Chapter 2 - Employing staff


All businesses employ staff; therefore appropriate management of these human resources is a vital process. Businesses have legal obligations to fulfil, whilst also needing to build a positive and cooperative culture. The business needs to ensure that human resources policies and procedures are kept current with changes to legislation. Business managers and owners frequently require assistance in understanding legal requirements pertaining to employment and dismissal of staff.

In Australia there are a vast number of laws that affect employers and staff. This chapter will focus directly on the recruitment process.

Please note that any legal commentary in this section has been prepared by Dover Legal Pty Ltd.


The business’s relationship with its employees is shaped through the procedures it uses and its compliance with legislation set down by federal and state governments. There are a number of steps employers need to undertake in order to recruit and select appropriate staff to fill positions in the business. Firstly, the employer will identify the need for additional human resources, either resulting from a staff member leaving or through increased workloads. A process to establish guidelines for recruitment needs to be followed.


These processes can be illustrated by a simple flow chart:







The recruitment procedure must include, but not be limited to the following criteria:

  • recruitment and selection procedures

  • personnel records for each employee

  • employment contracts

  • induction procedures

  • general conditions of employment

  • employee leave entitlement

  • termination procedures

  • employee remuneration and other benefits

  • equal employment opportunity and harassment policies

  • training and continued education procedures

  • performance review procedures

  • internal grievance resolution procedures


Businesses need to create strategies to ensure employee retention. An effective employer/employee relationship does not necessitate becoming friends and being involved in social interactions. Rather, building relationships that foster mutual trust, respect and accountability for direct responsibilities will develop a workplace culture around job satisfaction. Where employees are happy in their role and their environment, they are more likely to remain with the business.

The Australian workforce is ageing. As older employees retire, the number of skilled and experienced workers available to fill the vacated positions will decrease. Therefore, it is essential for businesses to consider what workers expect from the employment relationship.

Some of these expectations include:

  • job satisfaction

  • work/life balance

  • flexible working conditions

  • open lines of communication

  • workplace culture

  • recognition

  • appropriate rewards

  • consistent guidelines

Greater employee retention strategies are essential for maintaining competitiveness and sustainability, which in turn leads to enhanced employee satisfaction and motivation.


The Fair Work Act 2009 was passed on 7 April 2009, as a part of the then newly-elected Labour government’s election promise to abolish the Howard government‘s Work Choices Act. This is the main legislation that governs the employee/employer relationship in Australia. It was designed to provide a safety net of minimum entitlements, enable flexible working arrangements and fairness at work, and to prevent discrimination against employees.

In summary, the new laws altered the awards system, and significantly changed unfair dismissal laws. However, there are a number of other areas covered in the Fair Work Act. These include:

  • changes to unfair dismissal claims

  • changes to federal award systems

  • changes to the minimum wage

  • record keeping

  • discrimination

  • new allowances

  • restrictions on overtime payments

  • paid tea breaks every four hours; and

  • restrictions on the number of hours an employee can work


The government has established an information service for employers, regarding any queries or concerns they may. Employers are able to access Fair work online – employers for further information.



When recruiting employees, business should consider the three categories in which staff are able to be employed. This should be stipulated at the time of engagement and confirmed in the employment contract. The categories are:



A full time employee is engaged in work for 38 hours per week, or an average of 38 hours per week over a fortnight or four week period. The actual hours can be agreed upon between the employer and the employee set out by an award or registered agreement.

The employee can be hired as permanent or fixed term contract. Permanent employees are employed on an ongoing basis until the employer or employee ends the employment relationship. Fixed term employees are only employed for a specific period of time or task.



Part time employees work on average less than 38 hours per week.

The part time employee’s hours of work should be reasonably predictable. The regular pattern of work for the part time employee will typically be agreed in writing before the employment is commenced. The contract is also usually written and will include the number of hours to be worked each week and the days of the week that will be worked. It will also stipulate the starting and finishing times of each day, however, the contract may be varied by agreement and recorded in writing.

Part time employees are entitled to the same terms of the award as full time employees on a pro rata basis. This means they accumulate sick leave and annual leave entitlements, and are subject to all other National Employment Standards.

Like full time employees, they can be engage as either a permanent employee or on a fixed term.



Casual employees are engaged on an hourly basis, to work up to a maximum of 38 hours per week. They have no guaranteed hours of work, usually work irregular hours, are not entitled to sick or annual leave and can end their employment without notice, unless notice is required by registered agreement, award or employment contract.

