Minimum terms and conditions of employment

A. Introduction

The common law employment relationship is subject to the requirements of fair work legislation and also to applicable modern awards/enterprise agreements.

Minimum terms and conditions of employment for federal system employees (ie most private sector employees and federal government employees) are contained in the Fair Work Act 2009 (Cth). All employment agreements (whether written or unwritten) and modern awards/enterprise agreements are subject to the safety net of minimum conditions contained in the National Employment Standards (“NES”) which are part of the Fair Work Act.

Minimum terms and conditions can vary depending on the type of employment. Employees can be engaged on a full-time basis, part-time basis or casual basis. It is necessary to appropriately identify and monitor the nature of the relationship because there can be important variations in entitlements and conditions (such as overtime, leave and loadings).

So, it is firstly necessary to consider the basis on which you have been employed in considering minimum terms and conditions.

B. Minimum terms and conditions

There are 12 National Employment Standards which contain rules about:

maximum weekly hours of work;
requests for flexible working arrangements for certain types of employees;
offers and requests to convert from casual to permanent employment;
parental leave and related entitlements;
annual leave;
personal/carer’s leave, compassionate leave and family and domestic violence leave;
community service leave;
long service leave;
public holidays;
superannuation contributions;
notice of termination and redundancy pay; and
the Fair Work Information Statement and Casual Employment Information Statement.

The NES apply to all employees. Employers contravening the NES are potentially subject to significant penalties including fines, injunctions and orders for reinstatement.

Here is a more detailed summary of the standards.

1. Maximum weekly hours

Maximum ordinary weekly hours of work are 38 standard hours per week for full time employees (which can be averaged over a 6 month period), unless additional hours are reasonable. Employees may refuse to work additional hours if they are unreasonable, taking into account:

any risk to employee health and safety from working the additional hours;
the employee’s personal circumstances, including family responsibilities;
the needs of the workplace or enterprise in which the employee is employed;
whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
any notice given by the employer of any request or requirement to work the additional hours;
any notice given by the employee of his or her intention to refuse to work the additional hours;
the usual patterns of work in the industry, or the part of an industry, in which the employee works;
the nature of the employee’s role, and the employee’s level of responsibility;
whether the additional hours are in accordance with averaging terms included in a modern award or enterprise agreement or an averaging arrangement between the employer and employee under the Act; and
any other relevant matter.

Modern awards and enterprise agreements can provide for averaging of hours over a specified period, with the average hours not to exceed 38 for a full time employee. Where there is no modern award or enterprise agreement with application, an employer and employee can agree in writing to an averaging arrangement over a maximum of 26 weeks. Award covered employees are also subject to award requirements for overtime and penalty rates. It is common for employment contracts with award free employees to include specific provision for working additional reasonable hours.

2. Requests for flexible working arrangements

Certain employees can request a change in working arrangements if they require flexibility because they:

are pregnant;
are the parent, or have responsibility for the care, of a child who is of school age or younger;
are a carer (as defined by legislation);
have a disability;
are 55 or older;
are experiencing family an domestic violence; or
provide care or support to a member of their immediate family or household who requires care or support because they are experiencing family and domestic violence.

If an employee is the parent of, or has responsibility for the care of, a child and is returning to work after taking parental or adoption leave, the employee may request to return to work on a part-time basis to help them care for the child. Possible types of flexible working arrangements may include a temporary reduction in hours, non-standard start or finish times, working from home, working split shifts or job sharing arrangements. Full time and part time employees must have completed at least 12 months continuous service with their employer before making a request. Casual employees must be a long term casual employee (i.e. with at least 12 months service) and have a reasonable expectation of continuing systematic and regular employment.

The NES prescribe detailed requirements for employees and particularly employers. Firstly, requests must be in writing and set out the details of the change sought and the reasons. Secondly, the employer must give a written response within 21 days with their decision on the request and either agree to the request as made, agree to a varied request after discussion with the employee or refuse the request. However, an employer can only refuse a request if:

they have discussed the request with the employee;
they have genuinely tried to reach agreement with the employee to accommodate their circumstances;
they have had regard to the consequences for the employee of the refusal; and
there are reasonable business grounds for the refusal.

