What is the Fair Work Act?

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What is the Fair Work Act?

The Fair Work Act 2009 (Act) is the primary piece of legislation governing Australia’s workplaces. It is the foundation to all standards and regulations for employment and something that employers in all industries and within all business sizes should be familiar with.

Fair Work Act Summary.

The rules and obligations for employees and employers which are outlined within the Fair Work Act 2009 are known as the national workplace relations system. The purpose of this system is to provide a balanced framework for productive workplace relations which promotes national economic prosperity and social inclusion for all Australians. Which essentially means that it is in place for the good of all and does not come with any subjective or biased perspectives.

This is quite a broad understanding of what the Act is designed to do. More specifically, the Act:

On top of these provisions and guidelines, the Act also gives employees and employers a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards (NES), Modern Awards and National Minimum Wage orders – each of which entail their own specific adherences.

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National Employment Standards (NES).

Among the Act’s previously mentioned purposes, it includes a provision of 10 legislated National Employment Standards (NES). These standards are mandatory in compliance for all Australian businesses, regardless of industry, business size or unique circumstance. The purpose of these standards is to provide protection to all people working in Australia and as such they are unbiased and cover the following areas:

If you are looking for more information on the National Employment Standards, visit Employsure’s guide for a comprehensive explanation of what the Standards involve and how they might apply to your business.

What is The Role Of The Modern Awards?

While the National Employment Standards provide a base level of provisions which are applicable to all employees, most employees are also covered by a Modern Award. Modern Awards are an additional set of guidelines and entitlements within which employers must operate employment agreements. These awards cover variances in both industry and occupation, and provide additional enforceable minimum employment standards. On top of the Modern Awards, there is also a Miscellaneous Award which covers employees who are not covered by any other Modern Award.

Modern Awards typically contain terms and entitlements relating to minimum wages, penalty rates, types of employment, flexible working arrangements, hours of work, rest breaks, classifications, allowances, leave and leave loading, superannuation, and procedures for consultation, representation, and dispute settlement. As well as the above areas, Modern Awards may also cover terms about industry specific redundancy entitlements – that is, what employees who are being made redundant are entitled to. Visit Employsure’s guide on Modern Awards to find everything you need to know about this important aspect of employment relations.

National Minimum Wage.

As the name suggests, a minimum wage is the absolute base rate an employee is entitled to be paid for their ordinary hours of work. The minimum wage which an employee is to be paid is determined by the specific industrial instrument which they are employed under; whether it be a Modern Award, Enterprise Agreement or National Minimum Wage order. Regardless of which industrial instrument the employee is working under, they cannot be paid an amount less than the national minimum rate of pay, even if a different amount is agreed upon by the employee.

The national minimum wage and pay rates under Modern Awards are not set indefinitely. Both are reviewed by the Fair Work Commission (FWC) every year. This is to determine if an increase is required based on national living standards, and any changes to the national minimum wage or pay rates under Modern Awards need to be in effect well in advance of the next financial year starting. It is important for employers to remain vigilant in being aware of any changes to their relevant Modern Awards or national minimum wage to ensure that they are not underpaying their employees.

The Fair Work Commission and The Fair Work Ombudsman.

Of course, the practical application of the Fair Work Act 2009 and any other underlying entitlements in workplaces is not entirely left to the discretion of employers. There are two regulatory agencies which oversee the correct adherence to the Act in workplaces around Australia: the Fair Work Commission and the Fair Work Ombudsman. Together, these agencies administer, govern, and cooperate fair work within Australia. To be more specific about what the two bodies work to achieve:

  • the Fair Work Commission administers the Act, reviewing the legislation including updating entitlements, national minimum wages, and operates as a tribunal to hear claims and declare rulings
  • the Fair Work Ombudsman governs and investigates allegations of breaches in the workplace and initiates legal proceedings

You can learn everything you need to know about the Fair Work Commission and the Fair Work Ombudsman by visiting Employsure’s guide here.

As a business owner or employer in Australia, you are bound by the Fair Work Act 2009 and are responsible for treating all of your employees fairly and issuing them with the correct entitlements. Under the Act, employee entitlements such as the NES, Modern Awards and Enterprise Agreements are included and contracts cannot take away the minimum entitlements found in the NES and corresponding Modern Award. So with this in mind, it is important to be well informed of your requirements and obligations under the Act.

Like most items of legislation, the Fair Work Act 2009 is a complex and extensive 542-page document. This makes it a difficult thing for anyone to navigate, let alone understand. So it is understandable that business owners and employers are often confused by the complex language. However, the cost to a business for not being compliant with it, regardless of misunderstanding, can be significant. Even if you feel that you are familiar with the legislation, there are frequent updates and changes made to it, which means that you need to be up to date with its most current version.

For peace of mind about your obligations, call us today on 1300 207 182 and speak to a specialist.

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