The core of their employment is different to part time, full time or fixed term employees, and they will be paid at an hourly rate of 1/38th of the weekly rate appropriate to the employee‘s classification.

In addition, a 25% loading of that rate will be paid instead of the full time annual leave entitlements. Casual employees generally have a minimum period of engagement of three hours.

To find out more about the different types of employees refer to: Fair Work Ombudsman – Types of employees.



The Fair Work Act provides a safety net of minimum employment conditions called the National Employment Standards (NES). Under the NES all national system employers must provide 10 minimum entitlements to full-time and part-time employees:

  1. Hours of work – a maximum standard working week of 38 hours (plus reasonable additional hours) for full time employees

  2. Right to request flexible working arrangements – where an employee has at least 12 months of continuous service, they have a right to request flexible working arrangements if they are:

    • A parent, or have the responsibility for the care of a child who is school age or younger

    • A carer

    • Have a disability

    • Are 55 or older

    • Are experiencing violence from a member of their family; or

    • Provide care or support to a member of their immediate family or household, who requires care or support because they are experiencing family violence

    Flexible working arrangements may include changes in hours of work, patterns of work or location of work. The request needs to be in writing outlining the changes requested and the reasons for the changes. The employer must respond within 21 days with a decision (to grant or refuse the request). If the employer refuses it must be done so on reasonable business grounds

  3. Parental leave – When an employee has at least 12 months continuous service they have a right to 12 months of unpaid parental leave after the birth or adoption of a child, and the right to request to extend that period by a further 12 months (which can only be refused on reasonable business grounds)

  4. Annual leave – Four weeks paid annual leave (five weeks for certain shift workers). Part-time employees get a proportion of this based on the hours they work. All employees can access 2 days unpaid compassionate leave and 2 days carer’s leave

  5. Long service leave – The right to accrue long service leave

  6. Personal/Carer’s leave and compassionate leave – Ten (10) days paid personal/carer’s leave each year for full-time, non-casual employees. Part-time employees get a proportion of this depending on how much they work. Two (2) days paid compassionate leave for each permissible occasion when a member of the employee’s immediate family or household sustains a serious illness, serious injury or dies

  7. Community Service leave – an employee has a right to community service leave for eligible community service activities such as jury duty or activities with dealing with an emergency or natural disaster. Community service leave is unpaid, with the exception of jury service. Payment for jury service is capped at ten (10) days. An employee must give you notice of their absence as soon as reasonably practicable and must tell you how long they expect to be absent from work

  8. Public holidays – The right to the day off on public holidays if the employee would have usually have worked on that day and the right to be paid for the ordinary hours of work on that day. Employees can be asked to work on these days if the request is reasonable, and employees can refuse to work on these days provided that the grounds for refusal is reasonable

  9. Notice and redundancy payments – a minimum amount of notice in writing prior to the termination of the employment, where the notice period will be determined by how long the employee has worked for the employer.
    There is entitlement to redundancy payments in certain circumstances, if the employer no longer needs the employee’s job done by anyone, or because of insolvency, bankruptcy of the employer. The redundancy payment is calculated by using the employee’s base rate of pay and their length of service with the employer

  10. Fair Work Information Statement – Employers are required to provide a copy of the ‘Fair Work Information Statement’ to all new employees before or as soon as practicable after the commencement of employment. The Fair Work Information Statement is published by the Fair Work Ombudsman and available to download here:Fair Work Information Statement.

The parental leave and notice of termination entitlements also apply to casual workers.

The Fair Work Ombudsman has also produced a useful reference guide that summaries businesses responsibilities under the Fair Work Act 2009, the National Employment Standards, and other employment agreements. The latest version is dated May 2015 and is available here.



The Australian government introduced its first national paid parental leave scheme on 1st January 2011. Under the scheme, eligible working parents are entitled to 18 weeks leave, paid at the national minimum wage rate, when having a child or adopting a child.

In order to be eligible for the scheme, the worker applying must be the primary carer of a newborn or recently adopted child. This can be either the mother or the father, but not both at the same time; however the 18 weeks can be split between both parents. The worker applying must be an Australian resident and be receiving an adjusted taxable income of $150,000 or less in the financial year prior to the date of birth. Adjusted taxable income includes the following:

  • taxable income

  • tax-free pensions or benefits

  • target foreign income

  • reportable super contributions; and

  • adjusted fringe benefits, i.e. reportable fringe benefits multiplied by 0.535

  • total net investment losses; less

  • deductible child maintenance expenditure

The worker must have been employed by the employer for a minimum of twelve months prior to the expected date of birth, and will continue to be classed as an employee whilst on paid parental leave. The worker must be on leave or not working from the time they become the primary carer.