The Fair Work Act contains an inclusive list of what might be reasonable business grounds including cost, ability to change the working arrangements, practicability, significant loss of efficiency/productivity and significant negative impact on customer service. The specific circumstances of the employer including its nature and size are relevant matters. Any refusal must include details of the reasons for refusal and how those grounds apply to the request and either set out the changes the employer would be willing to make or say there are no such changes as well as next steps the employee can take. If an employer doesnt agree to the request, discussions must be had between the employer and employee to see whether any compromise arrangement can be reached. If there is a change, then both parties should be clear about how long that change will operate for and this should be in writing. If the change is to be permanent, then the employment contract should be changed by agreement.

Thirdly, where the employer has refused the request, or not responded within 21 days, employees should lodge an internal complaint with their employer if possible as a first step. If this is not practicable or not successful, then a dispute can be referred to the the Fair Work Commission (FWC). The FWC has the power to conciliate or mediate the dispute and can determine (arbitrate) the dispute if necessary. This may include:

ordering employers to take further steps if they have not responded or not responded adequately to the request;
ordering employers to grant the request or make specified changes to the employee’s working arrangements if there is no reasonable prospect of the dispute being otherwise resolved;
confirming the employer’s refusal on reasonable business grounds.

The ability to raise a dispute relates not only to the process but also the employer’s decsion and failure to follow the FWC’s order may result in penalties being imposed. Legal representation is only with the leave of the FWC. If a state or territory law provides an employee with a better entitlement to flexible working arrangements, that law will contine to apply so it is wise to check local entitlements.

3. Casual conversion rights

The effect of this standard is that employers (other than small business employers) MUST offer a casual employee the opportunity to convert to full-time or part-time employment when the employee:

has worked for their employer for 12 months; and
has worked a regular pattern of hours for at least the last 6 months on an ongoing basis; and
could continue to working those hours as a permanent employee without significant changes.

Small business employers are not subject to this obligation and an employer does not have to make the offer if it has “reasonable grounds”. The Fair Work Act inclusively defines what might be reasonable grounds including that within 12 months:

the employee’s position will cease to exist;
the employee’s hours of work will be significantly reduced;
there will be significant change to the days and hours of work which cannot be accommodated by the employee.

Employers must give written notification to employees if they are not offering conversion. Separate to this employer obligation, employees have a right to request to convert to permanent employment either:

if they work for a small business – at any time if they meet the requirements;
otherwise, after their employer has decided not to make an offer of casual conversion.

These requests must be in writing and employers must give a response within 21 days setting out reasonable grounds for refusal. The Fair Work Commission has been given broad powers to deal with disputes about casual conversion such as by conciliation, mediation and issuing an opinion or recommendation. However, the parties are required to attempt to resolve any dispute by direct discussions first and the FWC does not have the power to determine or arbitrate the dispute unless the parties agree. The Federal Circuit Court has also been given powers to deal with conversion disputes commenced through the small claims procedure.

Failure to comply with the NES requirements is a breach of the Fair Work Act for which civil penalties can be imposed. Employees need to be alert to their rights and obligations and should not assume that employers will comply with the above requirements. Employees should also be conscious that conversion may result in a lower hourly rate of pay as a trade off for permanent entitlements to leave. These are of course matters for negotiation and are subject to applicable minimum rates of pay.

4. Parental leave

Full time and part time employees must have completed at least 12 months continuous service to be entitled to parental leave. Casual employees must be long term casuals and have a reasonable expectation of systematic and regular continuing employment.

Parental leave can be taken for birth related leave or adoption related leave. To be eligible for adoption related leave, the child must be under 16 and not have lived continuously with the employee for 6 months or more as at the date of placement.

Parents and spouses (including adoptive parents) are entitled to up to 12 months unpaid parental leave if they will have a responsibility for the care of the child. Other requirements are that:

leave must be taken in 1 period;
birth related leave may be taken up to 6 weeks before the expected date of birth;
adoption leave must start on the day of placement;
leave may be taken at any time within 12 months after birth or placement;
concurrent leave (ie leave by a parent and spouse at the same time) must be for 3 weeks or less.

