The importance of understanding minimum employment rights and obligations

As an employer, understanding employee rights and obligations is imperative in the successful operation of a company or business. Every business with employees must take all necessary steps to ensure they are compliant with workplace laws.

Compliance with Australian workplace laws is multifaceted requiring employers to comply with workplace legislation, modern awards, enterprise agreements and employment contracts.

Fair Work Act 2009 (Cth) ('FWA')

The FWA governs the employee and employer relationship in Australia, providing a safety net of minimum entitlements.

National Employment Standards ('NES')

The FWA sets out the minimum standards of employment through the NES. The NES comprises the minimum entitlements for all employees in Australia. An award, employment contract, EA or other registered agreement cannot provide for conditions that are less than the national minimum wage or the NES and cannot exclude the NES.

Modern Awards

Modern Awards are industry or occupation-based and apply to all employees who perform work covered by an award. Not all employers and employees will be covered by an award. Modern awards set out the minimum terms and conditions of employment on top of the National Employment Standards.

Enterprise Agreements

An EA is formal agreement between employers and employees approved by the Fair Work Commission setting out minimum terms and conditions of employment on top of those provided for in the NES and in substitution of the rights and obligations of any applicable Modern Award.

It should be noted that, an EA can only improve on the minimum terms and conditions and where the employees’ rights (such as base rate of pay) in the EA are lower than those provided for in an applicable Modern Award the rights in the Modern Award will apply.

Employment Contracts

An employment Agreement is an agreement between an employer and an employee in which the employer provides clear expectations and responsibilities for the employee. An employment contract cannot provide for less than the minimum rights and obligations under the NES, Modern Awards or EAs that apply.

The consequences of misinterpreting minimum employment requirements

Seqwater, Southeast Queensland’s water supplier, was investigated in 2020 following underpayment allegations made through the media. The investigation revealed that many employees were underpaid because Seqwater incorrectly determined that it was not required to provide them with entitlements listed in its enterprise agreement because those employees had individual employment contracts.

Most of the underpayments related to overtime pay, but other entitlements including travel, on-call and call-back allowances, remote assistance allowance, leave loading and ordinary hourly rates were also underpaid.

Seqwater determined the issue was largely as a result of complex and ambiguous enterprise agreements, and their payroll system.

Fair Work Ombudsman, Sandra Parker, noted "Seqwater's breaches and subsequent significant backpay bill demonstrate how important it is for employers to place a high priority on workplace compliance, including having a clear understanding or how any enterprise agreements apply and performing regular checks to ensure they are providing employees will all lawful elements".

Compliance Review

As demonstrated in the investigations undertaken by Seqwater, regular compliance reviews are essential in business operation to ensure employers are adhering to any employment law obligations.

If you would like assistance in completing a compliance review please contact us at support@hrelements.com.au.