Hiring guide in Australia

Legal framework

Types of employment contracts

The nature and conditions of different employment relationships are defined under the Fair Work Act 2009, one of the legislative frameworks that governs employment contracts in Australia.

The main types of employment contracts are permanent (full-time and part-time), fixed-term, and casual contracts. The National Employment Standards (NES), which outline minimal rights such as maximum weekly hours, leave entitlements, and notice of termination, must be complied with by these contracts. Furthermore, contemporary awards and business agreements, which can include extra terms for particular sectors and jobs, may have an impact on employment contracts.

A permanent employment contract can be full-time or part-time, providing ongoing employment until the employee resigns or is terminated.

On the other hand, casual contracts, in contrast with permanent contracts, allow employers to hire staff on a task-based basis without committing to 9-to-5 hours. Casual employees are typically paid a higher hourly rate, known as casual loading, to compensate for the lack of entitlements such as paid leave and notice of termination.

Content of an employment contract

In Australia, employment contracts serve to define the key conditions of the arrangement and control the working relationship between the two parties. An employment contract in Australia, defined by the Fair Work Act 2009, needs to have the following components in order to be enforceable: nature of the employment (permanent, fixed or casual,) parties’ identity, job title and description, working hours, and entitlements such as leave and termination notice. Each contract must explicitly state these conditions to ensure clarity and prevent disputes.

 Download a free employment contract for Australia through Native Teams.

Oral, written or electronic employment contracts

In Australia, employment contracts can take various forms, including oral, written, or electronic agreements. While written contracts are not mandatory, they are highly recommended to ensure clarity and evidence of agreed terms. 

Written contracts provide tangible documentation that helps prevent disputes and facilitate easier enforcement of employment conditions. Electronic contracts are increasingly utilised and are legally valid under the Electronic Transactions Act 1999, provided they are properly executed with reliable methods demonstrating mutual consent. 

This includes using electronic signatures that meet the legal standards for authenticity and intention to be bound by the contract terms. Regardless of the format, all employment contracts must comply with the Fair Work Act 2009 and the National Employment Standards, ensuring that minimum entitlements and protections for employees are upheld.

Probationary period

The probation period is a standard part of employment contracts in Australia. Typically, probation periods range from three to six months, although the exact duration can be negotiated in the employment contract. 

Probationary employees are subject to the same workplace safeguards as permanent employees, including the national minimum pay or the equivalent award rate and the accumulation of leave benefits.

Working hours

The maximum number of hours an Australian employee can work in a week is 38, which works out to 7.6 hours (7 hours, 36 minutes) per day. Monday through Friday from 9 am to 5 pm, with a 30-minute to an hour-long meal break. For part-time workers, the number of working hours depends on the employer’s policies and the nature of the job.

Breaks and night work

In order to protect their health and welfare, the FWA requires that workers have the right to rest periods and food breaks. Employees typically have the right to food and rest breaks during the workday, such as a tea break. The length and timing of these breaks should be specified in employment contracts to ensure compliance with applicable laws. 

Also governed by the FWA, any work done between 10 PM and 6 AM is generally called “night work.” Workers who work nights are frequently entitled to overtime pay, also referred to as night shift penalties or allowances, to compensate for the inconvenience and possible health risks of working at these hours.

Annual leave

Under the FWA and NES regulations, full-time employees are entitled to four weeks of paid annual leave for each year of service, while part-time employees receive a pro-rata amount based on their hours worked. 

The annual leave is crucial for maintaining work-life balance, allowing employees to rest and recharge. Annual leave is cumulative in Australia, meaning unused time is carried over to succeeding years. It accrues gradually throughout the year.

Public holidays

In Australia, public holidays might differ by state and territory, while some common holidays are celebrated across the country. These include New Year’s Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day, and Boxing Day.

Salary

In Australia, the Fair Work Act 2009 (FWA) determines and regulates salaries and wage entitlements, while the Fair Work Commission (FWC) evaluates and determines the annual national minimum wage. Currently, the national minimum wage in Australia is $23.23 per hour or $882.80 per 38-hour week before tax.

To calculate the salary and taxes in Australia, click here. 

Sick leave

Sick leave in Australia provides employees with paid leave for personal illness or injury, ensuring protection and support within the employment relationship. Full-time employees are entitled to 10 days of paid personal/carer’s leave per year.

A pro rata entitlement is granted to part-time employees in accordance with their regular work hours. However, paid sick leave is not available to casual employees.

Parental and maternity leave

In Australia, maternity and paternity leave are governed by the Fair Work Act 2009, which ensures certain employee rights and entitlements. Mothers are eligible for up to 18 weeks of Paid Parental Leave (PPL) at the national minimum wage, provided they have worked for at least 10 of the 13 months before the birth of their child and met the minimum work hours requirement. This scheme, administered by employers as paymasters, offers financial support during the early stages of parenthood. 

Fathers and partners can avail themselves of the Dad and Partner Pay scheme, which provides up to two weeks of government-funded pay at the national minimum wage. To qualify, they must have worked for at least ten months of the past 13 and completed 330 work hours. Employment contracts should outline these entitlements and the process for applying, ensuring compliance with legal standards and supporting employees in balancing work and family responsibilities effectively.

Termination of the employment relationship

The Fair Work Act 2009 regulates the termination of employment relationships in Australia. The Act outlines various scenarios for ending employment contracts. Ordinary dismissal by notice is permissible when justified by reasons such as poor performance or misconduct, provided the process follows legal requirements for fairness. 

