LexisNexis Practical Guidance®

Minimum wage entitlements under the national system are usually set out in modern awards and enterprise agreements. The minimum wage for employees who are not covered by an award or agreement is prescribed by the National Minimum Wage Order (NMWO).

The NMWO and modern award wage rates are determined by a specialist panel of the Fair Work Commission (FWC) and are reviewed annually (Annual Wage Review).

Wage rates in enterprise agreements are agreed between the parties to the agreement. During the life of an enterprise agreement wage rates will be adjusted in accordance with the terms of the agreement. However, if the enterprise agreement wage rates fall below the level set out in the otherwise applicable modern award or the NMWO, those higher rates will apply.

Employees must be paid at or above the minimum wage. If they are paid less, action may be taken to recover the underpayment and the employer may be liable to a penalty and the imposition of other orders under the Fair Work Act 2009 (Cth) (FW Act).

See Minimum wages in the national system.

Employees are entitled to a range of leave and other benefits associated with their employment. The rates of pay which apply to these benefits may be prescribed by one or more of statute, awards, enterprise agreements or the employee’s contract of employment.

See Calculating pay for certain purposes.

The FW Act deals with the frequency and methods of payment for the performance of work and allowable deductions from those payments. The object of these provisions is to prevent employers from engaging in modern forms of “truck” practices, such as making deductions from employees' wages where service station or restaurant customers leave without paying their bills.

See Payment for work performed.

Division 3 of Pt 2-2 of the Fair Work Act 2009 (Cth) (FW Act) contains the provisions of the National Employment Standards (NES) relating to maximum weekly hours of work for full-time and part-time employees.

The NES provisions also deal with “reasonable” additional hours, averaging arrangements and the interaction of maximum working hours under the NES with provisions in modern awards and enterprise agreements.

Awards and agreements commonly contain many different types of provisions relating to hours of work, including terms specifying the “ordinary hours of work” and arrangements relating to overtime, rostering, shift work and minimum periods of engagement.

See Maximum hours of work under the national system.

Recent years have witnessed an increased emphasis on the need for employers to implement measures that enable employees to balance work with their other responsibilities.

Many employers offer various kinds of flexible working arrangements intended to promote “work life balance”, which is key to attracting and retaining good staff. These arrangements include part-time work, changes to hours of work, job sharing, working from home, and additional leave entitlements.

The right to request flexible working arrangements forms part of the National Employment Standards (NES) in Pt 2-2 of the Fair Work Act 2009 (Cth) (FW Act). The right is available to certain national system employees, such as employees who have parental responsibility for a child who is of school age or younger, employees with a disability and employees over 55 years old.

An employer may only refuse an employee's request for flexible working arrangements under the NES on "reasonable business grounds". However employees do not have the capacity under the FW Act to challenge the substantive reasons behind an employer's decision to refuse any request for flexible working arrangements, or to apply for a review of such a decision.

The NES provision for flexible working arrangements is the minimum requirement, and employers may choose to offer more generous entitlements eg by extending the right to request to work flexibly to all employees.

See Requesting flexible working arrangements under the national system.

Equal employment opportunity laws in each Australian state and territory make it unlawful for employers to discriminate against employees based on protected attributes such as their family responsibilities, status as a parent or carer, pregnancy, or breastfeeding. While these laws do not generally provide a positive entitlement for employees to request flexible working arrangements, denying such arrangements to employees who have a protected attribute could amount to unlawful discrimination.

See Flexible working arrangements and complying with equal opportunity obligations.

Unpaid parental leave and adoption leave entitlements for national system employees are provided for in the National Employment Standards (NES) provisions of the Fair Work Act 2009 (Cth) (FW Act): Pt 2-2 Div 5.

The entitlement to unpaid parental leave also extends to non-national system employees by virtue of s 744 of the FW Act. This does not, however, exclude state or territory legislation that provides more beneficial entitlements for employees. National system employees who are full time, part time or long term casual and who have at least 12 months continuous service are eligible to unpaid parental leave in accordance with the NES.

The basic entitlement of an employee under the NES is to take unpaid parental leave of up to 12 months following the birth or adoption of a child; with a right to request an additional 12 months' leave (which may only be refused on "reasonable business grounds").

See Applying for parental leave under the national system, Managing national system employees on parental leave and Returning from parental leave under the national system.

