Payment for work performed

The Fair Work Act 2009 (Cth) (FW Act) contains provisions dealing 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 “paying” fast food employees for overtime work or “closing up the till” with left-over food, or making deductions from employees’ wages where service station or restaurant customers leave without paying their bills.

See Payment for work performed.

Minimum wages

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

Employees can be paid at or above the minimum wage set out in the applicable instrument. However, if they receive 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).

See Minimum wages.

Calculating pay for certain purposes

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.

The principal focus of this guidance note is on the rate of pay for different benefits under the Fair Work Act 2009 (Cth). However, consideration is also given to long service leave and paid parental leave entitlements derived from measures other than the FW Act. In all circumstances, it is necessary to review other applicable instruments such as enterprise agreements and modern awards to determine whether they create any more beneficial entitlements than the statutory minima.

In broad terms, pay is calculated either on the basis of the employee’s:

• base rate of pay; or

• full rate of pay.

See Calculating pay for certain purposes.

Payments on termination of employment

When an employment relationship ends, the employer is required to pay the employee:

• outstanding wages for hours worked; and

• any accrued but unused annual leave.

In some cases, an employee must also be entitled to:

• redundancy pay;

• payment in lieu of notice;

• pro-rata long service leave; or

• a gratuity.

See Payments on termination of employment.

The National Employment Standards (NES)

Part 2-2 of the Fair Work Act 2009 (Cth) provides for a scheme of 10 minimum employment standards known as the National Employment Standards (NES). The NES constitute the minimum terms and conditions of employment for all employees covered by the FW Act

The ten NES relate to the following matters:

• maximum weekly hours of work;

• requests for flexible working arrangements;

• parental leave;

• annual leave;

• personal/carer’s leave and compassionate leave;

• community service leave;

• long service leave;

• public holidays;

• notice of termination and redundancy pay; and

• the Fair Work Information Statement.

See The National Employment Standards (NES).

Maximum hours of work

The NES make provision for an employee’s maximum weekly hours of work.

These provisions:

• set out the maximum weekly hours of work for employees covered by the FW Act, and

• identify when an employee can refuse a request to work additional hours because the hours are unreasonable.

Modern awards and enterprise agreements may include provisions relating to working hours, although there are some restrictions on such provisions arising from their interaction with the NES.

See Maximum hours of work.

Requesting flexible working arrangements — NES provisions

The right of employees to request flexible working arrangements forms part of the NES.

A national system employee who has completed at least 12 months of continuous service with their employer may request a change in their working arrangements if:

• the employee is the parent, or has responsibility for the care, of a child who is of school age or younger;

• the employee is a carer within the meaning of the Carer Recognition Act 2010 (Cth);

• the employee has a disability (which is not defined for the purposes of these provisions);

• the employee is 55 years of age or older;

• the employee is experiencing violence from a member of his or her family; or

• the employee provides care or support to a member of their immediate family or household who is experiencing violence from another family member.

Flexible working arrangements are not defined in the FW Act, but they may include, for example:

• changes in hours of work;

• changes in patterns of work; and

• changes in location of work.

See Requesting flexible working arrangements — NES provisions.

Applying for parental leave

The NES establish a minimum entitlement to unpaid parental leave. Eligible employees may take a period of 12 months’ unpaid leave for the birth or adoption of a child, and have the right to request a further 12 month extension of leave.

Employees may also be able to access Commonwealth-funded Parental Leave Pay (PPL) or Dad and Partner Pay (DAPP). PPL and DAPP are not an entitlement to leave as such, but a payment, and are typically taken in conjunction with unpaid leave under the NES.

Some employees may also receive employer-funded parental leave pursuant to an industrial instrument, or their contracts of employment. Modern awards, enterprise agreements, employment contracts or employer policies may supplement the NES entitlement to unpaid leave, but only to the extent that the entitlements in those instruments do not derogate from the NES.

See Applying for parental leave.

