate termination for serious misconduct.
Redundancy: Role is no longer needed (requires genuine redundancy process).
Unfair Dismissal
Employees may claim unfair dismissal if:
- They’ve completed the minimum employment period (6 months, or 12 months for small business)
- The dismissal was harsh, unjust, or unreasonable
- They’re not above the high-income threshold (unless award-covered)
Final Pay
Must include:
- Outstanding wages
- Accrued annual leave
- Any other owed amounts
- Redundancy pay (if applicable)
Timeframe: Within 7 days of termination (or as per award/agreement).
Small Business Fair Dismissal Code
Businesses with fewer than 15 employees can follow the Small Business Fair Dismissal Code:
- Believed on reasonable grounds the employee’s conduct was sufficiently serious to justify immediate dismissal, OR
- Gave the employee a reason why they were at risk of dismissal and a reasonable chance to rectify the problem
If you follow this code, a dismissal cannot be found to be unfair.
Essential Employment Documents
Every employer should have:
| Document | Purpose |
|---|---|
| Employment contracts | Define the employment relationship |
| Position descriptions | Clarify roles and expectations |
| Employee handbook | Communicate policies and procedures |
| Leave policies | Manage leave consistently |
| WHS policy | Meet safety obligations |
| Code of conduct | Set behaviour expectations |
| Performance review templates | Document performance management |
| Warning letter templates | Handle misconduct properly |
| Termination checklist | Ensure compliant exits |
Browse ExaLaw’s Employment Templates →
Getting Help
Employment law is complex and changes frequently. For specific situations, consider:
- Fair Work Ombudsman: Free advice on pay and conditions
- Industry associations: Sector-specific guidance
- Employment lawyers: For complex disputes or restructures
- ExaLaw AI: Quick answers to common questions
Connect with an Employment Lawyer →
This guide provides general information only and is not legal advice. Employment law changes frequently—check current requirements with Fair Work or seek professional advice.