Modern awards and enterprise agreements made under the FW Act, and employment contracts and employer policies, must not displace or exclude the NES entitlement to unpaid parental leave. However, they may contain provisions dealing with unpaid parental leave that do not derogate from the entitlements of employees under the NES.

See Types of parental leave under the national system.

Unpaid parental leave and adoption leave entitlements for employees still under the state system are provided for under applicable state industrial legislation or state industrial awards or agreements.

See Parental leave under state systems.

The Paid Parental Leave Act 2010 (PPL Act) provides a paid parental leave scheme, funded by the Commonwealth, for eligible workers who are the primary carers of children born or adopted on or after 1 January 2011.

The PPL Act also provides for Dad and Partner Pay (DAPP), which is a category of paid parental leave for fathers or other partners of primary carers of children born or adopted on or after 1 January 2013.

The PPL scheme operates independently of other entitlements to paid parental leave, for example, under enterprise agreements, employment contracts and employer policies, which have become increasingly common in many workplaces in recent years.

See Commonwealth-funded Parental Leave Pay and Dad and Partner Pay (Commonwealth-funded).

Federal and state legislation provides employees across all jurisdictions with minimum annual leave entitlements.

For national system employees, these entitlements are provided under the National Employment Standards (NES), as set out in the Fair Work Act 2009 (Cth) (FW Act): Pt 2-2 Div 6. For non-national system employees, annual leave entitlements are prescribed by the relevant state or territory legislation.

The minimum entitlement to annual leave of an employee under the NES is 4 weeks’ paid annual leave for each year of service with the employer. Annual leave accrues throughout the year and unused leave is rolled over to the following year. Shift workers are entitled to one additional week of annual leave.

Modern awards and enterprise agreements made under the FW Act may also contain provisions dealing with annual leave, although such provisions must not derogate from the annual leave entitlements of employees under the NES.

See Annual leave under the national system.

Once accrued, annual leave may be taken at a time and for a period agreed between the employee and employer. An employer must not unreasonably refuse an employee’s request to take leave.

An employer may reasonably require or direct an employee to take a period of annual leave at a designated time or in certain circumstances. Many awards and enterprise agreements expressly provide that an employer may direct an employee to take annual leave if they have accrued an excessive balance. However that is usually subject to the employer having first tried to reach agreement with the employee on how to reduce the excessive leave. An employer may direct an award and agreement-free employee to take any excessive annual leave provided the request is reasonable and the employee retains a minimum balance.

Many modern awards provide for the employee to take leave in advance of accrual, with the agreement of the employer. The employer may be able to recover annual leave paid in advance from an employee’s termination payments if the employment ends before the employee accrues an equivalent amount of leave.

See Taking annual leave under the national system.

Under the NES, annual leave is calculated at the employee’s base rate of pay for their ordinary hours of work. It does not include any overtime rates, penalties and other allowances that an employee would have been paid if they had worked during that period, unless an applicable award, enterprise agreement or contract of employment provides otherwise.

Many employees are paid an annual leave loading (usually 17.5%) above their base rate of pay during a period of annual leave.

In most cases, an employee can enter a written agreement with their employer to cash out annual leave, provided that the employee is not left with a balance of less than 4 weeks’ leave and the employee is paid the full amount that would have been payable had the employee taken the leave at the time the payment is made. Modern awards and enterprise agreements may impose additional conditions on when and how annual leave may be cashed out.

Upon termination of employment, unused annual leave must be paid to the employee.

See Payment for annual leave under the national system.

For employees not covered by the FW Act, annual leave entitlements are prescribed by the relevant state legislation. This includes public sector workers in New South Wales, Queensland, South Australia, Tasmania and Western Australia (including, in some instances, local government employees) plus, in Western Australia, private sector employees whose employer is not a constitutional corporation. All employees in the Territories and Victoria (apart from a limited number of employees who are excluded form that State’s referral of legislative power) are covered by the FW Act.

Like the FW Act, state and territory legislation provides for a base entitlement of 4 weeks of paid annual leave for each year of service with the employer which accrues progressively over the course of the year and any unused leave carries over to the next year. Shift workers are similarly entitled to an additional one week’s paid annual leave each year.

