Legal – The Current Legal Framework

Legal – The Current Legal Framework

  • The employment contract – common law (rights and obligations of employers and employees), minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contracts

The Employment Contract

The law regards an employee to be a person who is subject to a contract of service. An employment contract is a legally binding agreement between an employer and employee. It creates rights and responsibilities for employers and employees, which are enforceable by law, such as those governing:

  • A safe workplace
  • Minimum wage entitlements
  • Anti-discrimination and equal opportunities initiatives

It will include: Duties, Supervision, Hours, Location, Discipline Policy, Bonuses, Overtime, Superannuation, Benefits, Salary/Wage, Leave and Confidential Information.

Common Law

Common law is developed by courts and tribunals and, unlike statute law, it is not made in parliament. Under common law judge make decisions based on the facts of a case, guided by precedent and is developed over time.

The rights and responsibilities of both employer and employee reflect not only the common law but also a range of statue law

Both common law and statute sets out the obligations from the employer to the employee. Obligations are duties or commitments that are legally required of the employer, including:

  • To pay correct wages
  • To reimburse employees for work-related expenses
  • To ensure a safe working environment

Employees also have rights and responsibilities under both the common and statue law, this include obligations such as:

  • Obey the lawful and reasonable instructions of the employer
  • Exercise due care in the performance of the work and to do it competently
  • Account for all money and property receive while employed
  • To make available to the employer any process or product invented by the employee in the course of employment
  • Disclose to the employer information

Minimum Employment Standards

The national employment standards have been developed in consultation with a range of stakeholders. They provide the basis for most awards and enterprise agreements and include:

  • Maximum weekly hours of work
  • Parental Leave and related entitlements
  • Annual leave
  • Personal/carer’s leave
  • Long Service Leave
  • Public Holidays
  • Notice of Termination and redundancy pay
  • Provision of a Fair Work Information Sheet

Minimum Wage Rates

An employee’s minimum rate of pay for hours worked. The Minimum wage is reviewed by Fair Work Australia annually, with any adjustments taking effect on 1 July each year. The current minimum wage is $18.93 Per hour or $719.20 per 38-hour week (before tax). Minimum wage casual employees receive a minimum 25% loading.

Awards: a legal document that outlines the minimum wages and working conditions for all employees working in a particular industry. Awards are established through negotiations between dominant employers, employer associations and trade unions. Awards are allowed to be applied to be altered to suit the individual circumstances of the business, but cannot go below those outlined in the original award. Awards can include:

  • Classification of employees
  • Hours of work
  • Rest breaks
  • Rates of pay and classifications including bonuses
  • Penalty rates
  • Redundancy payments

Enterprise Agreement

  • Collective agreements made at a workplace level between an employer and a group of employees in relation to terms and condition of employment.
  • There are 3 types under the Fair Work Act 2009:
  • Single-Enterprise Agreement: between a single employer and a group of employees.
  • Multi-Enterprise Agreement: between multiple employers and groups of their employees.
  • Greenfields Agreements: between an employer and a union for a new enterprise agreement before any employees are employed.

Other Employment Contracts

  • Most Australian employees are still on one of four types of employment contracts:
  • Part-time work involves an employee working a fixed set of hours per week, but usually less than those of a full-time employee. They are entitled to all benefits of full-time staff, including sick and annual leave, holiday loading and various meal and uniform allowances.
  • Permanent Employment is a person who is provided with a continuing employment within the organisation. They work between 35-40 hours per week and may be requested to work more. They will usually be paid overtime. They are entitled to a minimum of four weeks holiday per year, and accrue 1.1 weeks long service leave each year.
  • Casual employees are employed by a business for short periods of time. They must work between 1-3 shifts. They do not receive sick or holiday entitlements but are entitled to casual loading.
  • Fixed-term contracts are used by businesses that require the use of labour for only a specific period of time. They employer cannot breach the time period of the contract without consent.

Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.