Dad and Partner pay is available for eligible working dads or partners, including adopting parents and same sex couples. They are eligible to get up to 2 weeks of pay based on the rate of the national minimum wage.

Parents who wish to claim paid parental leave will need to register through the Family Assistance Office, providing evidence to demonstrate their eligibility. Parents then notify the employer and agree on leave arrangements. The employer registers with the Family Assistance office to ensure that all payments are received prior to the date payments to the employee are due. Paid parental leave can be taken in conjunction with, or in addition to employer provide leave such as annual leave.


The employer will need to register for the paid parental leave scheme:

  • employers are responsible for providing paid parental leave to eligible employees who are expecting to receive more than 8 weeks paid parental leave

  • any employees who opt for less than 8 weeks parental leave will be paid directly by The Family Assistance Office, not the employer

  • to be eligible parents must be employed under the Fair Work Act

  • the Family Assistance Office will advance the employer paid parental leave funding, there is no obligation to provide paid parental leave until the funds are received from the Family Assistance Office – therefore employers should encourage their eligible employees to register with the Family Assistance office early to ensure the funds are received before they are due to be paid to the employee. This will not cause cash flow issues within the business – payments are transferred to the employer prior to the pay cycle

  • the employer is able to preregister with Family Assistance Office in order to simplify the process

  • parental leave funds are classed as taxable income, and should be separately identified for annual financial statements; Generally the funds declared will be received in the same financial year as the claim for the deduction for payment for paid parental leave

  • reasonable costs of complying with paid parental leave scheme are tax deductable; these include software expenses or necessary expenses incurred in carrying on a business

  • leave entitlements do not accrue while the employee is on paid parental leave, and is not classed as ordinary time earnings therefore does not attract super guarantee contributions. Paid parental leave is not subject to payroll tax, and will not attract additional workers compensation liabilities

For further information on this scheme, refer to: Paid Parental Leave Scheme.


It is important to determine the correct award classification for each staff member.


Job descriptions are important for clarification of these areas. Under the awards, employers are able to pay above award rates, however, the contract must state what the higher rates are covering, and that the employee is better off overall than they would be if they were receiving all additional award entitlements. The employment agreement must be signed by both parties; otherwise the additional entitlements will still apply.

It is a good idea to provide individually signed and written business cases to staff, outlining how their over award payments and conditions make them better off overall. Staff must not be forced to sign these agreements, as signing under duress gives the employment no legal protection from an underpayment claim. It is critical to ensure that all employment agreements address the award obligations line by line.

A general statement such as “this over award payment will cover all your penalty, allowance and overtime benefits” is not satisfactory. Details need to be spelt out in the employment agreement.

The employment contract should include the following details, as a minimum:

  • wages

  • allowances

  • super

  • business expenses

  • public holidays

  • annual leave

  • personal carers leave

  • compassionate leave

  • long service leave

  • community service leave

  • conflict of interest

  • confidentiality

  • intellectual property

  • commissions

  • internet/email/computer/mobile phone

  • viruses

  • unacceptable use

  • security

  • dress

  • policies

  • indemnity

  • jurisdiction

  • post employment obligations

  • principles

  • attendance

  • performance of duties

  • drugs and alcohol

  • property

  • vehicles

  • safety procedures

  • false declarations

  • personal behaviour

  • harassment

  • gambling

  • confidential information

  • media statements

  • smoke free environment

  • outward goods

  • date, name and address of employe

  • offer of employment, statement asserting replacement contract

  • employment duties

  • hours of work

  • remuneration and benefits:

  • health and safety

  • leave entitlements:

  • general conditions:

  • code of conduct:

  • termination

    • notice

  • redundancy

  • effective date

  • agreement signatures


Disciplinary action cannot be taken against an employee without justifiable reasons. Every employer should have effective policies and procedures in place to guide the process, with any required action using commercial common sense with the utmost respect for the rights and feelings of the employee. The following chart identifies and explains some common disciplinary issues:

The four basic steps for disciplinary action are: documentation, investigation, progressive discipline and termination:


Document all actions and follow a procedure designed to prove to a court that the correct procedures were followed. A good rule is to simply assume everything that has occurred will be eventually put under scrutiny by a court. All interactions should be documented in writing, including file notes of discussions and specific examples of inappropriate behaviour. It is appropriate to have witnesses wherever possible. Witnesses need to sign and date the file notes. Failure to accurately record disciplinary actions may result in the reversal of any action taken. (for example, a dismissed worker may be reinstated).