There are detailed notice requirements in the Fair Work Act. Employees must, if possible:

a. give their employer at least 10 weeks notice of their intention to take unpaid parental leave;

b. specify the intended start and end dates of the leave;

c. confirm these dates or advise of changes to the dates at least 4 weeks before the intended start date.

An employee can request their employer to agree to an extension of unpaid parental leave of up to a further period of 12 months. A response must be given within 21 days after the request is made and the employer can only refuse such a request on reasonable business grounds. As with the provisions in relation to flexible working arrangements, a dispute can be referred to the Fair Work Commission for assistance but only where the employer consents, whether in an enterprise agreement, employment contract or in a specific case.

Where a pregnant employee continues working during the six weeks before the expected birth, the employer can require the employee to produce a medical certificate to evidence her fitness for work. If this is not supplied, and no safe alternative job is available, the employee can be forced to start their leave early.

A female employee is entitled to unpaid special maternity leave if she has a pregnancy-related illness or loses the child within 28 weeks of the expected date of birth. A pregnant employee is entitled to transfer to a safe job in certain circumstances.

The employer must consult with an employee absent on parental leave if the employer makes a decision that will have a significant effect on the status, pay or location of the employee’s employment.

An employee is entitled to return to their pre parental leave position or, if it no longer exists, an available position for which the employee is qualified and suited nearest the status and pay to the previous position.

An employee can take up to 2 days of unpaid pre adoption leave to attend any interviews or examinations required in order to obtain approval for the adoption. Employers often strike trouble where they fail to consult employees about significant changes to the employee’s job or they seek to make an employee’s position redundant whilst they are absent on parental leave or on their return to work.

Paid parental leave

Separate arrangements exist outside the Fair Work Act for paid parental leave.

5. Annual leave

Full time and part time employees are entitled to 4 weeks paid annual leave for each year of service (or 5 weeks if they are a shift worker). The entitlement accrues progressively during each year, is cumulative and is paid out on termination.

Service is defined as all periods of employment other than:

unpaid leave (e.g. leave without pay or unpaid parental leave);
unpaid absence (other than community service leave); or
unauthorised absence (e.g. unprotected industrial action).

Annual leave may be taken as agreed between the employee and employer but the employer must not unreasonably refuse a request by the employee. The employer can impose a reasonable requirement for an employee to take paid annual leave if there is provision in an applicable modern award or enterprise agreement or the employee is award/agreement free. Public holidays are not included in annual leave nor sick leave taken during a period of annual leave.

There is no leave loading under the standard (although awards commonly provide for a loading) and the pay rate for the annual leave period is the employee’s base rate of pay for their ordinary hours. For most award employees:
• a loading of 17.5% is payable on annual leave (which is also payable on any annual leave payment on termination);

• annual leave may be taken in advance subject to written agreement and any overpayment can be deducted on termination of employment;

• an employer can require annual leave to be taken as part of a close down (eg Christmas-New Year) if at least 4 weeks notice is given;

• an employer can direct an employee to take annual leave where they have an accrual of more than 8 weeks subject to certain requirements; and

• there is no general ability to direct an employee to take annual leave.

A modern award or enterprise agreement can contain terms about the cashing out of annual leave and award or agreement free employees can also agree with their employer in writing about this. However:

the employee must keep a balance of accrued annual leave of 4 weeks; and
each cashing out must be subject to a separate written agreement.

What happens if the employer directs a Christmas close down but an employee does not have a sufficient annual leave accrual to cover the absence? In this situation, there is no general stand down power. Subject to industrial award requirements, an employer cannot direct an employee to take unpaid leave and will be required to pay the employee as if they were at work, even if the business is shut down.

What happens if there is a dispute about taking annual leave? Award based employees may have an entitlement to raise a dispute in the Fair Work Commission under the terms of their award. This entitlement does not exist for award free employees and any legal avenue to challenge an employer’s decision will largely depend on evidence of an unlawful motive on the employer’s part. The parties should consider taking part in voluntary mediation.

6. Personal/carer’s leave and compassionate leave

Full time and part time employees are entitled to 10 days per year of paid personal/carer’s leave. The entitlement accrues progressively during a year and is cumulative. The leave may be taken:

if the employee is not fit for work because of personal illness or injury; or
to provide care or support to a member of the employee’s immediate family or household who requires care or support because of personal injury or illness or an unexpected emergency. The term “immediate family” is broadly defined in the Fair Work Act 2009 (Cth) (although it arguably does not include family pets at this stage).

