Labour Law in Australia

The Fair Work Act 2009 (Cth)

Australian labour law is predominantly governed by the Fair Work Act 2009 (Cth) (the “FW Act”), which established the national “Fair Work” system. Enacted by the Rudd Labor Government, the FW Act replaced the earlier Work Choices regime (the Workplace Relations Amendment (Work Choices) Act 2005) and represented a return to a more arbitral model of workplace regulation. The Act relies on the constitutional heads of power in s 51 of the Commonwealth Constitution, principally the corporations power (s 51(xx)) and the external affairs power (s 51(xxix)), and covers the vast majority of Australian employees and employers.

The Fair Work Commission

The Fair Work Commission (the “FWC”) is the national workplace relations tribunal exercising quasi-judicial and administrative powers. Its principal functions include: setting modern awards; adjusting the national minimum wage; approving enterprise agreements; and adjudicating unfair dismissal and general protections claims. The President must be a judge of the Federal Court, reflecting the tribunal’s adjudicative character.

The FWC’s minimum wage fixing function is conducted through the Expert Panel for annual wage reviews under s 284, which considers the “relative living standards and the needs of the low paid” alongside economic conditions.

The Fair Work Ombudsman

The Fair Work Ombudsman (“FWO”) is the primary enforcement agency, responsible for monitoring compliance, investigating contraventions, and litigating breaches. Its enforcement powers include Compliance Notices (s 716), Infringement Notices (s 557G), and seeking civil remedy orders in the Federal Court.

The National Employment Standards

Part 2-2 of the FW Act establishes the National Employment Standards (“NES”), which prescribe ten enforceable minimum entitlements: maximum weekly hours (38 plus “reasonable” additional); flexible working arrangements; parental leave (12 months unpaid, with a right to request a further 12); annual leave (four weeks paid); personal/carer’s and compassionate leave (10 days paid personal leave); community service leave; long service leave; public holidays; notice of termination and redundancy pay; and the Fair Work Information Statement.

The NES operates as a legislative safety net that cannot be contracted out of, though enterprise agreements may provide “alternative” arrangements that are “better off overall” for employees.

The Modern Award System

The modern award system comprises 122 industry and occupational awards covering specific industries and occupations. These awards are legislative instruments made by the FWC under Part 2-3 of the FW Act. Modern awards provide terms and conditions of employment on matters including: minimum wages (classifications and pay rates); hours of work; rostering; overtime and penalty rates; leave; and dispute resolution procedures.

Modern awards are subject to the modern awards objective (s 134) and the FWC’s four-yearly review of awards. The system reflects the Australian tradition of compulsory conciliation and arbitration inherited from the Conciliation and Arbitration Act 1904 (Cth), which established the Commonwealth Court of Conciliation and Arbitration.

Enterprise Bargaining and the “Better Off Overall” Test

Enterprise agreements are bargained instruments operating in conjunction with modern awards. The FW Act provides for single-enterprise agreements, multi-enterprise agreements, and greenfields agreements (s 172). The 2022 amendments revived multi-enterprise bargaining through the supported bargaining regime for aged care, childcare, and disability services, alongside intractable bargaining provisions allowing FWC arbitration after nine months.

Agreements must satisfy the Better Off Overall Test (“BOOT”) under s 193 — each employee covered by the agreement must be “better off overall” than under the relevant modern award. This test has generated considerable litigation, including Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 3082 and Application by Australasian Meat Industry Employees Union [2017] FWCFB 3738.

The 2023 Closing Loopholes amendments introduced “same job, same pay” provisions, allowing labour hire employees to apply for a workplace determination ensuring pay parity with directly engaged employees.

Industrial Action

The FW Act adopts a system of protected industrial action available only during bargaining. Requirements include: a protected action ballot (ss 437–448) conducted by the Australian Electoral Commission; a bargaining order (s 229); and adherence to good faith bargaining (s 228). Unprotected action exposes organisers to civil penalties and common law liability.

The good faith bargaining obligations under s 228 include: attending meetings; disclosing relevant information; responding to proposals; and giving genuine consideration to the proposals of other parties. The FWC may make bargaining orders and serious breach declarations as enforcement mechanisms.

Unfair Dismissal

The FW Act’s unfair dismissal jurisdiction (Part 3-2) provides that a person who has been dismissed may apply to the FWC for a remedy if the dismissal was “harsh, unjust or unreasonable” (s 385). The FWC must consider factors under s 387, including whether there was a valid reason for the dismissal, whether the employee was notified of that reason, and whether the employee was given an opportunity to respond. The remedy for a successful claim is primarily reinstatement (s 391), with compensation available as an alternative (s 392, capped at the lesser of 26 weeks’ pay or half the high-income threshold).

A minimum employment period (6 months for employers with 15+ employees; 12 months for smaller employers) and the high-income threshold limit access to the jurisdiction.

General Protections

Part 3-1 of the FW Act provides general protections, prohibiting “adverse action” because of a workplace right (s 340), or because of prescribed attributes including race, sex, age, disability, religion, and political opinion (s 351). The reverse onus of proof (s 361) requires the employer to satisfy the court that the alleged reason was not a substantial and operative factor — a provision clarified in Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500.

Industry-Specific Regulation

The building and construction industry faces additional regulation through the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) and the Australian Building and Construction Commission. The Construction, Forestry, Maritime, Mining and Energy Union (“CFMMEU”) has been the subject of administrators and extensive litigation regarding workplace law contraventions.