The terminology used in the various state and territory legislation differs in certain respects, eg, some refer to “annual leave” whilst others refer to “annual holiday”, and some refer to “workers” and others to “employees”. Nevertheless, the key features of all five systems are essentially the same.

See Annual leave under state/territory law.

Long service leave (LSL) is an entitlement to an extended period of paid leave after a specified minimum period of service with an employer.

LSL is mainly regulated by state and territory legislation. Specific federal legislation exists providing LSL entitlements for Commonwealth public servants.

The National Employment Standards (NES) contain some minimal provisions relating to LSL (Pt 2-2, Div 9, Fair Work 2009 Act (Cth) (FW Act)), which preserve the operation of LSL entitlements applicable to employees under awards and agreements prior to 1 January 2010.

Modern awards do not contain provisions relating to LSL. However LSL provisions may be included in enterprise agreements made under the FW Act as long as those provisions do not derogate from an employee’s entitlements under applicable state or territory legislation.

Some Australian states and territories have legislation to provide employees in security, community services, building and construction, coal mining and contract cleaning with access to portable long service leave entitlements. This means that an employee will keep their long service leave entitlement even if they work for more than one employer.

See Long service leave entitlements.

Varied LSL provisions apply in each of the states and territories.

Due to the disparate entitlements to long service leave throughout Australia, this situation is often difficult for businesses to manage across the various jurisdictions. Cross-jurisdiction employers will need to maintain different long service leave standards depending upon which state or territory an employee is employed.

We have provided a comparative long service leave table which assists in this process.

See Long service leave comparative table.

The National Employment Standards (NES) in Pt 2-2 of the Fair Work Act 2009 (Cth) (FW Act) provide a minimum entitlement to paid personal/carer’s leave for national system employees.

Modern awards and enterprise agreements may include provisions that are ancillary or incidental to the personal/carer’s leave entitlements under the NES or which supplement those entitlements.

Employees who are not covered by the NES are generally entitled to personal/carer’s leave under state legislation.

See Personal/carer’s leave.

The NES provide a minimum entitlement to compassionate leave (also known as bereavement leave) for national system employees.

Modern awards and enterprise agreements may also include provisions that are ancillary or incidental to the compassionate leave entitlements under the NES, or which supplement those entitlements.

Employees who are not covered by the NES may be entitled to compassionate leave under state legislation.

See Compassionate leave.

The NES provide a minimum entitlement to community service leave for national system employees, including jury service leave and voluntary emergency management activity.

Modern awards and enterprise agreements may include provisions that are ancillary or incidental to the community service leave entitlements under the NES or which supplement those entitlements.

Employees who are not covered by the NES may be entitled to community service leave under state legislation.

See Community Service Leave.

The NES provide minimum entitlements for unpaid leave, including unpaid parental leave, unpaid carer’s leave and voluntary emergency management activity.

Modern awards and enterprise agreements may include provisions that are ancillary or incidental to the unpaid leave entitlements under the NES or which supplement those entitlements.

Employees who are not covered by the NES may be entitled to unpaid leave under state legislation.

An employer and an employee may also agree that the employee will be allowed to take a period of unpaid leave. However, care must be taken in such situations to clarify the effect of any period of agreed unpaid leave on the employee’s duration and continuity of employment.

See Unpaid Leave.

The NES provide minimum entitlements for unpaid family and domestic violence leave for national system employees. Unlike other NES leave entitlements, the entitlement to family and domestic violence leave is available from the first day an employee commences work and renews in full at the start of each subsequent year. The entitlement does not accrue from year to year.

Modern awards and enterprise agreements may also include provisions that are ancillary or incidental to the family and domestic violence leave entitlements under the NES, or which supplement those entitlements.

Employees who are not covered by the NES may be entitled to community service leave under state legislation.

See Family and domestic violence leave.

Provisions in relation to public holidays form part of the National Employment Standards (NES) applicable under Pt 2-2 of the Fair Work Act 2009 (Cth) (FW Act).

Public holidays are also the subject of regulation in state and territory legislation. These state/territory statutes specify the public holiday entitlements of employees who are not covered by the FW Act, and supplement the entitlements of national system employees.

Modern awards and enterprise agreement may also contain provisions which improve upon the public holiday entitlements of national system employees under the NES.

See Which employees are entitled to public holidays?