Photo by Karolina Grabowska from Pexels
National Employment Standards you should know
Updated: 26 September 2022
Did you know there are National Employment Standards? Also, did you know that no matter whether employees work under an industry award, employment contract or enterprise agreement, these are the minimum employee rights that you as the employer must meet? In other words, you cannot write the National Employment Standards out of a contract or agreement.
If you were not aware, this article covers what National Employment Standards you should know.
What the terms mean
A contract is verbal, written or a mix of the two that sets out the terms of the working relationship..
Industry Awards outline the minimum pay rates and employment conditions for all employees in the relevant industry.
An enterprise agreement is made at the enterprise level and sets out the responsibilities of employees and employer. This can be legally enforced.
The term industry relates to the product business produces. For example, the hair and beauty industry or manufacturing industry.
A contract can be verbal, written or a mix of the two. And employee contracts can have more, not less, generous terms than those in an award, enterprise agreement or legislation. And if you provide employees with generous terms, they apply over the minimum legal requirements.
Employee contract case study
An employer pays an employee $550 to work 3 days a week in a written employment contract. About 18 months later, the worker resigns.
The employer writes to the worker after they leave claiming to have overpaid the worker by $20,000 because the wages set out in the contract exceeded the Award rate.
Does the employer have the right to claim $20,000 back from the employee?
The employment contract had a higher rate than the Award and this is allowed. This is also the rate the employer agreed to pay the employee. The employer cannot then renege and claw back the difference between the Award and the contract.
What exactly is an Award?
An award outlines the minimum pay rates and employment conditions for all employees in the relevant industry in Australia. But an employer can choose to pay wages above the Award.
Meaning of industry would be good here too. I know seems obvious to us but might not be for others. – the meaning of industry is in the next paragraph
Currently, there are 122 industry Awards in Australia. These cover employees in the relevant industry such as the fast food and real estate industries. But Awards do not apply when an employer has an enterprise agreement or other registered agreement.
All awards have a section called coverage (usually clause 4) which sets out what workers it covers. Also review the job classification section.
Examples of industry awards include:
- Clerks – Private Sector Award 2010
- General Retail Industry Award 2010
- Textile, Clothing, Footwear and Associated Industries Award 2010
- Hair and Beauty Industry Award 2010
- Telecommunication Services Award 2010.
Which of these employee rights affects what you do? There is a full list of the Awards on the Fair Work Ombudsman website.
What do Awards typically cover?
Awards typically cover the minimum employee rights when working for you. These include:
- Consultation about major workplace changes.
- Dispute resolution processes.
- Types of employment (full-time, part-time and casual) and termination of employment.
- Classifications and wage rates.
- Leave and public holidays.
Importantly, an Award will not apply if an organisation has an enterprise or registered agreement.
Also, an award cannot exclude the National Employment Standards set out in the Fair Work Act.
So, what is a registered or enterprise agreement?
An enterprise agreement is an agreement made at the enterprise level and can be legally enforced. It sets out the rights and responsibilities of employees and employers covered by the agreement.
Similar to Awards, enterprise agreements cannot exclude the National Employment Standards and, if an award does, then it will have no effect.
The Fair Work Act deals with enterprise agreements. The legislation covers:
- Making an agreement.
- Bargaining and representation during bargaining.
- Pre-approval steps and applications for obtaining Fair Work Commission approval.
- Approval by the Fair Work Commission.
The Fair Work Act is legislation that governs the employee/employer relationship in Australia and includes minimum entitlements for workers. For example:
- The 11 National Employment Standards include:
- Maximum weekly hours
- Requests for flexible working arrangements
- Offers and requests to convert from casual to permanent employment
- Parental leave and related entitlements
- Annual leave
- Personal/carer's leave, compassionate leave and unpaid family and domestic violence leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Fair Work Information Statement and Casual Employment Information Statement.
- Modern Awards
- Enterprise Agreements
- Minimum wages
- Transfer of business.
It's important to note that State public sector and local government employees are not covered by the Fair Work system.
Domestic Violence Leave
In Australia, 1 in 4 women and 1 in 13 men experience domestic violence. And it worsened during the pandemic.
In May 2022, Fair Work ruled that family and domestic violence is a serious enough issue that employees should have access to 5 days unpaid domestic violence leave every year as part of the National Employment Standards. This is still provisional while Fair Work seeks input from interested parties.
In July 2022, the Federal Labor Government introduced the Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill 2022. If this passes it will give employees10 days paid Family and Domestic Violence leave.
Currently employees are entitled to 5 days unpaid leave under the National Employment Standards.
Avoid the flat rate pitfall
One pitfall to avoid is paying your workers a flat rate in lieu of overtime and penalty rates that may apply under an industry Award.
Many large employers have been caught out paying workers a flat rate which has meant they have been underpaying and also penalised by the Fair Work Commission.
Instead, pay your Award covered workers at or higher than the Award rate and make sure you are covering all Award entitlements as well as, for example, overtime, allowances, leave loading etc.
- It is important to understand the National Employment Standards.
- Check the applicable industry award, enterprise agreement (if any) and Fair Work legislation to see if your workers have other entitlements when you prepare employment contracts and also when an employee query their entitlements.
- Enterprise agreement terms only apply if they are more generous than the applicable award or National Employment Standards.
- Avoid paying your Award covered workers a flat rate that means they are underpaid compared to their Award entitlements.
As always, if you have questions or need clarifications, reach out for advice.