This page outlines country-level details about the onboarding process when hiring employees, and touches upon the applicable rules when terminating employment contracts.
If an organisation does not have a legal entity in Australia, they may use a third party, known as an employer of record, to be the employing entity and to undertake the administrative and legal obligations associated with employment.
The following obligations apply:
Probationary periods are allowed in written contracts of employment.
While the duration of the probationary period is a matter of agreement between the employer and the employee, it should be a reasonable period having regard to the nature of the employee’s role. Probationary periods are typically a minimum of 3 months and a maximum of 6 months in length.
It is possible to extend a probation period but the contract of employment should contain an express provision to that effect. In the absence of any such provision, a subsequent agreement to extend it should be recorded in writing.
The notice period required to terminate employment during the probationary period should be stated in the contract. Otherwise the minimum notice period of 1 week will apply.
As a matter of best practice, an employer should advise the employee when they have satisfactorily completed their probation period.
A pre-employment medical examination can be completed prior to the commencement of employment or an offer of employment can be made conditional on a satisfactory medical examination. Medical examinations are generally required where the employer wants to satisfy itself that the employee is able to meet the health and safety requirements of their role. Where an employer is satisfied that an employee could not perform the inherent requirements of their role safely, they may consider terminating the employment or not proceeding with the offer of employment.
A contract of employment can include a requirement to undertake medical examinations from time to time during the employment period.
Criminal background check
Criminal background checks can be completed prior to the commencement of employment or an offer of employment can be made conditional on satisfactory criminal background checks being received. While some industries require criminal background checks to be carried out, there is no general requirement for them to be done. In some jurisdictions it is unlawful to discriminate against a potential employee because of their criminal record.
A contract of employment can include a requirement to undertake various criminal record checks from time to time during the employment period.
Reference and education checks
Reference and education checks can be completed prior to the commencement of employment or an offer of employment can be made conditional on satisfactory reference and education checks being received. While some occupations have particular educational requirements, there is no general requirement for reference and educational checks to be done.
Diversity and inclusion is an increasingly important and high-profile issue for employers.
While many employers have an obligation to report on measures that promote and improve gender equality in the workplace, there are no specific diversity quotas that apply to the recruitment of new employees. The setting of targets is a matter for each employer. While leading employers recognise that pay equity is essential to an organisation’s performance, pay gaps continue to exist within Australian workplaces.
It is unlawful to discriminate against a prospective employee or any employee in their employment on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer responsibilities, pregnancy, religion, political opinion or national or social origin. This applies to all aspects of work including recruitment, terms and conditions of which a job is offered, employment benefits, training, transfers, promotion and dismissal.
Employees can be engaged for either full time or part time hours of work:
Subject to the terms of the contract of employment, where an employee is employed pursuant to a series of maximum or fixed term contracts of employment, they may be found to be an ongoing employee. This can have consequences for their entitlements on termination of employment and the potential claims they can make against their former employer.
Employees can also be engaged as casual employees. A person is a casual employee if, when they are offered a job, this job does not include a firm advance commitment to continuing and indefinite work according to an agreed pattern of work and the person accepts the offer knowing that there is no firm advance commitment. In practice, this means that a casual employee is one whose working arrangements are irregular, uncertain and discontinuous: each period of employment is a separate engagement.
Written contracts of employment are recommended but there is no general rule that they be made in writing. In the absence of a written contract of employment, the common law will imply various other terms into the employment relationship including the duty to comply with reasonable and lawful directions, the duty to use care and skill in the performance of duties, the duty of good faith and fidelity, the duty of confidence and termination of employment on the provision of reasonable notice.
Subject to shareholder approval being required for termination payments in excess of 12 months’ base salary for those persons holding “managerial or executive office”, executives are not generally regarded as a separate category of employee from an employment law perspective.
However, in recognition of an executive’s seniority, their written terms typically include longer notice periods, incentive arrangements and post-employment restrictions.
There are no language requirements that apply to contracts of employment in Australia. As a matter of practice, they are written in English.
Australia’s industrial relations tribunal, the Fair Work Commission (FWC) can make equal remuneration orders (ERO) on application by employees or their representative organisations. The FWC can only make an ERO if it is satisfied that there is not currently ‘equal remuneration for work of equal or comparable value’ between men and women. While rates can be increased to achieve this objective, they cannot be decreased.
As a result of recent legislative amendments banning pay secrecy clauses and creating a right for employees to choose whether or not to discuss their own remuneration, any terms (in an employment contract or other industrial instrument) prohibiting employees from discussing their pay, or other conditions necessary to determine remuneration outcomes have no effect.
