Workplace Relations Framework

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Managing Risks

There is no substitute for a planned employment framework in your NFP organisation. Employment contracts prepared specifically for your NFP; workplace policies; and regular training for employees (including managers), go a long way toward protecting a NFP from employment claims. Getting legal advice from an experienced workplace relations lawyer, understanding the potential risks and how to manage them before you make decisions provides further protection.

Who is covered by Employment Laws

Employment in Australia is governed by either the state or federal industrial frameworks.

Federal Industrial Jurisdiction

The Fair Work Act 2009 (Cth) (the FW Act) regulates “national system” employers and employees and covers the Commonwealth, Commonwealth authorities and constitutional corporations, as well as all other:

• employment in Victoria, ACT and the Northern Territory;
• private sector employment in New South Wales, Queensland and South Australia; and
• private sector and local government employment in Tasmania.

The system does not cover:

• state public sector or local government employment or employment by non-constitutional corporations in the private sector in Western Australia;
• state public sector and local government employment in NSW, Queensland and South Australia; or
• state public sector employment in Tasmania.

Volunteers and genuine contractors are not covered by the unfair dismissal provisions of the FW Act.

Charities

Most, but not all, non-government organisations (NGOs), such as charities, are incorporated and those that engage in “trading” are consequently covered by the FW Act. Incorporated charities which derive their income from non-trading activities (for example fund raising) are not covered by the FW Act. However, it can be difficult to determine whether an employer is a trading corporation and the cases are not entirely clear. Charities and other NFPs may still be constitutional trading corporations despite income accrued being used for charitable purposes other than to create a profit.

Examples of NGOs that have been found to be trading corporations include:

1. a charitable organisation, on the basis that it earned substantial income from trading activities. It did not matter that the income was used for charitable purposes rather to create a profit;[1]
2. a NFP organisation, on the basis that it generated substantial income from trading activities, even though that income was only a minority proportion of total income. The motive for which that trading income was earned was not relevant;[2]
3. a NFP provider of rehabilitation services because the provider’s funding contracts, individual contracts for some activities and its youth housing renovation program, generated about $1.2 million a year for the organisation, equating to 11 per cent of its annual activities. It was also held that activities associated with the direct provision of accommodation services were trading activities. The combined level of trading activities (in excess of 15 per cent of income) was held to be not insubstantial.[3]

However, a different charitable organisation was found not to be a trading corporation. The trading activities it did engage in were considered insubstantial and peripheral to the central activity of the organisation.[4]

State Industrial Relations coverage

Employment that is not covered under the national industrial relations system remains regulated by the relevant state industrial relations systems. However, some entitlements under the FW Act extend to non-national system employees, including unpaid parental leave, notice of termination, payment in lieu or notice and protection from unlawful termination of employment. Conversely, the states retain coverage of long service leave and workplace health and safety matters.

Understanding how your workplace is covered is important as that will dictate how you deal with various aspects of the employment relationship.

The Fair Work Act 2009

The FW Act establishes a safety net comprising of the NES; modern awards and national minimum wage orders; and a compliance and enforcement regime. It also establishes the institutions formed to administer the system, comprising of the Fair Work Commission and the Fair Work Ombudsman. The Fair Work Divisions of the Federal Court and Federal Magistrates Court and, in some cases, state and territory courts, perform the judicial functions under the FW Act.

Key features of the Fair Work system

The key features of the Fair Work system are:

• 10 minimum National Employment Standards (NES);
• awards that apply nationally for specific industries and occupations;
• the national minimum wage; and
• protection from unfair or unlawful dismissal, breach of workplace rights and workplace bullying.

Awards, together with the National Employment Standards and the national minimum wage, make up the safety net of entitlements for employees covered by the system.

Industrial Framework

National system employee’s conditions largely arise out of:

• the terms of the FW Act; and
• a Modern Award; or
• an enterprise agreement; or
• if they are not covered by an award or agreement, a common law employment contract.

