Master Australian Labor Law in 2024 for Expansion Success

Master Australian Labor Law in 2024 for Expansion Success

Master Australian Labor Law in 2024 for Expansion Success

March 1, 2024

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Key Takeaways

  1. Expansion to Australia provides access to a large consumer market and deep pool of diverse talent.
  2. Australian labor laws are enacted on a federal or state and territory level and companies must be aware of all their responsibilities
  3. An EOR (Employer of Record) in Australia can offer total compliance with all Australian labor laws while also cutting down on the time and costs associated with setting up a business in Australia
Summary

 

Australia, situated in the APAC region, presents a unique opportunity for international companies due to its European-styled economic outlook and business-friendly political structures. With a large and open-minded approach to business opportunities, the country ranked 5th globally for ease of doing business, as per the World Bank, in part thanks to the well-defined nature of Australian Labor Law.

Australia, boasting a diverse population with a very high number of foreign-born citizens, not only weathered the COVID-19 pandemic by increasing exports but has now fully reopened its doors to global companies.

With strategically positioned population centers on both coasts, Australia offers overlapping time zones with both Asian and American working days, serving as a convenient central hub for multiple markets.

This guide provides a primer to the essential knowledge you need to know when considering an expansion to Australia as an employer. We also offer helpful hints and tips to boost local effectiveness and better integrate your Australian workers into global structures.

 

Australian Labor Law Regulations: The Most Important Acts

 

In addition to companies being required to follow common law in Australia, the following Australian labor laws relate specifically to employment at a federal level:

 

  • The Fair Work Act of 2009 covers many of the minimum terms and conditions used for employment in the country and establishes the expectations for employer-employee relationships. Commonly, these are known as the National Employment Standards (NES).
  • The Work Health and Safety Act of 2011 provides legislation concerning employee health and safety requirements. It also provides stipulations for employee benefits and compensation to all Australian workers.
  • The Corporations Act of 2001 lays out most of the regulations concerning how companies are defined, how they can operate, and their requirements.
  • The Competition and Consumer Act 2010 defines many of the relationships between companies and consumers and legislates fair trade practices to protect consumers.
  • The Independent Contractors Act of 2006 defines the links between companies and independent contractors in Australia.

 

How are Australian Labor Laws Applied?

 

Each Australian state and territory has distinct laws regulating employment requirements. Full texts of applicable Australian labor laws can be found on state or territory government sites. However, we advise checking with employment professionals with specific knowledge of each state or territory when you are thinking about expansion.

Employers should also be aware of rules of their industry, either through a Collective Bargaining Agreement (CBA) or other Australian government acts.

Australian labor law compliance and workplace relations are overseen by the Fair Work Ombudsman. This body has the power to investigate breaches of the Fair Work Act or other work laws and act to enforce the law if needed.

 

Employment Contracts in Australia

 

While not legally required, written contracts are strongly advised in Australia due to the employee-friendly nature of Australian labor law.

These contracts should include crucial details such as employee and employer responsibilities, pay, hours, and materials.

Employment can take various forms, including full-time, part-time, indefinite, or fixed-term contracts. Fixed-term contracts are suitable for short-term roles but are limited to a maximum of 4 years.

 

Independent Contractors in Australia

 

Separate regulations cover independent contractor agreements in Australia.

Independent contractors must have greater control over their work, taxes, and supply their own tools. Misclassifying workers can lead to severe fines, so professional advice is advised to avoid such issues when hiring contractors in Australia.

 

Probation Periods

 

While not subject to fixed limits in Australian labor laws, probation periods can be included in an employment agreement if signed upon by both parties. CBAs may also limit probation periods according to the sector.

Typically lasting from 3 to 6 months, probation periods offer employees many of the same protections as full-time employees, including paid leave. However, termination procedures are less strict during the probation period.

 

 

Working Hours and Overtime in Australia

 

In Australia, employees may work up to 38 standard hours per week, with full-time workers (7-10 hours daily) entitled to 2 paid 10-minute rest breaks and an unpaid 30–60-minute lunch break. Rest periods of 10-12 hours between shifts are required.

Employers can request “reasonable” overtime beyond 38 hours, with no set limit.

Overtime in Australia is typically paid at 150% for the first 2 hours and 200% thereafter, though specific rates may apply in certain industries or times. At the same time, employees may receive time off in lieu of overtime pay.

For precise calculations, the government department managing Australian labor law compliance has provided an online calculator.

 

Types of Leave in Australia

 

Public Holidays in Australia vary by state or territory, typically ranging from 10 to 13 paid days off per year. If a public holiday falls on a weekend, the next workday is given off in lieu.

Annual leave entitlement is a minimum of 4 weeks for all employees (except casual workers), beginning on day 1 of their contract.

Sick and carer’s leave, calculated at 10 days per year, allows employees to care for themselves or family members.

Parental leave combines paternity, parental, and maternity leave in Australia, permitting up to 12 months of unpaid leave. However, during this time the primary caregiver may receive 18 weeks of Parental Leave Pay which is based on the national minimum wage.

Compassionate bereavement leave grants 2 days of paid leave for family-related tragedies.

Family and domestic violence leave has recently been extended to 10 days of fully paid leave.

Long service leave, lasting up to 3 months, and community service leave for emergency management activities or jury duty are also provided as needed.

 

Termination and Severance in Australia

 

Notice periods in Australia, determined by continuous service, must be given by employers and can be extended for employees over 45. However, early termination is possible with mutual agreement, and serious misconduct allows for immediate termination without notice or severance pay.

Employee resignations require notice as per their agreement or industry standards. Here, the law is built around the concept of fair warning.

In Australia, ending an employment contract involves meeting specific requirements to avoid unfair dismissal claims. Legitimate reasons for dismissal include issues with job performance, multiple prior warnings, dangerous behavior, refusal to follow directions, or any action which puts at risk the company’s performance or reputation.

Redundancy pay is required for indefinite contract terminations due to redundancy, with amounts based on service length:

 

Service Length Redundancy pay 
1-2 years 4 weeks
2-3 years 6 weeks
3-4 years 7 weeks
4-5 years 8 weeks
5-6 years 10 weeks
6-7 years 11 weeks
7-8 years 13 weeks
8-9 years 14 weeks
9-0 years 16 weeks
10+ years 12 weeks

 

Establishing a Legal Entity in Australia

 

 

Opening a business in Australia is made easier thanks to government incentives and regulations, offering access to a diverse pool of global talent.

 

Foreign Ownership

 

Non-citizens seeking to establish a business in Australia can explore options like the Business Innovation and Investment (Provisional) Visa, designed for people with business experience, and the Business Talent Visa, a more long-term option with varying streams and requirements.

 

Opening a Business as a Non-Resident

 

While non-residents can run businesses in Australia, they must work with at least one local resident or citizen when founding the company.

 

Personal Liability as a Company Owner

 

Business owners should be aware of potential personal liabilities for unpaid Pay-As-You-Go (PAYG) employee tax and pension payments, along with rules outlined in the Director’s Duties section of the Corporate Act of 2001.

Compliance breaches can entail severe financial problems for a company’s owner(s) depending on the company type and, where breaches are serious enough to merit it, criminal penalties as well.