As an employer, you have obligations regarding your employee’s rights and it is your responsibility to provide a respectful and compliant work environment. The Fair Work Act 2009 (Cth) governs Australian workplace relationships between employees and employers and sets the minimum workplace entitlements called the National Employment Standards (NES). The NES protect employees from unreasonable workloads, state the various obligations of both parties and promote the productivity of employees. Also, terms within awards, agreements and employment contracts cannot exclude or provide for an entitlement less than the NES and those that do, have no effect.

Working hours

An employee’s maximum working hours depends on their employment status (i.e. full-time, part-time or casual) and whether they are subject to an enterprise agreement or modern awards. The maximum hours that an employer can require their full-time employees to work, according to the NES, is 38 hours per week.

The employer can require the employee to work extra hours above the maximum weekly hours (under the NES) as long as the additional hours are reasonable. If the employee’s employment is covered by an enterprise agreement or modern awards, the additional time will then be considered as overtime. As an employer, you should have regard to different factors in order to determine if the additional hours are reasonable, including:

  • the health, safety and risk related to the work of the employee;
  • the personal circumstances of the employee, such as family responsibilities;
  • the needs of the company and the importance of the additional hours requested in meeting those needs;
  • the overtime payments or other compensation to which the employee is entitled for working additional hours;
  • the role of the employee in the workplace and their seniority;
  • whether the employer gave notice to the employee regarding the additional hours; and
  • whether the employee has already worked extra hours recently.

Employees have the right to refuse unreasonable additional hours and it is the employer’s obligation to protect its employees having regard to the nature of the work and the employment agreement.

Superannuation/tax

The Australian government has introduced superannuation laws to ensure that Australians are prepared in advance for their retirement, by making sure a portion of each employee’s ordinary earnings are set aside in a special superannuation account. As an employer, you have the duty to contribute superannuation to each of your employees – currently set at 9.5% of the employee’s ordinary earnings. The employer has to pay superannuation contributions where:

  • the employee is earning more than $450 per month before tax; and
    • the employee is over 18 years old; or
    • the employee is under 18 years old but works more than 30 hours weekly.

The employee can also make additional personal contributions to their super account. These contributions will, however, affect the employer’s tax deductions. The money is set aside by the employer to provide a return on investment for the future retirement. Keep in mind that some awards, enterprise agreements and other registered agreements provide different terms/obligations regarding superannuation.

In certain circumstances, the employer may also have to pay Fringe Benefits Tax (FBT) in order to meet their taxation requirements. FBT is a tax you pay on some non-income benefits which are provided to employees in place of salary/wages such as a company car or parking space. The employer also has to make the appropriate tax payments from the employee’s income.

Leave entitlement

The NES provide leave entitlements for all employees. However, only full-time and part-time employees are entitled to 4 weeks annual leave each year. The leave entitlement for part-time employees is calculated in proportion with the number of hours worked. Some employees will prefer to accumulate their leave throughout the year. Employees subject to enterprise agreements or modern awards may be entitled to additional leave and other rights.

Employees (other than casual workers) are also entitled to parental leave after working with an employer for 12 months, personal or carer’s leave & compassionate leave (10 days), community service leave and long service leave. Each of these leave entitlements depend on the employee’s situation.

Restraint of trade

Restraint of trade clauses are commonly included in employment contracts in order to restrict outgoing employees from engaging in certain conduct following the termination of their employment, such as working in the same industry as the employer or working for a competitor. The restraint of trade clauses can include protection for any trade secrets and intellectual property owned by the employer. The application and enforceability of this type of clause depends on the circumstances and interests of the business.

However, the clause has to be reasonable and in the interests of both parties and the public generally. If the clause is too wide or too broad it will be considered unreasonable and, ultimately, unenforceable. Employers should ensure that the clause is appropriate to protect the company’s legitimate business interests. To determine if the restraint of trade clause is reasonable, you have to evaluate the following factors;

  • the value and composition of the employer’s client list;
  • the geographical scope of the restraint and its duration of time;
  • the nature and the position of the employee in the business;
  • the nature of the activities sought to be restrained;
  • whether the restraint actually protects the employer’s legitimate business interests; and/or
  • whether the restraint is unduly injurious to the employee and the public (this may include whether the restraint operates to prevent the employee from earning an income).

These restraints are typically enforced by an employer obtaining an injunction from a court restraining an employee from doing the things that the restraint clauses are expressed to prevent. If you are seeking guidance in relation to this article contact us at H&A legal on (02) 9223 5704.