In many cases, the investigation of an incident will be enough to prompt a change in the behaviour of the employee. In the case of an employee who is not performing well, but who is positive about improving their performance and is not engaging in serious misconduct, the following course of action should be followed:

  • talk with the employee about their performance. Let the employee know exactly what is required of them and how they are falling short of this standard. Try to do this in a friendly and non-threatening way. An approach that is too strong may trigger a defensiveness, which may frustrate the whole process

  • the employee should be given an opportunity to respond to the concerns and to explain their point of view, how they perceive their work performance has been, and whether they think it can be improved, or whether there are any extenuating circumstances that need to be considered; and

  • often this will be the end of the matter. Both the employer and the employee will have benefited from a full and frank discussion regarding the matter, and the situation will improve immediately (or at least improve over the following few weeks)


Progressive disciplinary procedures should be applied to minor indiscretions. A further meeting should be held, preferably a few days after the initial meeting, when the employee has had the opportunity to reflect on the issues unemotionally and perhaps talk with friends and family. At this next meeting, performance targets and goals should be set, including time limits. Documentation of these targets and goals is essential, and the agreement of the employee should be obtained and recorded in writing. It is often a good idea for more than one person to be present at each of these meetings. In particular, if the employee is a young female and the employer is a male, it may be appropriate for the third person to be an older independent female.

If this discussion does not end the matter, and after an appropriate period there is no improvement, then the above procedure should be repeated. Again, the concerns of the business and the proposed course of action should be put in writing, and witnessed by an independent person.


If the position still does not improve, then a third and final warning should be given. This warning should be very direct and to the point, and should refer to all previous discussions and correspondences. It should state unequivocally what the required standards of performance are, and that the consequence of the employee not reaching this standard by the specified date, will result in dismissal. If the third warning does not have the desired effect it is appropriate to consult a legal professional or Fairwork.

It is important to bear in mind the position of the employee, and the possibility that they are preparing to move on by the time they receive the third warning. Favourable references and some common sense on the part of everyone concerned may assist the employee to consider other options.


The Fair Work Act 2010 altered the termination notice periods given to unsatisfactory employees. Upon termination of employment, an employer may have to comply with the federal notice periods that provide for mandatory minimum notice periods prior to ceasing employment. This gives an employee the chance to receive wages for this period, and secure new employment with a smaller gap between jobs.

There are some exceptions to the notice periods. Most significantly, these notice periods do not apply to employees guilty of serious misconduct (discussed in further detail below). Other circumstances where the notice periods do not apply include:

  • dismissal of casual employees

  • employees who earn above the threshold amount (currently $108,300)

  • temporary employees who operate under contract; and

  • employees under a probation period, which is generally up to three months

The table below sets out the notice periods compared to the period of service:


Further details on the notices periods, can be accessed at: Fairwork notice and redundancy calculator.


Employers do not have to accommodate serious misconduct. Serious misconduct is defined in the Industrial Relations Act as:

"…misconduct of a kind such that it would be unreasonable for the employer to continue the employment during the notice period and which must be taken as a repudiation of the employment contract by the employee."


Examples of serious misconduct are:

  • dishonesty against the employer

  • conflict of interest (e.g. working for a competitor, or competing with the employer after hours: at least in some industries):

  • referring work away from the employer; and

  • committing a serious breach of the law (e.g. stealing)

When faced with serious misconduct on the part of an employee, such as a significant theft or other dishonesty, an employer should:

  1. investigate the matter fully, reasonably and impartially, and fully document the steps taken in this investigation. It can be a good idea to ask an independent third party, such as an accountant or a solicitor, to help with this investigation

  2. specify exactly what the employee is alleged to have done. Document all the details, including times, dates, places, the names of any witnesses, or the details of any corroborating evidence

  3. speak to the employee, put the allegations to them and allow them to respond. Consider any mitigating factors (for example, thirty years of happy service may mitigate a minor theft of stationery); and

  4. consider the other available options. Apart from dismissal, these could include a suspension, a demotion or a transfer. Generally though, if the misconduct is serious, the wisest solution is usually to dismiss the employee. This is particularly the case given that the misconduct of which the employer is aware may not be the only misconduct that has occurred

Each of the above steps should be documented, and, preferably, should involve an independent person as a witness. Again, the witness should sign and date these documents. Any breach of criminal law should be reported promptly to the police. Let the law make up its mind as to what action should be taken.


