Fair Work Fact Sheet

INTRODUCTION
Following its 2007 election commitment, the Federal Government replaced the Work Choices laws with its own Fair Work reforms. While the legislation enacting these changes passed through Parliament in 2009, most of the new law became operative on 1 January 2010.

FAIR WORK ACT - COVERAGE
Who Is Covered?

 Employers and employees of constitutional corporations (i.e. Pty Ltd or Ltd companies)
 Employers and employees in Victoria, NT and the ACT
 Sole traders, partnerships, other unincorporated entities and non-trading corporations in New South Wales, Queensland, South Australia and Tasmania, and
 Employers and employees of the Commonwealth or Commonwealth authorities.

Who Is Not Covered?

 Most state and local Government employees and employers (except for those in Victoria)
 Western Australian corporations whose main activity is not trading or financial, and
 Western Australian sole traders, partnerships or other unincorporated entities.

Therefore, unless you are a non-corporation in Western Australia or a state or local government organisation, you (and therefore your employees) will generally be covered by the Fair Work Act.

FAIR WORK ACT – KEY FEATURES
The Fair Work Act has at least eight key features which relate to:

 National Employment Standards
 Modern Awards
 Leave
 Termination of Employment
 General Protections
 Minimum Wages
 Agreements, and
 Record Keeping.

Employers and bookkeepers handling payroll need to familiarise themselves with these changes as they are enforceable by the Fair Work Ombudsman who has the power to take court action and impose fines for employers who contravene the Fair Work Act.

(i) National Employment Standards
Regardless of their Modern Award (see later), all workers covered by the Federal workplace system are covered by the following ten National Employment Standards (NES). Modern Awards, common law employment contracts and enterprise agreements can not exclude or contravene the NES. Along with Modern Awards, the NES are a safety net that can not be contracted out of.

The NES took effect on 1 January 2010 and replace the Australian Fair Pay and Conditions Standard. The 10 standards are summarised, as follows: (For full details refer to the following link: www.fairwork.gov.au/employment/condition...t/pages/default.aspx

1. A maximum standard working week of 38 hours for fulltime employees, plus ‘reasonable’ additional hours.
2. A right to request flexible working arrangements to care for a child under school age, or a child under 18 years of age with a disability
3. Unpaid parental and adoption leave of 12 months, with a right to request an additional 12 months
4. Four weeks paid leave each year (pro rata) (accumulating)
5. Ten days paid personal/carer’s leave each year (pro rata), two days paid compassionate leave for each permissible occasion, and two days unpaid carer’s leave for each occasion
6. Community service leave for jury service (paid) or activities dealing with certain emergencies or natural disasters (unpaid)
7. Long service leave
8. Public holidays and the entitlement to be paid for ordinary hours on those days
9. Notice of termination and redundancy pay
10.The right for new employees to receive the Fair Work Information Statement.

Note that redundancy pay and the right to flexible working arrangements were never previously guaranteed under Federal law. Employers should familiarise themselves with the NES as they are compulsory and can not be contracted out of.

Casual Workers
While the NES applies to all employees covered by the Federal system, casual workers are only entitled to the following standards:

 Two days unpaid carer’s leave and two days unpaid compassionate leave per occasion
 Maximum weekly hours (see earlier)
 Community service leave (except paid jury service) (see earlier)
 To have a day off on a public holiday, unless reasonably requested to work by the employer, and
 Provision of the Fair Work Information Statement (see earlier).

Additionally, casual employees who have been employed for 12 months or more on a regular and systematic basis and with an expectation of ongoing employment are entitled to:

 Make requests for flexible working arrangements (see earlier), and
 Parental leave (see earlier).

Small Business Carve-Out
Although the NES generally apply to all employers within the Federal system, the Fair Work Act provides a carve-out for small businesses from the requirement to pay redundancy (Standard 9 above). For this purpose, a ‘small business’ is a business with fewer than 15 employees (including its associated entities but not including casual employees). More details can be found in the above Fact Sheet.

