With more than 12 million people in its workforce, more and more companies are considering a move Down Under and starting to learn about Australia employment law. Tapping into this talented labor pool can prove beneficial for businesses looking for a smart place to grow globally.
Employees in Australia receive great benefits and its market is more familiar to businesses from the US. If it’s a country that’s on your company’s radar, check out our Australia employment law best practices below.
Australia Employment Law Basics
Employees pay higher income taxes Down Under compared to here in the States but it’s not for nothing. Employees in Australia receive many benefits from the Federal Government when working for local employers. These benefits fall under your scope of responsibility as an employer. It’s a lot to manage, which is why helpful solutions exist such as International PEO (Professional Employer Organization) and Foreign Subsidiary as a Service (FSaaS).
Employer of record (EOR) options allow international businesses to establish a legal presence in their target country (i.e. Australia) and get assistance with compliance management, hiring, payroll, and termination. It’s something you should truly consider for your company during global growth. These solutions take a lot of the headaches out of the employment process. It’s also a lot cheaper and quicker than establishing a foreign subsidiary from scratch.
Establishment of Regulations
In the US, the Federal Government is responsible for determining employment law basics. This applies to the minimum wage, acceptable work week hours, and required withholdings. While overall regulations are established by the National Employment Standards (NES) in Australia, each State and Territory can provide its own legislation for items including occupational health and safety, workers’ compensation, and anti-discrimination.
If your employee ever decides to argue their status or an issue in labor courts, it’s important to understand that there is no statutory requirement to enter into a written employment contract. As a result, your contract will be thrown out the window. Overall, the primary means of regulating the employment relationship is determined by Australia employment law, not a contract.
On the same token, employment contracts are commonplace to describe terms of engagement. Contracts may be based on a workplace agreement between an employer and a group of employees or industry-based awards. Also, as an employer, your employment agreements should be distinguished from agreements with international independent contractors. To learn more about Australia employment best practices, check out this blog post.
Work Condition & Pay Requirements
The NES sets the minimum wage and maximum work hours per week in Australia. Currently, the minimum wage is A$16.87 per hour or A$640.90 per 38 hour week before tax. The maximum working week is set to 38 hours unless additional hours are reasonable. Employers and employees can establish an agreement about the reasonableness of additional hours, including, for example, that reasonable overtime is required from a role.
Time Off Requirements for Australia Employment Law
According to regulations set by the NES, full-time employees (those working 38 hour weeks) are entitled to four weeks of paid annual leave. Part-time employees receive a prorated amount of leave and shift workers receive five weeks. Annual leave that not taken accrues from year to year and is paid out to employees on termination.
In the US, many employment relationships are established on an at-will basis. This does not exist in Australia. As a result, employees are entitled to a minimum notice period between one and four weeks upon termination. Also, employees over the age of 45 that have worked for a company for at least two years receive an additional week’s notice. You can establish a clause in your employment contracts that allows the employer to pay the notice in a severance payment.
Termination notices can get tricky with Australia employment law. Confide in an expert to help you with these processes by using one of the EOR services like FSaaS or International PEO that we mentioned above.
In Australia and most foreign countries, an employment relationship does not give employers automatic ownership of the intellectual property (IP) created by those employees. Ensure that your legal team is assigning language in employment agreements for IP to protect your company’s interests and avoid disputes.