A modern award or enterprise agreement can provide for cashing out of paid personal/carer’s leave but only by separate written agreement on each occasion and only as long as the employee’s paid personal/carer’s leave balance does not fall below 15 days. The standard does not provide for cashing out for award/enterprise agreement free employees.

In addition to the requirements for paid personal/carer’s leave, all employees are entitled to 2 days of unpaid carer’s leave for each occasion that a member of the employee’s immediate family or household requires care or support because of personal illness or injury affecting that person or an unexpected emergency affecting that person. The 2 day entitlement does not have to be taken in a single bloc.

Employees are entitled to 2 days of compassionate leave for each occasion when a member of their immediate family or household:

contracts or develops a personal illness that poses a serious threat to their life;
sustains a personal injury that poses a serious threat to their life; or
dies.

This leave can be taken to spend time with the family member or after the death of the member. Full time and part time employees are entitled to payment for compassionate leave. There are notice mechanisms for this leave.

What if an employer suspects an employee is abusing the entitlement? Firstly, employees are required to give notice of taking leave as soon as practicable and must advise how long they will or expect to be away from work. Employees who fail to do this can be counselled and potentially disciplined. Secondly, an employer can require an employee to provide reasonable evidence to support their leave claim. This commonly takes the form of a medical certificate but a statutory declaration may also be satisfactory, particularly if carer’s or compassionate leave is involved.

Commonly, medical certificates merely state that a person is/was suffering from a “condition”. An employer may be able to refuse pay for the leave until some further detail is provided, particularly if an employee has a history of taking leave. Where the claim is for carer’s leave, further details of the care or support given and the nature of the illness, injury or emergency affecting the family or household member can be sought. However, an employer’s requests for evidence must be reasonable because an employee could complain to the Fair Work Ombudsman or potentially even take legal action if an employer unreasonably refuses payment.

A couple of other points should be kept in mind. Firstly, there is debate about whether absences for elective medical procedures are strictly personal leave but the safer approach is to allow it. Secondly, care should be exercised where an employee has used up their paid entitlement and exceeds their unpaid entitlement. There are a number of overlapping requirements in this area which mean employers should obtain advice before taking any disciplinary action against an employee.

Family and domestic violence leave

From 1 February 2023 (1 August for employers with less than 15 employees), all employees are entitled to take up to 10 days paid family and domestic violence leave each year. This entitlement supplements the existing personal/carers leave entitlements under the National Employment Standards. This includes part time and casual employees. The NES operates as a minimum standard so more generous arrangements in employer policies or Enterprise Agreements will continue to apply.

Family and domestic violence is defined in the NES as being violent, threatening or other abusive behaviour by a close relative of an employee that seeks to coerce or control the employee and causes them harm or to be fearful. The term “close relative” is defined broadly in the Fair Work Act 2009 (Cth) and includes someone who is related to the employee according to Aboriginal or Torres Strait Islander kinship rules. The NES provides that this leave can be taken if:

a. an employee is experiencing family and domestic violence; and

b. they need to do something with the impact; and

c. it is impractical for that to be done outside ordinary work hours.

Examples include arranging for the safety of the employee (including relocation), attending urgent court hearings or accessing police services. An employee may also be able to take carer’s leave to support a household member experiencing domestic violence.

The NES leave does not accumulate from year to year but is available in full at the beginning of employment and each 12 months. The leave can be taken as a single bloc or separate periods of one or more days or otherwise as agreed between the employer and employee. Unpaid family and domestic violence leave does not break an employee’s period of continuous service but does not count as service when calculating accumulated entitlements such as paid leave.

The same notice and evidence requirements apply as for personal/carers leave. So, an employee taking this leave should notify their employer as soon as possible (which may be after the leave has started) of the need for and duration of the leave. An employer can ask an employee for reasonable evidence of the need for the leave. This might include documents issued by the police, court or family violence support service or a statutory declaration. Employers must also take reasonably practicable steps to ensure information provided by the employee, including about the need for the leave, is treated confidentially.