(ii) Modern Awards
Along with the NES, Modern Awards complete the Federal workplace safety net for employees. The new Modern Awards will replace the estimated 4 000 awards which were up until recently operating in Australia. The Modern Awards are industry-based, will apply to all employees performing work in the relevant industries and occupations that they cover, and address the following ten additional conditions:

 Minimum wages
 Types of employment (e.g. fulltime, casual)
 Arrangements for when work is performed (e.g. rostering, rest breaks etc)
 Overtime rates
 Penalty rates
 Annualised wage arrangements
 Allowances
 Leave, leave loadings and arrangements for taking leave
 Superannuation, and
 Consultation, representation and dispute-settlement procedures.

The Awards take effect on 1 January 2010 and can all be accessed via the Fair Work website. as well as the Australian Industrial Relation Commission’s website. www.fairwork.gov.au/awards/pages/default.aspx

(iii) Leave
The NES includes minimum leave entitlements for all Federal system employees regardless of their employment instrument. Permanent fulltime employees are guaranteed:

 Paid annual leave – four weeks (accumulating year to year) and five weeks for shift workers (accumulating) per year
 Paid personal/carer’s leave – 10 days per year (accumulating)
 Unpaid carer’s leave – two days (when needed)
 Paid compassionate leave – two days (when needed)
 Unpaid parental leave – 12 months
 Community service leave – no limit

For more information on the leave conditions, www.fairwork.gov.au/leave/pages/default.aspx

(iv) Termination of Employment

New standards now cover the following:

 Unfair Dismissal
 Termination Notice
 Redundancy
 Unlawful termination, and
 Final pay

visit the Fair Work website for more information www.fairwork.gov.au/termination/pages/default.aspx

(v) General Protections
Broadly speaking, the General Protection provisions of the Fair Work Act prevent employers from taking ‘adverse action’ (e.g. dismissing an employee, discriminating against an employee, detrimentally altering an employee’s position within the organisation, refusing to employ a potential employee) against an employee because of:

 Their workplace rights
 Their industrial activities, or
 Certain protected rights (including race, family responsibilities, sex, age, disability).

These General Protection provisions also contain independent contractor provisions. These provide employees and prospective employees protection against ‘sham arrangements’. Under these provisions, employers must not:

 Misrepresent to a prospective employee that an employment relationship will be an independent contracting relationship, or
 Dismiss or threaten to dismiss an employee in order to engage the employee as an independent contractor to perform the same, or substantially the same, work.

Indeed the Tax Office has also warned that they are on the lookout for these sham contractor arrangements. Such arrangements are increasingly common during tough economic times where employers are looking to cut costs such as annual leave, public holiday pay etc (which are not afforded to contractors).
A comprehensive General Protections Fact Sheet is available on the Fair Work website. www.fairwork.gov.au/employment/general-p...s/pages/default.aspx

(vi) Minimum Wages
Under the new law, minimum wages are set out in Modern Awards. For award-free employees (i.e. those who do not fit within an award), the minimum wage is set out in a ‘national minimum wage order’ which is currently $15.00 per hour or $569.90 per week. (From first page on or after 1 July 2010)
All minimum wages (those in Modern Awards and the ‘national minimum wage order’) will be reviewed each year by the Minimum Wage Panel and any change will be effective from the first pay period after 1 July each year. Therefore, employers (and bookkeepers who handle payroll) with low paid workers will need to monitor Awards around this time and take note of any adjustments.
Employers and employees can not agree to a rate of pay that is less than the minimum wage stipulated in the relevant Modern Award or, where no Award applies, the ‘national minimum wage order’.
For more information on minimum wages, visit the Fair Work website. www.fairwork.gov.au/pay/national-minimum...e/pages/default.aspx

(vii) Employment Agreements
From 1 January 2010, the main two types of employment agreements between employees and employers are Enterprise Agreements and Modern Awards. If no Enterprise Agreement is in place for an employee, the relevant Modern Award will apply.

