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End of Employment Procedures & Guidelines in Australia

Sound reasoning to the dismissal is vital for employers to ensure a minimal risk of unfairness claims from employees. There are four key areas in which the release of an employee can occur with proper reasoning:

*If an employee is to be dismissed on grounds related to performance and conduct, they must be allowed to be heard before dismissal, rectify their behaviour, and must have been given a warning before the discharge.

Failing to base a termination on the above areas could result in an unfair dismissal claim. However, there are some exceptions, such as whether an employee has been involved in severe, repeated or gross misconduct.

An employee's final termination pay should be paid within seven days and include:

  1. Any outstanding salary up to the termination date
  2. Accrued but untaken annual leave or if applicable, long service leave entitlements
  3. Payment in respect of the employee's notice period (if it is being paid in lieu)
  4. Any redundancy payment if the employee's employment terminated on account of redundancy

Employers can ask employees to sign a declaration that releases them from obligations related to their dismissal as long as they have made full payment to the above.

Procedure guidelines

Employers must ensure to follow the correct and fair procedure when terminating an employee, following specific rules:

  1. Have a valid reason for the dismissal related to the employee's capacity or conduct
  2. Notify the employee of the reason in writing
  3. Allow the employee to respond
  4. Respect the employee's request to be accompanied by a support person for any discussion relating to the dismissal
  5. In the case of unsatisfactory performance, warn the employee about performance concerns and allow them to improve or rectify the problem.
    • Rectifying the problem might involve the employer providing additional training and ensuring the employee clearly understands their job expectations.

Termination of the employment must be consistent with the terms of any employment contract and the requirements of any Modern Award/enterprise agreement that applies to the relevant employee. Failure to do so can result in claims for breach of contract or breach of the industrial instrument. Potential remedies include reinstatement and compensation. Penalties and other remedial orders can be made for violations of general protections laws.

Unfair Dismissal in Australia

Eligibility for unfair dismissal

An employee may be eligible for a remedy under the national unfair dismissal laws if they have:

If an employee is not eligible to bring an unfair dismissal claim against the employer, provided the reason is lawful (e.g. not discriminatory or in breach of some other law), the procedure for terminating those employees are more straightforward.

Employee protections

Employees who have been employed for six months (12 months for businesses with less than 15 employees) are protected from terminations of employment that are harsh, unjust, unreasonable or that don't follow the correct grievance procedure. If the employee claims being unfairly dismissed, the employer will have to provide evidence of compliance with the termination procedure.

Employees are also protected from being dismissed in the following cases:

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Redundancy Pay & Entitlement in Australia

Redundancy Pay

Employees working with the business for at least one year are entitled to redundancy pay according to their length of service. Redundancy pay is in addition to an employee's notice period.

Redundancy pay does not apply if the company employs fewer than 15 employees.

* There is a reduction in redundancy pay from 16 weeks to 12 weeks for employees with at least 10 years continuous service.

Redundancy pay is not payable in the following circumstances:

Resignation Procedure in Australia

Employees who want to resign from their job must inform their employer in writing. The notice period starts when the employee sends their notice and must be respected unless the employer elects to make a payment in lieu or brings the employment to an end sooner. The required amount of notice that is usually outlined in the employment contract is between one and four weeks.

An employee can take annual leave during a notice period if the employer agrees to it, but an employer cannot force an employee to take leave as part of the notice period.

The employee's resignation letter should be stored in the employee's personnel file, with this file remaining private and confidential. Generally, no one can access them other than the employee, their employer, and relevant payroll staff. If requested by the employee, or the former employee to whom the record relates or the Fair Work Ombudsman, employers must make copies of these records available.

Other End of Employment Regulations in Australia

Notice period

Both employers and employees must respect the notice period when terminating the employment, except in cases of serious misconduct. Employees may be paid in lieu of notice.

Employees who are 45+ and have been with the company for two years or more are entitled to either an extra week's notice or the equivalent pay.

While the above limitations are statutory, often employment contracts will include longer notice periods.

Particularly for senior executives, that notice may extend as far as 9 to 12 months.

Unemployment funds

Unemployment payment can be claimed by people between the age of 22 and retirement age who are Australian citizens, holders of permanent residency visa and new residents who have resided in the country for 104 weeks and meet the criteria, which imposes limits on income and assets.

To be eligible for the unemployment benefit, the individual must have lost their job and demonstrate that they are actively looking for work or be sick or injured and unable to do their usual work. Payment amount depends on each person's circumstances, and vary between $510 and $793 per fortnight.

Until 31 December 2020, there is also an additional Coronavirus supplement at a rate of $250 per fortnight.

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Holiday Leave in Australia

Full-time employees are entitled to 4 weeks off per year based on their ordinary hours of work, but it is common to receive 5-6 weeks of vacation.