Employers should obviously be sensitive to their employees’ personal situations and handle these matters in an empathetic and reasonable manner. Confidential information, counselling and support for people impacted by domestic and family violence is available at the 1800 RESPECT website – www.1800respect.org.au, the national sexual assault, domestic and family violence counselling service.

7. Community service leave

Employees are entitled to this leave if taking part in an eligible community service activity, which is defined as:

jury service;
a voluntary emergency management activity (which is further defined); or
otherwise as prescribed by regulation.

There is no restriction on leave for jury duty. Employees absent on jury duty (other than casual employees) do have to be paid the difference between their base pay and the amount received for jury duty for the first 10 days of absence.

A voluntary emergency management activity involves the employee:
• being a member of a recognised emergency management body (such as the State Emergency Service, Country Fire Authority or RSPCA);

• being requested to engage in an activity dealing with an emergency or natural disaster on a voluntary basis (no formal request is necessary in urgent circumstances); and

• engaging in the activity.

Leave for emergency management purposes must be reasonable in all the circumstances and covers not only the time engaged in the activity but also reasonable travelling and rest time following the activity. Employees absent on voluntary emergency management activities do not have to be paid by the employer. Notice of the absence for all types of community service leave must be given as soon as practicable by the employee and reasonable evidence must be produced on request.

8. Long service leave

There is a National Employment Standard dealing with long service leave but there is no uniform national scheme. The result is that long service leave currently remains under the coverage of state law (which varies from state to state). The Industrial Relations Act 2016 (Qld) provides that full time employees become entitled to 8.6667 weeks of long service leave after 10 years of service. Part-time and long term casual employees are also entitled to accrue a proportional long service leave entitlement, calculated on their actual hours of service.

When long service leave is taken is a matter for agreement between an employer and employee. However, where there is no agreement, an employer can direct an employee to take at least four weeks long service leave by giving at least three months written notice. From an employer perspective it is wise to encourage employees to take their long service leave. It is desirable for employees to be able to take a break after a lengthy period of employment and come back to work refreshed. It is also desirable for employers to avoid the accrual of significant unpaid entitlements. Employers should be careful to diary note when long service leave is due so that large amounts of accrued leave do not accrue on their books.

What about pro rata entitlements? Employees are entitled to pro rata payment of long service leave if their employment ends after seven years but less than 10 years if:

• the employee’s service is terminated by their death;
• the employee terminates their service because of their illness or incapacity or because of a domestic or other pressing necessity;
• the employer dismisses the employee for a reason other than the employee’s conduct, capacity or performance (i.e. redundancy); or
• the employer unfairly dismisses the employee.

If an employee has medical evidence of a significant illness, then that will usually satisfy this requirement. Other circumstances that have given rise to a pro rata entitlement are:
• a new parent resigning to look after their child, or a sick partner or children;

• family relocation due to the employee’s partner getting a new job in another town;

• the employer relocated and the employee was required to travel substantial distances to attend work each day.

An employer is able to ask for reasonable evidence before agreeing to make a pro rata payment. If the employer is not satisfied, the employee can apply to the Queensland Industrial Relations Commission for a payment order. If employment ends for any reason after 10 years and long service leave has not been taken, the employee is entitled to payment of their long service leave as of right. If employment continues after the 10 year mark, the entitlement continues to accumulate and is payable on termination of employment. Further long service leave can be taken (as opposed to being paid on termination) after 15 years of service. After that, long service leave can be taken as it accrues. Some final points:

• unpaid leave, such as parental leave, does not count towards long service calculations but does not break a period of service;

• it is the same if employment ends but the employee is re employed with the same or a related employer within three months;

• payment is made at the employee’s ordinary rate of pay;

• long service leave cannot generally be cashed out. However, the Queensland Industrial Relations Commission can order payment on genuine hardship or compassionate grounds after the 10 year mark has been reached;

• long service leave should not be paid in advance;

• some awards contain industry specific long service leave provisions and portable long service leave applies in certain industries (such as building and construction, contract cleaning and community services).

More information on long service leave in Queensland is available at https://www.business.qld.gov.au/running-business/employing/employee-rights/long-service-leave/entitlements.