Under the Fair Work Act, employers cannot dismiss their employees in circumstances that are harsh, unjust or unreasonable. Whether the dismissal is harsh, unjust or unreasonable will depend on the circumstances of each case.

Under section 385 of the Fair Work Act a person will be unfairly dismissed if the Commission is satisfied that the employee’s dismissal was:

  1. Harsh, unjust or unreasonable; and

  2. Not consistent with the Small Business Fair Dismissal Code(for small businesses with less than 15 employees); and

  3. Was not a case of genuine redundancy

An employee who has been dismissed can make an application for unfair dismissal if they:

  • Have completed 6 months of employment; and

  • They earn less than the high income threshold (currently $136,700 pa); or

  • A modern award covers their employment; or

  • An enterprise agreement applies to their employment


For small businesses that employ fewer than 15 employees there are special arrangements which are different to larger businesses. The special arrangements which apply to these small businesses mean that:

  • employees will need to have worked for the business for at least 12 months in order to be eligible to make a claim for unfair dismissal; and

  • if a small business employer strictly follows the Small Business Fair Dismissal Code and the dismissal of the employee is not harsh, unjust or unreasonable, then the dismissal will be deemed to be fair


In summary, this code provides for the following dismissals:


Where the employer can dismiss the employee without notice or warning then the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.


In all other cases, the employer must give the employee a valid reason why he or she is at risk of being dismissed based on the employee’s conduct and/or capacity to do their job. The employee must then be provided an opportunity to respond and a reasonable chance to rectify the problem.

The code provides a detailed checklist to help small business employers comply with the code. This will help the employer assess and record their reasons for dismissing an employee. However, completion of the checklist does not in itself prove that the code has been complied with and only acts as a guide.

A copy of the code and checklist is available here: Unfair dismissal – Small Business Fair Dismissal Code.

For more information regarding the process and timelines and the protections afforded to employees protected under this scheme, refer to the latest versions of the Fair Work Unfair dismissal Benchbook published 18 September 2015 here: Benchbook – Unfair Dismissal.



Australia has a variety of anti-discrimination laws, on both state and federal levels. The human rights and equal opportunity commissions oversee and administer the federal legislations, to ensure that no employees are unfairly discriminated against.

On a federal level the legislation includes:

  • Racial Discrimination Act 1975

  • Sex Discrimination Act 1984

  • Disability Discrimination Act 1992; and

  • Human Rights and Equal Opportunity Commission Act 1986


Discrimination involves treating a person unfavourably because of an attribute or a characteristic that distinguishes them from others. The characteristics include race, culture, origin, skin colour, gender, family status, family responsibilities, union membership, disability, health, physical features, political association, sexual orientation, and religion.

Discrimination does not have to be direct. It can be indirect. For example, promoting employee A because he voted for a particular political party in the last election, could mean that employee B is indirectly being discriminated against due to the political association. The promotion was not offered based on his or her merits, and employee B was not given the same opportunity as employee A.

A further example could be a company policy that reads: “All staff members, without exceptions, are to wear work uniforms at all times, without any additional accessories whatsoever.” This could be discriminating as some cultures and religious beliefs require that followers wear a head cover, very modest clothing, or piercings. Therefore, a company policy should be flexible enough to accommodate these needs. More appropriate policy could therefore read: “Staff members are required to wear work uniforms at all times, without any additional accessories, unless:

  • other agreements are entered into in writing with management; or

  • the uniform requirements contravene your personal cultural or religious beliefs.”

Intention is irrelevant in anti-discrimination laws. Therefore, it is not sufficient to claim lack of intention to discriminate.If you discriminate, that is illegal.


All employers should have procedures for dealing with conflict, and it is essential that employees must be given access to grievance procedures. All complaints or grievances from staff must be recorded, and a copy filed in the employee's personal file.

Understanding conflict will assist with dealing with grievances.

Differing opinions or ideas amongst team members can produce conflict; this may be caused through differing cultural beliefs and backgrounds, or from varying skills and experience.

However, conflict is not always negative and can usually be resolved when dealt with appropriately. Unresolved conflict can result in frustration amongst the team members, which may develop into negative competitive behaviour, increased stress and lower morale. It can also cause resentment and ongoing anger, decreased efficiency and increase in staff turnover. Conversely, when handled correctly, differing opinions can be productive and encourage creative solutions, generate innovation and increase communication.


In order to manage conflict effectively, it is important to understand the five different strategies commonly used for resolving the issues that may arise:


3. Time management