Any accrued annual leave not taken during the year is paid when the employment ends.

In certain circumstances, the annual leave may be cashed out as long as the employee retains at least four weeks paid time off. This needs to be supported by a written agreement between the employer and employee. Employers should, however, check whether cashing isn't prohibited under the terms of specific Modern Awards.

Annual leave does not accumulate when a worker is on any form of unpaid leave.

Public holidays

There are seven national public holidays in Australia and additional state and territory public holidays. Holidays that fall on weekends are generally observed on the Monday after.

Depending on the Modern Award, enterprise agreement or employment contract, employees who are working on a public holiday could be entitled to one of the following:

All employees have a right to not work on public holidays; however, employers can ask them to work if the request is reasonable. Employees, in turn, can refuse it if they have their own reasonable grounds.

An employee doesn't get paid for a public holiday if they don't usually work on the day that the public holiday falls on.

Australia 2022 Holiday Calendar

May Day in ACT, NSW & SAQueen’s Birthday in QLD

DATEWEEK DAYHOLIDAY
1/1/2022SaturdayNew Year's Day*
26/1/2022WednesdayAustralia Day
1/3/2022MondayLabor Day in WA
15/4/2022FridayGood Friday
17/4/2022SundayEaster Sunday
18/4/2022MondayEaster Monday
25/4/2022MondayAnzac Day
6/6/2022MondayWA Day
13/6/2022MondayQueen’s Birthday (except WA & QLD)
26/09/2022MondayQueen’s Birthday in WA
3/10/2022MondayMay Day in ACTNSW & SA Queen’s Birthday in QLD
25/12/2022SundayChristmas Day**
26/12/2022MondayBoxing Day (except SA)


* Observed on Monday, January 3rd.
** Observed on Tuesday, December 27th.

Full list of public holidays per state.

Types of Leave in Australia

Sick leave

Referred to as sick and carer's leave, this leave entitles employees to 10 days per year of paid time off that can be used during sickness or when taking care of a family member. The employer funds the break. Any untaken sick leave from a given year is added to the next. This means that if an employee only takes five sick days in a given year, they will be granted 15 the following. However, accumulated sick leave is not paid out at the end of employment.

Employers can request evidence that the employee took the leave for the right reasons with the following documents:

Maternity leave

Employees are entitled to unpaid 52 weeks of unbroken leave and can request an additional 12 months off, which can only be refused by employers on reasonable business grounds. To be eligible for the maternity leave, the employee must have 12 months of continuous service as of the expected date of birth or the adoption. Pregnant employees can start the leave up to 6 weeks before the expected date of delivery.

Of that leave, the primary carer of a newborn or adopted child is entitled to 90 days payment at the national minimum wage ($753.90 as of September 2020). This used to have to be taken in one single period, but in July 2020, the government introduced a more flexible setup:

Employees are entitled to the same job they had before going on the leave. If an employee's job no longer exists or has significantly changed, they must be offered suitable alternative employment. If the employee's job no longer exists, they may be entitled to redundancy. 

If an employee has a pregnancy-related illness or her pregnancy ends after 12 weeks because of miscarriage or stillbirth, she may be entitled to special maternity leave.

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Paternity leave

If the father is the primary carer of the child, he is entitled to the same parental leave rights described above. Otherwise, the father or partner (including same-sex) is entitled to 2 weeks' paid leave at the federal minimum wage by the government if they have been continuously employed for at least 12 months.

Adoption leave

Employees who adopt a child under the age of 16 are entitled to the same parental leave. They are also entitled to two days of unpaid pre-adoption leave to attend interviews or examinations required for the adoption.

Compassionate leave

Employees are entitled two days paid leave for a compassion leave in the case a family member sustains a severe personal injury or develops a severe illness that poses a threat to life or where death occurs.

Carer's leave

In Australia, carer's leave is combined with the ten days of leave entitlement employees receive.

Work-related injury

Employees with work-related injuries may be eligible for payments under their employer's workers' compensation schemes. All employers must have workers' compensation insurance for their Australian employees.

Long service leave

Unique to Australia, employees who have spent between 5-10 years with the same company are entitled to paid leave that varies from 2 to 3 months, depending on the state or territory as follows:

When an employee ceases work with an employer, they are entitled to be paid the amount of leave entitlement not taken on termination on a pro-rata basis if they have worked the minimum period of service.

Family & domestic violence leave

Employees are entitled to 5 days unpaid leave each year (some companies elect to provide paid leave) in case they have been subjected to family and/or domestic violence.

Family and domestic violence refer to violent, threatening or other abusive behaviour by an employee's close relative that seeks to coerce, control or causes them harm or fear. A close relative is an employee's spouse, de facto partner, child, parent, grandparent, grandchild, sibling or in-laws.