9. Public holidays

An employee is entitled to paid absence from work on public holidays. Public holidays are listed as:

1 January (New Year’s Day);
26 January (Australia Day);
Good Friday;
Easter Monday;
25 April (Anzac Day);
Queen’s Birthday holiday;
25 December (Christmas Day);
26 December (Boxing Day);
State declared public holidays.

An employer can make a reasonable request for an employee to work on the public holiday which the employee can refuse on reasonable grounds. The legislation sets out certain factors to take into account in deciding what is reasonable:

the nature of the employer’s workplace (including its operational requirements) and the nature of the employee’s work;
the employee’s personal circumstances including family responsibilities;
whether the employee could reasonably expect that the employer might request work on a public holiday;
whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of work on the public holiday;
whether the employee is full time, part time or casual or is a shift worker;
the amount of advance notice given by the employer.

10. Notice of termination and redundancy pay

The NES set out minimum requirements for the giving of notice of termination of employment and redundancy pay. All employees must be given notice of termination in writing. Civil penalties can be imposed under the Fair Work Act if this is not done. Ideally notice should be handed to an employee personally as part of a termination meeting.

Apart from notice in writing, employees must be given the minimum notice required under the standard or paid in lieu for the period of notice. Exceptions mainly relate to casual employees and employees terminated for serious misconduct. These are minimum requirements only and any greater contractual requirement should be met. However, the statutory requirement will override any lesser contractual notice provision. The requirement for notice is also separate to requirements to pay accrued entitlements such as annual leave and long service leave.

The minimum entitlements to termination notice under the Fair Work Act are:

Period of employee’s service	Required period of notice
Not more than 1 year	At least 1 week
More than 1 year but not more than 3 years	At least 2 weeks
More than 3 years but not more than 5 years	At least 3 weeks
More than 5 years	At least 4 weeks

An employee who is over 45 years of age and has worked for the same employer for at least two years is entitled to an extra weeks notice. It is important to note that these are minimum entitlements only and an employee may be entitled to a greater period of notice according to the circumstances of the case.

If an employee resigns their employment, the employer should check that they have provided the appropriate notice required under an award or contract. If award based notice is not given, the employer may be within its rights to withhold an amount from any payment due to the employee, eg from any annual leave, if this is allowed by the industrial award. Alternatively, they may be able to sue the employee for the amount of notice not given, whether under the award or contract.

If employment ends due to the redundancy of the employee’s job, then redundancy pay is required in addition to the giving or payment of notice. Redundancy occurs where an employer decides they no longer need an employee’s job to be done by anyone, including where the duties of the job are to be distributed amongst other existing employees. The scale of redundancy pay is:

Period of employee’s service	Redundancy pay period
1 – 2 years	4 weeks
2 – 3 years	6 weeks
3 – 4 years	7 weeks
4 – 5 years	8 weeks
5 – 6 years	10 weeks
6 – 7 years	11 weeks
7 – 8 years	13 weeks
8 – 9 years	14 weeks
9 – 10 years	16 weeks
More than 10 years	12 weeks

The requirement to pay redundancy does not apply if the employee has less than 12 months continuous service or is a “small business employer”. This means an employer with less than 15 employees. If the employer obtains other acceptable employment for the redundant employee or cannot pay the required redundancy pay, the employer can make application to the Fair Work Commission to vary the required amount. There is also an exemption in certain transfer of business situations.

The standard deals with minimum notice and payment requirements. Any applicable industrial award or enterprise agreement should be checked for particular entitlements along with contractual and policy requirements. Please keep in mind that the standard does not deal with all the requirements of termination and redundancy.

11. Fair work information statement

Employers are required to provide to every new employee with a document called a Fair Work Information Statement (FWIS) before, or as soon as practicable after the employee commences employment. It contains details of the NES, awards, agreement-making, the right to freedom of association and the role of the Fair Work Commission and the Fair Work Ombudsman. It is good practice to attach the FWIS to the new employee’s employment agreement. The FWIS is updated each year and can be accessed at www.fairwork.gov.au.

C. More Information

Further information about minimum entitlements can be obtained from www.fwc.gov.au or www.fairwork.gov.au or go to the links section of this website.