Existing Employment Agreement
An employee covered under the Federal workplace system as at 1 January 2010 (before the Fair Work law took effect) would have been employed under one of the following instruments:

 Federal Awards
 Former State Awards (also known as Notional Agreements Preserving State Awards)
 A Collective Agreement (made under Work Choices)
 A Certified Agreement (made before Work Choices)
 A State Enterprise Agreement (also known as Preserved Individual State Agreement)
 An Australian Workplace Agreement (AWA)
 An Individual Transitional Employment Agreement

These agreements can no longer be made, however they will continue to operate until they are terminated, replaced or they expire. Although they continue to operate, from 1 January 2010 these existing agreements are subject to the NES and the minimum wage as set out in the relevant Modern Award or, if no Award applies, the national minimum wage order.

Enterprise Agreements can be made by an employer with a group of employees or by more than one employer with groups of employees. These agreements are negotiated by the parties through collective bargaining in good faith, primarily at an enterprise level.

Each Enterprise Agreement will need to pass a new ‘better off overall’ test to be valid. That is, each award-covered employee will need to be better off overall under the Enterprise Agreement than they would be if their employment was governed by the relevant Modern Award.

A comprehensive Enterprise Agreement Fact Sheet is available on the Fair Work website. www.fairwork.gov.au/resources/fact-sheet...ning-fact-sheet.aspx

(viii) Record Keeping
It is important that employers maintain comprehensive, English, written employee records for seven years. Failure to do so can result in court action.

Pay Slips
Employers must issue pay slips (electronic or hard copy) to each employee within one working day of each pay day. This applies even where an employee is on leave. Pay slips must include:

 The name of the employer
 The ABN of the employer
 The employee’s name
 The date of payment
 The pay period
 The gross and net amount of pay
 Any loadings, monetary allowances, bonuses, incentive-based payments, penalty rates or other entitlements paid
 If an employee is paid an hourly rate, the ordinary hourly rate of pay and the number of hours worked at that rate and the amount of pay at that rate
 If the employee is paid an annual salary, the rate as at the last day in the pay period
 Any deductions made from the employee’s pay including the amount and details of each deduction (including superannuation) including the name, or the name and number, of the fund or account the deductions are paid into
 The amount of each superannuation contribution made during the period to which the pay slip relates, or the amount of contributions that you are liable to make, and
 The name and the number of the superannuation fund where the contribution is made.

Time and Wages
The following six categories of records need to be retained:
1. General Records:

 Employer and employee name
 The employer’s ABN, and
 The date the employee commenced

2. Type of Employment and Pay

 Nature of the employment – (fulltime or part-time, permanent, temporary or casual)
 The employee’s pay rate (including gross and net amounts and any deductions made by the employer)
 Any other amounts or entitlements that can be singled out (e.g. bonuses allowances, penalty rates, other entitlements)
 If a penalty rate or loading must be paid, the number of hours of overtime worked
 Hours worked if the employee is casual or works irregular part-time hours and is guaranteed a pay rate set by reference to a period of time worked
 A copy of the written agreement if the parties agreed to average the employee’s work hours, and
 If the parties agreed to an IFA, a copy of that agreement.

3. Leave

 Leave taken
 Leave balance, and
 A copy of any agreement to cash out annual leave, the rate of pay for the leave and when the amount was paid.

4. Superannuation

 Amount paid
 Pay period
 Dates paid
 Name of the fund, and
 A record of the employee’s superannuation fund choice and the date the choice was made.

5. Termination of Employment
 Name of the person who terminated the employment (including whether it was the employer or employee), and
 How the termination took place (e.g. by notice, summary dismissal etc).
6. Guarantee of Annual Earnings
Where the employee has been provided with a written guarantee of annual earnings above $108 300 (see earlier), a copy of that written agreement.

Self Audit
Given the onerous nature of the requirements, and the potential for audit by the Fair Work Ombudsman, employers or bookkeepers may wish to conduct a self-audit. to ensure that your record keeping is up to the required standard.
www.fairwork.gov.au/Templatesformscheckl...-audit-checklist.pdf

(ix) Other Matters
There are other key features of the Fair Work legislation which are outside the scope of this paper, such as right of entry by an official and industrial action. Employers should consult the Fair Work website and their advisor for further information.