Community service leave

Employees can take community service leave for voluntary emergency management activities (unpaid) or jury duty (paid). An employee is considered to be part of voluntary emergency management if:

An employee is entitled to take community service leave while they are engaged in the activity and for reasonable travel and rest time. There is no limit on the amount of community service leave an employee can take.

Employees must give their employers notice of the absence as soon as possible and the period or expected period of absence. Employers may request the employee to provide evidence that they're entitled to community service leave.

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General Employee Pay Regulations in Australia

Minimum Wage

AUD $19.84 per hour or AUD $753.80 per 38 hour work week before tax.

Minimum rates of pay may be higher if a Modern Award applies to the industry.

Frequency

Monthly is the most common, however, employees may also be paid weekly or fortnightly.

Payday

Usually, the 15th of each month if monthly, but other days are used as well.

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Maximum Working Hours & Overtime Laws in Australia

Standard hours

9 am to 5 pm, Monday to Friday, with 30-60 minute lunch break.

Maximum hours

Thirty-eight hours weekly for full-time employees, plus reasonable additional hours (there’s no formal definition of what’s considered reasonable, as it depends on the nature of work, salary and personal circumstances of the employee).

For senior employees, due to the nature of their work and level of salary, it is unusual to be bound by a maximum working week. The full weekly hours are more so relevant for low-income earners and those covered by industrial instruments, such as Modern Awards.

Opt-out option

Employees can only opt out of maximum working hours in very limited circumstances. Employers and employees can only enter into individual flexibility arrangements or make enterprise agreements that vary working hours if the cases provide an overall benefit to the employee.

Overtime compensation

Overtime is defined differently under each Modern Award and enterprise agreement, but it is typically an hourly rate of time and a half for the first 2 hours and double time for each hour after that.

Employees not under a Modern Award (or enterprise agreement) do not have a statutory right to be paid overtime.

Work on Sundays

Where a Modern Award applies, employees working on Sundays are entitled to a higher pay rate. The applicable rate is dictated by the Modern Award or enterprise agreement as appropriate.

Break rights

This section applies to employees employed under an industrial agreement.

Full-time employees working between 7 to 10 hours a day are entitled to 2 paid rest breaks of 10 minutes and one unpaid meal break of 30-60 minutes.

Employees are also entitled to a minimum break of 12 hours between shifts, but it can be agreed between employer and employee to reduce the break to 10-12 hours.

Breaks vary according to the industry and the applicable modern award or enterprise agreement.

Employee Time Tracking Obligations in Australia

Employers are required to keep complete and accurate records of employee work hours. These records must be in English, legible, in a form able to be inspected by a Fair Work Inspector, not be altered unless correcting an error and retained for seven years.

The time tracking record must specify the following:

Government time tracking template

Penalties

Not having the records available for inspection by the Fair Work Inspectors may lead to fines of $1,260 per violation for an individual and $6,300 per violation for a business.

If the Inspector believes the record-keeping failures are serious, wilful or repetitive, they may recommend the matter be taken to court where the fines are significantly more substantial.

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Working from Home Policy in Australia

General guidelines

Regardless of the location where work takes place, the employer must care to ensure the mental and physical health and safety of the employees.

When deciding whether working from home is appropriate for one of the employees, the employer should consider the suitability of work activities, workflows and expectations, the surrounding environment, workstation set up, communication frequency, the mental health of the employee and safe working procedures and training requirements.

Just like in an office, employers are responsible for providing employees with the necessary tools to perform work. 

Health & safety at home

Employers must work to minimise the risks of accidents for employees working from home in the following ways:

Employers may also facilitate an inspection of the employee’s home office environment to ensure it meets health and safety requirements.

Employers must also eliminate or minimise the psychological risks of working from home. This includes anything inherent in the work that causes stress. Some hazards include:

Employees too have health and safety responsibilities in minimising risks at home, including:

See Australian government's Work from Home Checklist for more information.

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Workspace Guidelines in Australia

Employers must take all reasonable steps to ensure the employee’s workstation is correctly set up, safe, comfortable and easy to use to reduce potential injuries as indicated in the health and safety measures. In turn, employees must care for their health and safety and follow any reasonable policies or directions their employer gives them. They must inform employers of any work-related incidents or injuries that occur while working at home.

An appropriate workstation will include the following:

Working conditions

Employers must ensure employees access their workplace entitlements, including breaks, standard hours and any agreed-to flexible work arrangements.

The employer should have general working conditions and work from home policies in place, including a policy aimed at preventing and limiting employment-related psychosocial pressure. When working from home, the employer must avoid the chances of employees experiencing excessive work pressure.