While on parental leave

The general rule is that unpaid parental leave under the NES must be taken in one continuous period and an employee’s entitlement to leave ceases when the employee returns to work. However, an employee may take up to 10 “keeping in touch days” on which the employee performs work for the employer without breaking the continuity of their leave: s 79A.

Following the end of the initial parental leave period, an employee can request a further 12 month’s unpaid leave (up to a maximum total of 24 months). An employee may also resign while on unpaid leave by giving the required period of notice. An employee must keep in mind that he/she does not accrue other types of paid leave (ie annual leave, personal leave etc.) while:

• on unpaid parental leave; or

• in receipt of PLP or DAPP.

If an employee is on unpaid parental leave and the employer makes a decision that will have a significant effect on the status, pay or location of the employee’s pre-parental leave position, then the employer must take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect the decision would have on that position.

See While on parental leave.

Returning from parental leave

At the end of a period of unpaid parental leave, an employee is entitled to return to his or her pre-parental leave position or, if that position no longer exists, an available position for which the employee is qualified, and which carries similar status and pay as the employee’s pre-parental leave position.

The FW Act provides that if an employee has taken unpaid parental leave in relation to a child and the employee ceases to have responsibility for the care of that child, the employer may require the employee to return to work on a specified day by giving the employee at least 4 weeks’ written notice to that effect.

The Act also provides that an employee who has completed at least 12 months of continuous service may request flexible working arrangements if they come within one of the categories of employees set out in s 65(1A) .

See Returning from parental leave.

Annual leave under National Employment Standards

The NES set out minimum annual leave entitlements for all national system employees other than those employed as casuals. Casual employees, long or short term, have no entitlement to annual leave under the FW Act. This is because the loading paid to casual employees is assumed to compensate them for (among other things) not receiving paid annual leave: s 86, FW Act.

Under the NES, employees are entitled to:

• 4 weeks of paid annual leave based on the employee’s ordinary hours of work; or

• 5 weeks of paid annual leave based on the employee’s ordinary hours of work if the case of shiftworkers.

Annual leave accrues progressively during each year of service, and unused annual leave rolls over to the next year.

See Annual leave under National Employment Standards.

Long service leave entitlements

Long service leave (LSL) is a distinctively Australian form of employment benefit. It consists of an entitlement to an extended period of leave after a specified period of service with an employer (or, in some instances, a predecessor or a related entity). It is intended as a reward for loyal service over an extended period, and is available in addition to other forms of leave entitlement such as annual leave or personal leave.

The broad thrust of the legislative provision is the same in all cases, the employee renders continuous service to the employer for a specified period, and as at a specified anniversary of commencement of employment the employee is entitled to take LSL.

All jurisdictions also make provision for the pay-out of LSL in the event of termination of employment. Where the employee has not served the full qualifying period, payment may be on a pro rata basis after a specified period which is shorter than the qualifying period.

Despite these common elements, there are many differences between the various jurisdictions as to matters of detail. Complex issues can also arise in relation to the interaction between LSL provision in industrial instruments and state and territory legislation. This can be a source of significant confusion and inconvenience — especially for businesses that operate in more than one jurisdiction. For example, not only do they have to cope with a diverse range of technical requirements, they also have to maintain different kinds of employment records as between jurisdictions.

Part 2-2 Div 9 of the Fair Work Act 2009 (Cth) makes provision for LSL as one of the National Employment Standards (NES). However, it does so in only a very limited way, pending the development of uniform national standards through consultation between the Commonwealth and the states. This process is likely to take some considerable time and has seen little progress in recent years. In the meantime, LSL for most employees is regulated by state or territory legislation, and in some cases, a federal industrial instrument.

See Long service leave entitlements.

Long service leave comparative table

Long service leave entitlements are currently contained in State and Territory laws and some pre-reform federal awards and pre-WorkChoices agreements.