Employees can also terminate their employment through resignation, adhering to specified notice periods or provisions outlined in their contract. Additionally, contracts may end due to the completion of a fixed term, mutual agreement between parties, or circumstances such as redundancy or serious misconduct.

Ordinary dismissal by employer

Ordinary dismissal by an employer in Australia refers to the termination of an employee’s contract for reasons other than redundancy or mutual agreement. Governed by the Fair Work Act 2009, this type of dismissal requires a valid reason related to the employee’s conduct, performance, or the business’s operational needs. The dismissal must not be harsh, unjust, or unreasonable, and the employer must follow a fair process.

Employees protected from unfair dismissal may seek recourse through the Fair Work Commission if they believe the dismissal was unjust, seeking remedies such as reinstatement or compensation if the dismissal is deemed unfair. Clear documentation and adherence to legal standards are essential to ensure the fairness and legality of ordinary dismissals in Australia.

Notice period and challenging the dismissal

In Australia, notice periods for dismissal depend on the employee’s length of continuous service:

• One week: Less than one year of service.
• Two weeks: Between one and three years of service.
• Three weeks: Between three and five years of service.
• Four weeks: More than five years of service.

Employees over 45 years old with at least two years of service get an extra week. Employees can challenge dismissals they deem unfair by lodging a claim with the Fair Work Commission within 21 days. The Commission assesses factors like the validity of the dismissal reason, notification, and procedural fairness, offering remedies if unfairness is found. Understanding these rules ensures compliance with Australian employment law and protects employees and employers.

Rights and obligations of unemployed individuals

In Australia, unemployed individuals have access to financial support through the social security system, primarily the JobSeeker Payment, which assists with living expenses while actively seeking suitable employment. Eligibility criteria include residency status, age, and job-seeking efforts. Recipients must engage with employment service providers to develop job plans and participate in job search activities as part of their mutual obligation requirements. The government periodically adjusts payment rates to reflect changes in living costs. Unemployed individuals also have rights against discrimination and unfair treatment in their job search, ensuring equal employment opportunities.

Severance pay

Severance pay in Australia, commonly known as redundancy pay, is provided to employees who lose their jobs due to redundancy situations such as business restructuring or economic downturns. This entitlement ensures that affected employees receive financial compensation based on their years of continuous service with the employer. 

The amount of redundancy pay is calculated using a prescribed formula tied to the employee’s base rate of pay and length of service. It ranges from four weeks’ pay for employees with one to two years of service up to 16 weeks’ pay for those with nine to ten years. This payment is in addition to any notice period or payment in lieu of notice and other accrued entitlements like annual leave and long service leave.

Prohibition of competition

Prohibition of competition, commonly referred to as “restraint of trade” clauses, in Australia, safeguards the legitimate business interests of employers by limiting an employee’s ability to engage in competitive activities both during and after their employment. 

These clauses are crucial components of employment contracts that protect confidential information, trade secrets, customer relationships, and goodwill. The enforceability of these clauses is contingent upon their reasonableness in terms of geographic scope, duration, and the specific activities they seek to restrain.

Remote working policy

Remote work in Australia has gained significant traction, especially post-COVID-19, necessitating clear responsibilities for employers and employees. Employers are mandated under the Fair Work Act 2009 (Cth) to provide the necessary equipment and ensure a safe home office environment compliant with health and safety standards for their remote employees. 

The employers must establish comprehensive remote working policies in employment contracts detailing work scope, hours, communication protocols, and the provision of company resources. Data security measures, including secure network access and adherence to privacy laws to safeguard sensitive information, are also crucial. Conversely, employees are accountable for adhering to work schedules, maintaining productivity, communicating effectively, and upholding confidentiality protocols to prevent unauthorised access or disclosure of company data.

Health and safety at home

Under Australian law, employers have a duty of care to ensure a safe working environment, which extends to remote work arrangements. 

Employers must perform risk evaluations of the home office configuration, considering potential dangers, including electrical safety, emergency protocols, and ergonomic issues. This may entail offering ergonomic tools, instructions for setting up a safe workstation, and routine check-ins to discuss and handle any new hazards. On the other hand, employees are responsible for taking reasonable precautions for both their own health and safety as well as the health and safety of anyone else who might be impacted by their employment.

What are the advantages of hiring employees from Australia vs other countries?

Hiring employees from Australia can be exceptionally advantageous compared to recruiting from other countries. Firstly, Australia is renowned for its highly skilled workforce across various industries, including mining, healthcare, technology, and finance. The country prioritises education and vocational training, ensuring a pool of professionals with up-to-date knowledge and skills.

Australia’s geographical location in Asia-Pacific makes it a strategic gateway for businesses expanding into Asia and beyond. Its robust infrastructure supports efficient connectivity, facilitating seamless operations and market access. Thanks to the country’s diverse population and global business outlook, Australian employees often possess international experience and are accustomed to working in multicultural settings.

Culturally, Australians are known for their adaptability and openness, contributing to effective collaboration within global teams. Proficiency in English as the primary language of business, along with a multicultural society that values diversity, enhances communication and integration efforts in international workplaces.

Moreover, Australia has a stable economic environment, providing businesses with reliable operational conditions and access to high-calibre talent. Combined with its strong regulatory framework and support for innovation, hiring Australian professionals can significantly boost a company’s capabilities and global competitiveness.

Why use Native Teams for hiring in Australia?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.