Recommendations for employees working from home:

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Terms & Conditions of Employment in Australia

Probation period

There is no prescribed probationary period under Australian law. Usually, employees in Australia are subject to a probationary period of either 3 or 6 months. It is unusual for probationary periods to exceed six months as that is the minimum employment period for large businesses for unfair dismissal purposes which means that employers must adopt procedural fairness for any terminations beyond that period.

Post-contractual duty of care

It is possible to restrict employees' activities during employment and post-termination if the employer can establish that their scope is reasonably necessary to protect its legitimate business interests. This could include goodwill, protection against soliciting employees or the release of confidential information and trade secrets.

Express terms requiring exclusive service and the protection of confidential information and intellectual property are frequently included in employment contracts. The main types of restraints include:

Typically, the maximum enforceable restraint period in an employment context is 12 months.

Intellectual property

Employers are not automatically entitled to ownership of the intellectual property (IP) created by employees. Therefore, it is prudent for employment arrangements to assign IP to protect the employer's interests and avoid disputes.

There is a statutory presumption that employers own the copyright in any work created in the course of employment (Copyright Act 1968 (Cth)) subject to certain exceptions. The same presumption arises in respect of ownership of designs (Designs Act 2003 (Cth)).

Business transfer

In the case of a business transfer, employment may be transferred from one entity to the next under the Fair Work Act. For that to happen, the transferring employee should start work within three months of termination from the old employer and their work must substantially similar. One of the following connections should be established:

Usually, on a transfer, the employee's period of service with their first employer counts as service; however, this is not always the case. Typically, the employee would retain their accrued annual leave (unless paid out on termination of employment with the first employer). The period of service relevant to redundancies is not interrupted unless the second employer decides not to recognise the employee's period of service with the first employer. Continuity of extended service leave entitlement is dependent on the applicable state legislation.

The new employer is not required to offer to employ employees from a transferring business.

Handbook

No federal or state law requires companies to provide employees with a handbook. However, employers have a legal responsibility to inform employees of their rights and responsibilities, and an employee handbook is excellent to help clarify expectations and reduce misunderstandings at work. Another benefit for employees is they can see the benefits and compensations they are entitled to receive.

Redundancy

When a redundancy involves 15 or more employees, the Australian social security agency, Centrelink, must be notified. Employers are not permitted to select employees for redundancy based on age or job tenure. There are no general priority rules in the case of redeployment.

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General Employee Rights in Australia

Employment agreement

Employment contracts do not have to be in writing. However, it is best practice to record the key terms of employment in a formal written agreement.

Contracts should include the following elements at a minimum:

Employers are also required to provide all employees with a copy of the Fair Work Information Statement, which summarises crucial provision and employee rights under the National Employment Standards.

Payslip

Employees are entitled to receive a payslip, hard or e-copy, within one working day of being paid.

Flexible working

Employees with 12 months of service have the right to request to adjust their existing working schedule. This can include flexible working hours, pattern or location of work to suit their lifestyle and circumstances better.

Flexible working is available for employees who are:

Employers must consider and respond to the employee's written request within 21 days. They can only refuse the request on reasonable business grounds.

Equal opportunity

Each state and territory in Australia has equal opportunity legislation in place, which broadly requires that employers treat and give all employees equal opportunity to be hired, promoted, and trained.

Fair work information statement

Employers have to provide each new employee with a copy of the Fair Work Information Statement, which includes information about the conditions of employment, including their rights.

Modern Awards

Modern Awards are legal documents that outline the minimum entitlements and conditions of employment of over 120 different jobs. They primarily cover wages and conditions and are based on the particular industry and occupation. Some key aspects that contribute to Modern Awards are the type of employment, overtime, penalty rates, allowances, superannuation, and leave entitlements. Employers need to pay employees, which are covered by a Modern Award, the amount set out in the relevant award at least. Employers can find whether a Modern Award covers an employee by using the 'Award Finder'.

Software developers and engineers are typically covered by the Professional Employees Award 2020.

Suppose a Modern Award covers a particular employee. In that case, they need to be notified of the applicable award, the relevant level/classification under the award and the applicable rate of pay. These terms should be included in the employment contract.

An enterprise agreement is another form of industrial instrument, which, like Modern Awards, also contains minimum terms and conditions of employment. They are, however, made at an enterprise level and therefore apply to particular groups of an employer.

Health & Safety

In Australia, the specific requirements for health and safety vary between states. In general, all employers must undertake processes to identify and manage risks and implement health and safety committees, which include nominated employee representatives. The general obligation is that an employer has a duty of care to protect its employees so far as reasonably practicable.

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Employee Protections in Australia

Whistleblower protection

Whistleblower protections extend to a variety of public and private activities and cover both current and former employees who disclose any of the following:

Under the Corporations Act 2001 (Cth), public and enterprise companies must offer more substantial protection to whistleblowing employees through an adequate whistleblower policy. They should be guaranteed anonymity if requested, given increased immunity against prosecutions and extended protection against detriment (including dismissal) through victimisation.