The NES

The national minimum wage and the NES make up the minimum entitlements for employees in Australia. The NES are 10 minimum employment entitlements that must be provided to all employees. A Modern Award, employment contract, enterprise agreement or other registered agreement cannot provide for conditions that are less than the national minimum wage or the NES and they cannot exclude the NES.

The 10 minimum entitlements of the NES are:

• Maximum weekly hours;
• Requests for flexible working arrangements;
• Parental leave and related entitlements;
• Annual leave;
• Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave.

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• Community service leave;
• Long service leave;
• Public holidays;
• Notice of termination and redundancy pay; and
• Fair Work Information Statement.

The Office of the Fair Work Ombudsman investigates alleged breaches as well as conducting random audits and have a demonstrated history of prosecuting employers in breach of their obligations. The have been significant penalties applied to employers in recent years.

Employers must provide employees with a copy of the Fair Work Information Statement before the employee commences employee or soon after. Substantial penalties can apply for failing to comply with this obligation.

Who is covered by the NES

All employees in the national workplace relations system are covered by the NES regardless of the award, registered agreement or employment contract that applies to them.

However, casual employees only get NES entitlements relating to:

• unpaid carer’s leave;
• unpaid compassionate leave;
• unpaid family and domestic violence leave;
• community service leave; and
• the Fair Work Information Statement.

In some states and territories long serving casuals are also eligible for long service leave.

Where there is an expectation of ongoing work for a casual employee and they have been employed regularly and systematically for at least 12 months, they have extra entitlements under the NES of the right to request for flexible working arrangements, access to parental leave and protection from unfair dismissal.

Employment Records

Employers must keep time and wages records for 7 years. Time and wages records must be:

• readily accessible to a fair Work Inspector if requested;
• legible; and
• in English.

An employer must keep a record in respect of each employee about:

1. basic employment details such as the name of the employer and the employee and the nature of their employment (e.g. part‑time, full‑time, permanent, temporary or casual);
2. pay;
3. overtime hours;
4. averaging arrangements;
5. leave entitlements;
6. superannuation contributions;
7. termination of employment (where applicable); and
8. individual flexibility arrangements and guarantees of annual earnings.

There are also record generation and retention obligations on old employers and new employers in transfer of business situations.

Records must be properly maintained.  For example, the regulations set out the required form to make sure that records are legible and readily accessible to an inspector and that records are accurate at all times.

Time and wages records cannot be changed unless the change is to correct an error and cannot be false or misleading. Substantial penalties apply if an employer is found to breach their record keeping obligations.

Pay slips

An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work. The pay slip must be in electronic form or hard copy and include:

1. the employer’s name;
2. the employee’s name;
3. the period to which the pay slip relates;
4. the date on which the payment to which the pay slip relates was made;
5. the gross amount of the payment;
6. the net amount of the payment;
7. any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive‑based payment or other separately identifiable entitlement; and
8. the Australian Business Number (ABN) (if any) of the employer.

If the employee is paid at an hourly rate of pay, the pay slip must also include:

• the rate of pay for the employee’s ordinary hours (however described); and
• the number of hours in that period for which the employee was employed at that rate; and
• the amount of the payment made at that rate.

If the employee is paid at an annual rate of pay, the pay slip must also include the rate as at the latest date to which the payment relates.

If an amount has been lawfully authorised to be deducted from the gross amount of the payment, the pay slip must also include the name, or the name and number of the fund or account into which the deduction was paid.

If the employer is required to make superannuation contributions for the benefit of the employee, the pay slip must also include:

• the amount of each contribution that the employer made during the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contribution was made; or
• the amounts of contributions that the employer is liable to make in relation to the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contributions will be made.

Record of hours worked

An employer must make and keep a record that specifies:

• the number of overtime hours worked by the employee during each day; or
• when the employee started and ceased working overtime hours.

Even for salaried employees, it is generally required that an employer maintain overtime records to ensure the employee is not financially disadvantaged by working excessive hours. There are also WHS obligations to consider with regards to excessive additional hours.

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