Cross-jurisdiction employers are currently required to maintain different long service leave standards depending upon which State or Territory an employee is employed.

An employee employed under a federal award or certified agreement that provides for long service leave is subject to the provisions of the relevant award/agreement, otherwise such federal award employee is covered by the relevant state/territory legislation.

See Long service leave comparative table.

Personal/carer’s leave

The NES provide that employees (other than casuals) are entitled to 10 days of paid personal/carer’s leave for each year of service with their employer.

Part-time employees are entitled to a pro-rata amount of personal leave based on their ordinary hours of work.

An employee may take paid personal/carer’s leave:

• when the employee is unfit for work due to personal illness or injury; or

• to provide care or support to a member of the employee’s immediate family or household who is affected by illness, injury or unexpected emergency (‘immediate family’ includes de facto partners and grandparents/grandchildren).

An employee does not receive their full entitlement to paid personal/carer’s leave on commencement of employment, it accrues progressively throughout the year based on the employee’s ordinary hours of work. Unused leave rolls over to the next year, but is not usually paid out on termination of employment (unless this is provided for in an applicable award or agreement, or the employment contract).

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 entitled to personal/carer’s leave under state legislation.

See Personal/carer’s leave.

Compassionate leave

Under the NES, all employees (including casuals) are entitled to two days of paid compassionate leave on each occasion when a member of the employee’s immediate family or household (s 104 ):

• contracts or develops a life-threatening illness or injury; or

• dies.

An employee may take compassionate leave (s 105):

• to spend time with the ill or injured family/household member (at any time while the illness or injury persists); or

• after the death of the family/household member.

Compassionate leave may be taken as two consecutive days, two separate periods of one day each, or over separate periods as agreed between employer and employee: s 105(2) .

Employees (other than casuals) are entitled to be paid while on compassionate leave, on the basis of their base rate of pay for ordinary hours of work.

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 are entitled to compassionate leave under state legislation.

See Compassionate leave.

Community service leave

Community service leave forms part of the NES.

It encompasses two kinds of leave:

• jury service; and

• voluntary emergency management activity.

The FW Act contemplates that further community service activities may be added by regulation, but no such regulations have been made as yet, and none appear to be in contemplation.

See Community service leave.

Unpaid leave

The NES provide for the following forms of unpaid leave:

• unpaid parental leave;

• unpaid carer’s leave; and

• voluntary emergency management activity (as part of community service leave).

Modern awards and enterprise agreements may also provide for additional unpaid leave entitlements, provided they are not detrimental to an employee in any respect, when compared to the NES.

Aside from any entitlement to unpaid leave under statute or industrial instrument, an employer may allow an employee to take unpaid leave on terms agreed with the employee (so long as those terms do not run counter to any relevant provision in statute or an applicable industrial instrument). Such agreement can form a continuing part of a contract of employment (ie a standing entitlement to take unpaid leave to undertake an approved course of study), or can be implemented on an ad hoc basis (ie where an employee decides that they want to take a break from work in order to travel).

See Unpaid leave.

Public holiday entitlements

Public holidays are dealt with by the NES. They are also the subject of regulation in state and territory legislation, as well as modern award and enterprise agreements.

Employees covered by the NES are entitled to be absent from work ‘on a day or part-day that is a public holiday in the place where the employee is based for work purposes’: s 114(1).

An employee is also entitled to be paid the base rate of pay for his/her/their ordinary hours of work on any day (or part-day) that the employee is not required to work due to a public holiday. If an employee would not have performed any ‘ordinary hours of work’ on that day (ie a casual employee who was not rostered on for the public holiday in question), then the employee is not entitled to any payment (see the Note to s 116 ).

While the general rule is that employees are entitled to take a day off on a public holidays, employers may make a reasonable request for employees to work on that day. An employee can refuse such a request if it is unreasonable, or if the employee’s refusal is reasonable: s 114(2)–(3), Fair Work Act 2009 (Cth)

See Public holiday entitlements.