Employees are protected from adverse treatment when making a complaint or inquiry about their employment, irrespective of whether those qualify for whistleblower protection.

It is common for employers to implement policies intended to protect employees who report misconduct.

Sexual harassment protection

Sexual harassment is unlawful under the state and Commonwealth legislation, but Australian law does not require training. Since employers carry a responsibility for the employee's health and well-being at work, they can be held liable if sexual harassment at the workplace does occur. For this reason, the implementation of sexual harassment policies, procedures and training are highly recommended. They will serve as evidence that an employer has taken reasonable steps to prevent harassment from occurring.

Protection from bullying

All employees have the right to be respected and not bullied at the workplace. Bullying is when a person or group of people repeatedly act unreasonably towards a worker, and the behaviour creates a risk to their health or safety. Unreasonable behaviour includes victimising, humiliating, intimidating or threatening. Examples of bullying include:

Protection from discrimination

It is unlawful to either directly or indirectly discriminate against a person in all aspects of employment relationships, including recruitment and termination. Discrimination is prohibited based on:

The range of attributes varies from state to state.

Unfair dismissal protection

Employees who have been employed for six months (12 months for businesses with less than 15 employees) are protected from dismissals that are "harsh, unjust or unreasonable".

When the Fair Work Commission investigates a potentially harsh, unjust or unreasonable dismissal, they will review:

When an employee claims unfair dismissal, the Fair Work Commission will ask the employer to give evidence of compliance with this Code. Things that qualify as evidence include a warning issued to the employee, copies of written notices, a statement of termination or signed witness statements.

Protection from adverse employer actions

Current and potential employees are extended protections from adverse actions against their fundamental workplace rights. Under the Fair Work Act, they are:

Relating to the existence or exercise of these fundamental employee rights, employers are forbidden from the following adverse actions:

Personal information protection

There is no general legal right to privacy. Currently, the Privacy Act 1988 provides a framework for the collection, correction, use and disclosure of personal information. However, the handling of "employee records" by a private-sector employer is exempt from the Privacy Act. The Privacy Act only applies to an employee record if the information is used for purposes unrelated to the employment relationship.

Employers are free to collect, use and disclose employee records and outsource employment-related functions without obtaining prior consent, provided these acts are directly related to the employment relationship.

This does not apply to prospective employees or contractors.

Workplace protection

Employees are protected from the following acts:

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Required Employee Benefits in Australia

Personal and carer's leave

Full-time employees are entitled to ten days paid personal leave per year, which can be used as sick or carer's leave.

Parental leave

Parental leave comprises the birth or adoption of a child and includes maternity leave, paternity leave (for fathers or partners) and adoption leave. All parental leave is unpaid, but depending on the agreement, company policy or award, the leave can be paid. Primary carers are usually entitled to government-funded parental leave pay at the national minimum wage for a maximum period of 18 weeks.

Long service leave

Employees that have been working with the same company for an extended period are entitled to a long service leave of 2 to 3 months. The minimum length of service varies from five to ten years, depending on the state.

When an employee ceases work with an employer, and they haven't taken all of their extended service leave, they are entitled the amount of leave on a pro-rata basis, as long as they fulfil the required length of service. 

Long service leave entitlement by state and territory.

Termination notice

There is no at-will employment termination in Australia. Under the FW Act, employees are entitled to a minimum notice period that ranges between one and four weeks. Employees that have worked with the company for two years and are 45 years of age or older receive an additional week's notice. Employers may choose to pay in lieu of notice, provided there is an ability to do so under their contract of employment.

It is common practice for employers to include longer notice periods in an employee's contract of employment. Most tech companies have a 1-month notice period (which would increase to 5 weeks' notice if the employee has attained five years of service and is over the age of 45). It is also common for senior executives to be bound longer periods of notice, for example, three months.

Workers' compensation is statutory insurance that all employers must provide. It protects employees in case they suffer a work-related injury or disease. Generally, the payment covers wages while the employee is unfit for work and medical expenses and rehabilitation costs.

There are state and territory regulators that administer the compensation and amount of money paid.

The amount paid to an employee is an insurance payment and not a wage. The employee can be paid:

  • Directly by the insurer
  • From the insurer through the employer
  • By the workers' compensation regulator
Unemployment funds

Unemployment payment can be claimed by people between the age of 22 and retirement age who are Australian citizens, holders of permanent residency visa and new residents who have resided in the country for 104 weeks and meet the income criteria.

To be eligible for the unemployment benefit, the individual must have lost their job and demonstrate that they are actively looking for a new one. Alternatively, they are entitled to if they are sick or injured and unable to do their usual work. Payment amount depends on each person's circumstances and is between AU$510 - AU$790.

