Many business owners find it difficult to comply with the Fair Work Act (FWA).
Here are 10 steps to comply with FWA:
Step 1. The first thing is understanding there are National Employment Standards (NES).
The 11 minimum entitlements of the NES are:
- Maximum weekly hours
- Requests for flexible working arrangements
- Offers and requests to convert from casual to permanent employment
- Parental leave and related entitlements
- Annual leave
- Personal carers leave, compassionate leave and unpaid family and domestic violence leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Fair Work Information Statement and Casual Employment Information Statement
Step 2. Provide this Fair Work Information Statement to all your employees.
Provide a copy of the Casual Employment Information Statement (CEIS) as well if employing casuals.
They’re available to download (FWIS) on the Fair Work Ombudsman’s site:
Who’s covered by the NES
Casual employees and the NES
Casual employees only get some NES entitlements including:
- offers and requests to convert from casual to permanent employment
- unpaid carers leave
- unpaid compassionate leave
- unpaid family and domestic violence leave
- unpaid community service leave
- the Fair Work Information Statement and the Casual Employment Information Statement.
In some states and territories long serving casuals are eligible for long service leave.
Casual employees can request flexible working arrangements and take unpaid parental leave if:
- they have been employed by their employer as a casual employee on a regular and systematic basis over at least 12 months, and
- they reasonably expect to continue being employed by the employer on a regular and systematic basis.
Step 3. 10 Ways to Comply with FWA | understand which Modern Awards are relevant to your industry and employees
Modern Awards are specific to an industry for your business. And the function your employee performs. So, your business may have many Modern Awards to consider. It depends on what type of function your employees have. Not he industry your business is in.
How to work out and find which Modern Awards relate to your business and employees:
What industry is your business in and what function does your employee do? If your business is in the storage and wholesale Industry. Your industry Modern Award is the Storage Services and Wholesale Award.
But your bookkeeper or administration person are under the clerks – Private Sector Award. That is the case for each of your employees. It depends on what work they perform. and so on for each of your employees depending on the work they perform.
Once you find the right Industry Modern Award (MA), you need to look at what roles are covered. If the role is not covered in the MA, you’ll need to look at what they do. Find the MA for their function in your business
The MA details such as coverage will notify you if you need to look at other MAs too. Ones that cover employees in slightly different functions. Even though they work in a storage and wholesale business.
For example, using the Storage Services and Wholesale Award 2010 (MA0000084):
To get even more clarity about which of your employees are under this award refer to classifications.
See video below which gives an example of the employees’ type of responsibilities, training and experience covered by this award:
Step 4. 10 Ways to Comply with FWA | Minimum Wages
This is determined by the Modern Award of relevance and by the national minimum wage. It changes each year on 1st of July in Australia.
Continuing with the Storage Services and Wholesale Award example. You can see below how to determine the minimum wage. That applies to your employees. It’s based on their level of skill and experience as well as responsibilities:
But you may want to consider looking at the market rate as well. If you want to find good people, you need to pay the right money. Or they’ll look elsewhere for a similar job paying better money.
Step 5. 10 Ways to Follow the FWA | Average Maximum work week 38 hours plus reasonable additional overtime. Understand the effect extra hours worked has on a person’s wages. The more hours a person works, the less the hourly rate.
“I work 42.5 hours per week, but my pay slip is only for 38 hours, how is that fair or even legal?” Quote taken from a whirlpool forum discussion.
This is a question I get often. According to the FWA the average work week is 38 hours. But most businesses operate for 40 hours. The payroll systems all changed when the 38-hour week began. So, your pay slip states 38 hours, but you worked 40.
Remember, the 38 hours is an average, plus reasonable over time. It’s important to bear in mind that this related to minimum wages. A person’s wage must compensate them for all hours worked.
The fairness test:
There is a test of fairness and reasonableness. The more hours worked for the salary given, the less earned per hour. If the salary received is 80,000 and the hours worked each week are an average of 50 then the hourly rate is over $30. The minimum wage is $19.49, so we see that even at $30 per hour, it is still a lot more than the minimum wage.
But on the same salary, if the hours worked are 100 then the hourly rate is only $15.38. So, if a person’s salary is not high enough to cover all the hours worked it could put them under the minimum wage. Thus, it would not comply with FWA for minimum wage. So, you can see that the more hours worked for the salary provided decreases the hourly rate.