A contravention of the prohibition on pay secrecy clauses or of an ERO may result in penalties being imposed against an employer. The potential remedies that can be awarded if an ERO is contravened include compensation and/or injunctions to stop or remedy the effects of the contravention.
Non-public sector employers with 100 or more employees are required by law to submit a report to the Workplace Gender Equality Agency including information in relation to:
An employer that does not comply with these requirements will be named by the Agency as a ‘non-compliant’ organisation.
There is no specific legislation regulating remote work or providing entitlements to employees working remotely, including electricity, internet or other remote work allowances.
Subject to their personal circumstances, employees have a right to request flexible working arrangements, which include working from home. An employer may refuse a request if they have reasonable business grounds for doing so, and have complied with the requirements to discuss the request and attempt to reach an agreement with the employee and consider the impact of any such refusal on the employee.
Work health and safety is regulated by each State and Territory in Australia. Under these laws, employers, officers (being a person who makes or participates in the making of decisions that affect the business) and employees all have duties and obligations to ensure the health and safety of work from home arrangements. These include consideration for:
To facilitate a remote work arrangement that enables the employer and employee to comply with their respective obligations, it is recommended that the employer and employee agree in writing the terms that will apply or have a workplace policy in place that specifies each of their obligations.
There is no requirement to validate or file any such agreement with an employee representative body.
The employment contract can be brought to an end by way of the following:
An employer and employee may also agree to mutually terminate the contract of employment.
Each engagement of a casual employee is a separate period of employment: that is, the employment ends at the end of each shift or rostered period of work.
Employers should have a lawful reason for the termination of any employee’s employment.
While there may not be a legal requirement to provide an employee with details of the reason for the termination of their employment in all circumstances (for example, when terminating the employment of a probationary employee), doing so is consistent with best practice and assists the employer in defending any claim that the termination of employment occurred because of a different unlawful reason.
The termination of employment must be confirmed in writing and the written confirmation provided to the employee.
Where an employee is protected from unfair dismissal, the reason for the proposed termination of employment should be discussed with them. The employee should be provided with the opportunity to respond to the proposed decision to terminate their employment before that decision is confirmed.
In some jurisdictions, if an employee brings a claim following the termination of their employment, the employer can rely on information that it became aware of after termination to support the termination of employment. As a general rule, it is preferable that all of the information relied on by the employer is put to the employee prior to the decision to terminate taking effect.
The minimum notice period, or payment in lieu of notice, that must be provided by an employer to terminate the employment of an ongoing or maximum term employee is as follows:
|Employee’s period of continuous service with the employer at the end of the day the notice is given||Notice period|
|Not more than 1 year||1 week|
|More than 1 year but not more than 3 years||2 weeks|
|More than 3 years but not more than 5 years||3 weeks|
|More than 5 years||4 weeks|
The minimum notice period should be increased by 1 week if the employee is over 45 years of age and has completed at least 2 years of continuous service.
Unless an exclusion applies, employers must give notice in writing with the day of the termination not prior to the day the notice is given. There is no requirement to have the same notice obligations on both an employer and an employee.
While a longer notice period can be agreed in writing by the employer and employee, any agreement to a notice period that is less than the minimum notice period will be of no effect.
Where there is no written contract of employment or the employer and employee have not agreed to the notice period required to terminate the employment relationship, the common law will imply a term of reasonable notice. What is reasonable depends on a range of factors including the period of employment, position, salary, age, difficulty of finding similar employment and the employee’s qualifications and experience.
Where a payment in lieu is made to an employee, the payment should be equivalent to the full rate of pay that they employee would have received had they worked through their notice period. This includes incentive-based payments and bonuses, loadings, monetary allowances, overtime and penalty rates or any other separately identifiable amounts.
Where the employment is terminated for serious misconduct, there is no requirement to provide the employee with notice of termination.
Fixed term contracts (or maximum term contracts that have not been terminated prior to their expiry date) end by way of the effluxion of time without the requirement to provide any additional notice period.
While the employment of a casual employee ends at the end of each engagement, there may be notice requirements that apply if the employer decides to terminate their employment during a particular shift or rostered period of work.
On termination of employment, an employee is generally entitled to payment of the following:
The amount of redundancy pay that should be provided to an employee is determined in accordance with the following:
|Employee’s period of continuous service with the employer on termination||Redundancy pay period|
|At least 1 year but less than 2 years||4 weeks|
|At least 2 years but less than 3 years||6 weeks|
|At least 3 years but less than 4 years||7 weeks|
|At least 4 years but less than 5 years||8 weeks|
|At least 5 years but less than 6 years||10 weeks|
|At least 6 years but less than 7 years||11 weeks|
|At least 7 years but less than 8 years||13 weeks|
|At least 8 years but less than 9 years||14 weeks|
|At least 9 years but less than 10 years||16 weeks|
|At least 10 years||12 weeks|
The contract of employment may also specify other entitlements payable to an employee on the termination of their employment.