Fair Entitlement Guarantee

The Australian Government offers financial assistance to eligible employees who have lost their job because their employer was liquidated or bankrupt.

Employees have access to the Fair Entitlement Guarantee scheme that guarantees payment of both:

  • End of employment (subject to some exceptions).
  • Unpaid wages (up to 13 weeks and subject to a current cap of $2,451 per week).

Employees are further entitled to receive priority treatment, be ranked above unsecured creditors and be paid in a required order set out under corporations legislation.

The Fair Entitlement Guarantee does not cover the following entitlements:

  • Superannuation
  • Reimbursements
  • One-off or irregular payments
  • Commissions
  • Bonuses
Compassionate leave

Employees are entitled to two days paid compassionate leave if an employee's immediate family member is seriously ill or dies. Immediate family is an employee's:

  • Spouse
  • De facto partner
  • Child
  • Parent
  • Grandparent
  • Grandchild
  • Sibling
  • Child, parent, grandparent, grandchild or sibling of their spouse or de facto partner

Employees can take compassionate leave for other relatives (e.g. cousins, aunts and uncles) if they are a member of the employee's household, or if the employer agrees to this.

Family & domestic violence leave

Employees are entitled to five days of unpaid leave in 12 months (some companies elect to provide paid leave) in the case of family domestic violence incidence. What falls under that is any violent, threatening or otherwise abusive behaviour by an employee's close relative that seeks to coerce or control them or causes them harm or fear. This could come from any member of the employee's immediate family (or is related to them according to The Aboriginal or Torres Strait Islander kinship rules).

Community service leave

Employees are entitled to a leave for engaging in an eligible community service activity, such as for voluntary emergency management activities (unpaid) or jury duty (paid). The following criteria must be met:

  • The activity is related to an emergency or a natural disaster
  • The employee volunteers to do the activity
  • The employee was either requested to volunteer or would have been
  • The employee is a member of or associated with a recognised emergency management body

An employee is entitled to take community service leave while they are engaged in the activity and for reasonable travel and rest time. There is no limit on the amount of community service leave an employee can take.

Employees must give their employers notice of the absence as soon as possible and the period or expected period of absence. Employers may request the employee to provide evidence that they're entitled to community service leave.

Redundancy payment

Employees who have been with the company for at least 12 weeks are entitled to redundancy pay when their employment is terminated because the employer no longer requires the job. Redundancy pay varies from 4 to 16 weeks' pay based on the amount of time the company has employed them:

  • Between 1-2 years: 4 weeks' pay
  • Between 2-3 years: 6 weeks' pay
  • Between 3-4 years: 7 weeks' pay
  • Between 4-5 years: 8 weeks' pay
  • Between 5-6 years: 10 weeks' pay
  • Between 6-7 years: 11 weeks' pay
  • Between 7-8 years: 13 weeks' pay
  • Between 8-9 years: 14 weeks' pay
  • Between 9-10 years: 16 weeks' pay

Job Security in Australia

Union membership

Employees have the right to join or not a union at work, and cannot be treated less favourably or pressured for deciding either way.

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Mandatory Employee Benefits in Australia

Medicare

Medicare is a universal health program that provides basic medical and hospital care free of charge available to Australian residents. Medicare is funded by most resident taxpayers, who are subject to a 2% levy of their taxable income to support this scheme.

High-earners not covered by health insurance for private patient hospitals have an additional surcharge of up to 1.5%. Therefore, it is important that employers and foreign nationals working in Australia carefully choose a health fund which provides good coverage but also qualifies them for the exemption from the Medicare levy surcharge. Some policies offer full coverage but do not exempt the policyholder and their family members from the surcharge. 

Superannuation

Superannuation is a government arrangement to encourage people to accumulate funds to provide them with an income stream when they retire. There is no requirement for companies to register for Superannuation. However, a company is required to have a default superannuation fund that is "My Super" (low cost) fund. Such a fund needs to comply with a regulated set of features, including: 

The selected fund may require the employer to register if it is an employer-based superannuation fund. However, the existing trend is for employees to individually sign up as a member of funds rather than employers to have to register. The current rate of Superannuation contribution is 10% payable by the employer, and employees are encouraged to supplement the superannuation contributions with voluntary contributions.

Employees have a right to choose their superannuation fund and have hundreds of options. They can also use their self-managed superannuation fund. The only requirement is that the Australian Government records them as complying superannuation funds and listed in the Super Fund Lookup.

Workers compensation insurance

Employers must cover employees with workers' compensation insurance to protect workers if they suffer a work-related injury or disease. Coverage must be purchased for every state and territory where the employer has workers. Premiums are usually a percentage of the employee's pay and are based on factors such as industry, claim history, and remuneration.

Flexible work

Under the FW Act, eligible employees who have worked for their employer for at least 12 months have a legal right to request flexible work arrangements. Employers can only refuse a request on reasonable business grounds.

