Hiring in Australia
In accordance with the Fair Work Act 2009, the Australian government has defined a set of minimum standards of employment known as the National Employment Standards (NES). They set out comprehensive requirements concerning various kinds of pay and leave which must be followed by employers. An employment relationship may be established by an award, an employment contract or an enterprise agreement. Regardless of these, NES always applies.
An award is a legal document outlining the conditions of employment for eligible employees within a particular industry or occupation. There are more than 100 industry or occupation awards that cover most people who work in Australia. However, they do not apply when a workplace has a registered agreement.
An employment contract is an agreement between an employer and employee that sets out terms and conditions of employment.
An enterprise agreement sets out minimum employment conditions that can apply to one business or a group of businesses.
Australia’s National Public Holidays are : New Year’s Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and Boxing Day. Besides, NES also defines standard leave entitlements which apply to all employees, except casual employees.
Maximum work hours
38 hours per week, plus additional hours which must be reasonable
4 weeks paid leave per year, plus an additional week for some shift workers
Up to 12 months unpaid leave. Right to request another 12 months.
Personal / Carer’s leave
10 days paid personal/carer’s leave; 2 days unpaid carer’s leave as required
2 days unpaid as required
Domestic violence leave
5 days unpaid per year
Notice of termination and redundancy pay
up to 5 weeks notice of termination and up to 16 weeks redundancy pay, both based on length of service
Nonetheless, casual employees are also entitled to leave on public holidays and maximum weekly work hours. There are also other leave entitlements defined for casual employees. They are : 2 days unpaid carer’s leave, 2 days unpaid compassionate leave per occasion and 5 days unpaid family domestic violence leave per year.
Pay to Employees
Employees need to be paid the right pay rate for all time worked. This includes time spent on training, team meetings, opening and closing the business and working unreasonable trial shifts. All employees working in Australia are entitled to a minimum wage. This is the minimum amount an employee can be paid for their work. It refers to the amount of pay before tax is taken out (gross pay).
For most employees, the minimum wage is set by the award that covers their industry or occupation. However, when a workplace has a registered agreement, the award does not apply. Nonetheless, NES still applies and the base pay rate cannot be less than that in the award.
Tax and Superannuation Payment
Whenever employers make payment to their employees, they must withhold a portion of their pay for tax. This is called Pay As You Go (PAYG) withholding which helps employees meet their end-of-year tax liabilities.
When employers pay employees, their families or associates on certain benefits, they also have to pay Fringe Benefit Tax (FBT). Below are some examples of such benefits.
- Allowing an employee to use a work car for private purposes.
- Paying an employee’s gym membership.
- Reimbursing an expense incurred by an employee, such as school fees.
- Deductions for work related-travel expenses.
FBT is separate from income tax and is calculated on the taxable value of the fringe benefit. This amount is then multiplied by the FBT rate.
Superannuation (also known as Super or Super Guarantee) is not another tax or government revenue. Its payment is an important obligation of employers to provide for retirement of their employees. Generally, all employees are eligible for Super Guarantee. Specific situations such as the following do not affect their eligibility.
- Full time, part time or casual.
- Those receiving a super pension or annuity while working, including employees on transition to retirement.
- Temporary residents.
- Company directors.
- Family members working in their business.
The current Super Guarantee rate is 10.5%.
Payroll Tax is levied on wages paid or payable by an employer to its employees when the total taxable wages of an employer (or group of employers) exceeds a threshold amount.
The payroll tax rates and thresholds vary between states and territories.
Termination of Employment
Employers may need to make redundancy pay (or severance pay) to employees when their jobs are made redundant.
Nonetheless, under NES, employees will not get redundant pay under the following conditions.
- Period of continuous service with the employer is less than 12 months.
- Employees are employed for a stated period of time, an identified task/project or a particular season.
- Termination of employment is due to serious misconduct.
- Employees are casual, apprentices or trainees engaged only for the length of the training agreement.
Dismissing an employee from his/her job in a harsh, unjust or unreasonable manner may amount to unfair dismissal. The employee may apply to the Fair Work Commission for unfair dismissal within 21 days of the dismissal. Normally, the employee need to be employed for at least 6 months before he/she can apply for unfair dismissal. For small businesses, the required period is 12 months.