The Fair Work Act considers both the needs of employees and of the business. So, as business owners and employers we need to consider if our demands are fair and reasonable. We need to consider the hours of work, the stress and the income provided. That’s the fairness test. It’s what the Fair Work Ombudsman would also consider.
Step 6. You may need to provide certain allowances to your employees. Such as: penalty rates, over time, shift allowances. And uniform allowances, travel allowances. Also, meal breaks (paid and unpaid) are important for compliance.
Again, refer to the MA. To see if there allowances you need to provide your employees with.
Step 7. Provide the correct amount of Leave entitlements. Such as annual, personal/carers, long service. And domestic violence, leave loading, parental leave. Various types of leave are available to your employees. Make sure you are aware of them and follow the FWA.
You can find all the leave available to your employees on the Fair Work Ombudsman’s website.
There are various types of leave entitlements available depending on the circumstances. Added in August 2018 Domestic Violence leave became an entitlement. So, you need to keep up to date with changes.
Because of regular changes, I recommend you register with the Fair Work Ombudsman to receive updates by email.
Step 8. Policy and Procedures to protect you, your business, and employees. Check that your business and employees are operating in line with the FWA and Australian Legislation:
Other Governing laws your business needs to comply with in Australia are important to have addressed with your employees. If you have good policy and procedures in place, it will save you and your business from fines and potential losses in productivity and court cases.
List of Policy and Procedure Documents every business would benefit from having:
- Equal Employment and Anti-Discrimination
- Bullying and Harassment
- Performance Management
- Social Media
- Internet, Email and Computer Use
- Security and Privacy
- Whistle blower
- Code of Conduct (The way we behave around here)
- Alcohol and other drugs
- Work Health and Safety (Occupational Health and Safety
Step 9. Performance management procedures for fairness and to avoid an unfair dismissal or adverse action:
There are specific procedures to manage performance in a fair and compliant manner. You can find a checklist and instructions on the Fair Work Ombudsman’s site:
The Fair Work Ombudsman provides great resources. Tools, tips, and courses to help you learn about managing employees in Australia. You can do the courses anonymously or register and receive a certificate.
It’s tough to run a business and be across all the important areas of legislation. At least we can get free courses and guides to help. Click on the link here to go to the various managing employee courses available free of charge.
These courses only take a few minutes. They could save your business thousands. And improve productivity, so they are well worth your time.
Step 10. Keeping accurate records, pay slips etc. This is an important aspect of employment law in Australia. Employers must keep time and wage records for 7 years to comply with FWA. If a Fair Work Inspector (FWI) asks for these records, you must provide them:
The records in relation to employees have specific requirements. In summary they are:
- Weekly time and wage records
- Employer and employee details
- Ending employment and the reasons
For more detailed information you can go to the link provided above about keeping accurate records. Also, you can do the online course provided by the Fair Work Ombudsman which will teach you how to make, update and manage employment records for your business.
The above 10 Ways to comply with FWA will provide you with the basic information you need to know. It is essential for anyone employing or considering employing people to work for them in Australia to know these 10 Ways to comply with the FWA.
The BOOT Test
Putting it all together to make sure your employees are better off overall known as the BOOT Test. First, the NES entitlements must be adhered to with your employees. Make sure the average weekly hours and reasonable overtime plus the employees circumstances and wages meet the fair and reasonableness test.
Check the Modern Awards for your industry and the work an employee performs for the minimum wage entitlements based on their level of skill, experience and responsibility. Further, check for any other allowances to be provided.
Your business must keep accurate records, so invest in a quality accounting system. There are many low cost options available that have provisions for the Australian work place system. Accounting systems like Xero, SAASU, Quickbooks and MYOB are low cost and meet the Australian work place system including single touch payroll.
If you get these 10 things right for your employees, you will be able to relax knowing your business complies with employment law in Australia. So, your employees will typically be more productive, and you and your business will be less likely to end up with fines and time costs incurred in a Fair Work matter.
For further information in short tutorials you can check out our Vlog on National Employment Standards and Navigate Industry Awards. If you would like support or advice about human resources management or hiring your next employee please get in touch.
If you would like to know if your business has all the right ducks in a row to comply with FWA you can contact me to receive a free analysis with suggestions for any areas of improvement.