Personal / carer's leave

Both Full-time and part-time employees are extended ten days of personal sickness and carer's leave for each year of employment, although employers may voluntarily offer more time. Employees may also be eligible for compassionate & bereavement leave and unpaid family and domestic violence leave. An employer does not pay out these forms of leave on termination of an employee's employment.

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Non-Mandatory Employee Benefits in Australia

Most common non-mandatory benefits in Australia.

Life and disability insurance 

The most common non-mandatory benefit in Australia is a Life and Disability insurance. Premiums are usually between 0.5% and 0.8% of the salary and vary according to age, occupation, location and company size.

In the tech industry, the benefit is usually three times the employee's basic salary.

Long term disability

A long term disability insurance is often provided to selected professions and higher-grade employees. It's typically based on 75% of the salary plus 10% of the superannuation benefit and the premium costs are usually between 0.8% and 1.2% of payroll. A good benefit consists of 75% of salary plus Super benefit with a 30, 60 or 90-day wait and a 5-year benefit period. 

Employee Assistance Programme (EAP)

Most larger Australian companies provide access to an EAP to employees. The programmes can either be bought on a stand-alone basis or supplied on a 'pay as you use' arrangement. Higher quality policies include face-to-face counselling as well as a telephone helpline. Costs are typically less than $50 per employee per year.

Childcare places and subsidies

An increasing number of large, professional services companies are looking to offer childcare placements and or daycare facilities.

Additional annual leave

Tech companies usually offer 5-10 additional days off above the statutory minimum while other employers allow staff to buy extra days off.

Some employers offer Australian work visa sponsorship, and a relocation expenses allowance to attract international talent.

Additional flexibility 

Most tech companies give employees flexible work hours to better control their time and obligations between work and private life.

Healthcare

Although not very common, big tech companies usually cover employee's and their dependents' private healthcare and dental insurance. 

Wellness

Some tech companies offer fitness membership allowances to employees.

Many employers offer a top-up of the government-funded parental leave.

Commuter allowance

Some companies offer employees commuter benefits.

Hardware

Most tech companies get employees a state of the art technology when joining the company.

Career development allowance

Some of the more prominent tech companies give employees an individual learning & development budget.

Stock options

Share save plans are standard with employers who want to encourage staff participation in the company shared ownership.

Bonus

Annual bonuses ranging from 6%-10% are a standard benefit in Australia, and some high-level executives may receive up to half of their salary as an incentive bonus.

Learn about more benefits here.

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Employer Contributions in Australia

It's the employer's responsibility to withhold taxes from employee's payments through payroll and pay them to the Australian Taxation Office (ATO). Payments to the ATO are referred to as Instalment Activity Statements. Employers are required to make payments to the ATO on specific dates depending on their Tax Remitter bracket.

Superannuation & retirement taxation

Superannuation is the arrangements put in place by the Government of Australia to encourage people to save up funds to provide them with an income stream when they retire. Employers must contribute a minimum of 10.5% of an employee's earnings base (capped earnings level of $55,270 per quarter) to a registered superannuation fund or retirement savings account (RSA) on behalf of the employee. Since superannuation funds or RSAas are not seen as a form of fringe benefit, employees pay 15% tax on the contribution that their employer makes. Employees may choose to make before-tax concessional contributions capped annually at $25,000. 

The rate that employers need to contribute will be increasing by 0.5% every year, reaching 12% by July 2025 when it will be capped.

Work coverage

Companies employing workers in Australia have to obtain a workers' compensation insurance.

Fringe benefits tax (FBT)

Australia is one of the few countries where the employer covers the tax for non-cash fringe benefits (company car, parking, free private health care, accommodation, low-interest loans). The FBT is levied at 47% of the taxable value multiplied by a gross-up factor of the fringe benefits granted to employees. Laptops and mobile phones used for work purposes are exempt from the fringe benefits tax.

Benefits subject to FBT are excluded from the employee's taxable income. Still, they may be taken into account as reportable fringe benefits when determining the employee's liability for tax surcharges such as the Medicare levy surcharge and income-related obligations such as child support, and entitlement to specific tax offsets. 

Employee Contributions in Australia

Australian residents have to pay tax on their worldwide income. Individuals are considered Australian residents in the following circumstances:

Temporary residents are exempt from Australian tax on foreign source income. A temporary resident is defined as someone who:

Income tax

Income tax in Australia differs depending on whether the employee is a resident of Australia or not. The following resident income tax rates do not include either Medicare Levy or Medicare Levy Surcharge.