With regard to the cost projections for Australia, note that these are for illustration purposes only and specific advice should be obtained to ensure that all relevant entitlements, including but not limited to accrued but untaken annual leave and long service leave entitlements, are included in termination of employment calculations.
An employee should be provided with written confirmation of the termination of their employment (either on notice or without notice). As a matter of best practice, the decision to proceed with termination should be discussed with the employee (and where they are protected from unfair dismissal, the employee should have an opportunity to respond to the proposed decision before it is confirmed in writing).
The employer can give notice by handing the letter to the employee personally, leaving it at the employee’s last known address, sending it by pre-paid post to the employee’s last known address or if the employee agrees, sending it electronically by email.
With some limited exceptions, an employee who has completed the minimum employment period (6 months or 12 months depending on the size of the employer), is covered by a modern award, enterprise agreement or who earns less than the high income threshold (as of 1 July 2022, the amount is $162,000 excluding superannuation) is protected from unfair dismissal. In addition to a valid reason for the termination of their employment, these employees must be afforded a fair process when disciplinary action is taken against them, up to and including termination of employment. This includes the obligation on an employer not to unreasonably refuse an employee’s request for a support person to attend discussions with the employer and the opportunity to respond to any proposed disciplinary action or the termination of their employment.
All employees, including probationary employees, are entitled to a protection against adverse action being taken against them by their employer (which includes the termination of their employment) because they have a workplace right, exercised (or did not exercise) a workplace right, proposed to exercise (or not) an exercise right or to prevent the exercise of a workplace right by them. The meaning of “workplace rights” is very broad and includes, amongst other rights, the right to make a complaint or inquiry about the employment.
It is unlawful to discriminate against an employee and terminate their employment because of a protected attribute. The protected attributes include but are not limited to race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer responsibilities, pregnancy, breast feeding, religion, political opinion, national extraction or social origin.
Employees are also protected against unlawful discrimination or termination of employment for a temporary absence due to illness or injury. An absence is temporary if it extends for no more than 3 months or the absences extent for no more than a total of 3 months within a 12 month period.
An employee who is protected from unfair dismissal must file an unfair dismissal claim with the Fair Work Commission within 21 days of the termination of their employment. It is very rare for an extension of time to be granted. The claim will be listed for conciliation and, if it cannot be settled at or shortly following conciliation, will be listed for hearing. While the compensation that can be awarded is capped at 6 months’ salary, the primary remedy available is reinstatement.
An employee who alleges that their employment was terminated because they exercised a workplace right, must file a general protections claim with the Fair Work Commission within 21 days of the termination of their employment. The claim will be listed for conference and, if it cannot be settled at or shortly following conference, the employee has the option of referring it to either the Fair Work Commission for hearing (if the employer agrees) or the Federal Courts. The remedies available are broad and the amount of compensation that can be awarded is not capped.
An employee who alleges that they have been discriminated against by the termination of their employment may make a discrimination claim in a State/Territory or Federal anti-discrimination tribunal. The time periods for doing so vary depending on the jurisdiction and some tribunals have a broad discretion to grant extensions of time, particularly where psychological injury is alleged.
An employee who alleges that the termination of their employment was a breach of their contract of employment, because for example, the notice period was not complied with, may also commence proceedings. The time periods vary depending on the jurisdiction of the governing law of the contract of employment.
As with any employee, the termination of employment of an executive must be in accordance with the terms of the contract of employment.
Unless an exemption applies and in specified cases, benefits provided by specified entities require member approval (for example, approval by shareholders) if they are made in connection with a person’s retirement from an office or a position of employment.
As a general rule no member approval is required if the benefit or payment is below the statutory limit, being the value of one year of the retiring person’s base salary. While the value of all benefits given in connection with retirement must be combined, there are some exceptions.
Employers must consult with employees and their representatives if 15 or more redundancies are proposed.
Consultation must commence as soon as practicable after a definite decision has been made. The employer is required to provide all relevant information about the changes in writing, but is not required to disclose confidential information that would be contrary to its interests.
An employer as an obligation to engage in meaningful consultation. This requires the parties to consider each other's position in good faith, exchange relevant information and respond to each other in a timely manner. While an employer must consider matters raised by the employees and their representatives, they do not require their consent to implement the changes.