Resident Income Tax 2020/2021

TAXABLE INCOME (AUD)INCOME TAX
$ 0 - 18,2000
$ 18,201 - 45,00019%
$ 45,001 - 120,0032.5%
$ 120,001 - 180,00037%
Over $ 180,00045%
Non-Resident Income Tax 2020/21

TAXABLE INCOME (AUD) INCOME TAX
$ 0 - 120,00032.5%
$ 120,00 - 180,00037%
Over $ 180,00045%

Non-residents are not required to pay the Medicare levy in Australia.

There is no joint filing for spouses in Australia.

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Medicare levy

Medicare is a universal health program that provides basic medical and hospital care free of charge. Most individual Australian resident taxpayers are subject to a 2% levy on their taxable income to fund Medicare and Disability Care. The Medicare levy low-income threshold is currently $22,398 for individuals.

An additional Medicare levy surcharge of up to 1.5% applies to higher income taxpayers who are not covered by a health insurance for private patient hospital cover.

Tax-Free Allowance in Australia

While many of these concern the employee, it's important for you to understand since employers are responsible for filing taxes and accounting for various income offsets.

Employment expenses

As long as employers do not reimburse expenses, residents and non-residents can deduct expenses incurred in employment. These could be business-connected travel expenses, vehicle expenses, subscriptions to professional or trade organisations, and protective clothing.

The following expenses cannot be claimed as a tax deduction: 

  • Travel costs to and from the place of work
  • Private or domestic expenses
  • Entertainment expenses

Prepaid expenses are deductible over the period to which the cost relates and are subject to exceptions.

Allowances that employees receive for living away from home are currently subject to Fringe Benefits Tax (FBT) that is payable by the employer. A portion of that allowance can be exempt from FBT when it covers accommodation or excess food costs. This concessional tax treatment for employees living outside of Australia is limited to 12 months.

Cars provided by employers are taxed concessionally under the FBT rules. 

Certain relocation expenses are exempt from FBT. However, relocation costs are rarely covered by the employer and are instead an expense the employee needs to pay. They can be but deducted from the taxable income as salary sacrifice. 

Superannuation contributions

Employees can claim a tax deduction for the registered superannuation funds contributions they have made, regardless of the extent of their employment-related activities. However, suppose the contributions made in a year (including those made by an employer) exceed the annual 'concessional contributions cap' of $25,000. In that case, the tax employee pay on the excess matches the income tax bracket they usually fall under (instead of the 15%). 

In case an employee does not reach the full $25,000 cap in a given year, and they have accumulated a total superannuation balance of less than $500,000 by the end of the previous financial year (June 30th), they can carry forward the unused amounts. The limit on the carryover is five years. 

Charitable contributions

Charitable contributions over $2 are generally deductible when made to entities that are named as 'deductible gift recipients' in the tax law or endorsed by the Commissioner of Taxation. However, the deduction is limited to the amount of assessable income remaining after all other deductions have been applied.

Family tax benefits

A Family Tax Benefit is extended to individuals with dependent children or secondary school students under the age of 19 whose family income is below a certain threshold. Australian residents, individuals on a special category visa or ones with an approved visa for family tax benefit purposes are eligible. The children should not be receiving a pension, payment, or other government allowance and the care for them should take at least 35% of the time.

The limits, rates, and nature of Family Tax Benefit payments vary depending upon family income, the number of children, and ages of children, and change from year to year.

Dependent invalid and carer tax offset

This tax offset is only available to taxpayers who have care obligations for a dependent who is unable to work due to invalidity. It is capped at $2,766 and is subject to abatement for the 'adjusted taxable income' of the dependent, cutting out if this exceeds $11,150.

This offset is only available wif the individual's adjusted taxable income (after all deductions have been applied) is no more than $100,000.

Other personal tax offsets

There are additional tax offsets such as the Seniors and Pensioners Tax Offset, offsets for residing in isolated areas, and rebates for certain lump sums received in arrears (such as bonus or compensation from a past tax period for example).

Resident individuals are also entitled to Low and Middle Income Tax Offset. It's capped at $1,080 (phased out for those with a taxable income of up to $126,000) applicable from 2018/19 to the 2021/22 income years.

Health insurance premiums

Health insurance premiums that cover hospital treatments represent a tax offset (or a rebate provided directly against the premium). 

The exact amount of the offset is income tested and depends on the age of the individual. Between April 1st 2020 and March 31st 2021, there is no entitlement to an offset, regardless of the age, if the adjusted taxable income exceeds $140,000 for singles or $280,000 for families. The offset for an individual under the age of 65 for that same period ranges from:

  • 8.352% for taxable income ranging from $105,001 to $140,000 for singles and from $210,001 to $280,000 for families 
  • 16.706% for taxable income ranging from $90,001 to $105,000 for singles and from $180,001 to $210,000 for families
  • 25.059% for taxable income ranging from $90,000 to $180,000 or less for families.

For individuals aged 65 years or over, the offsets could be as high as 33.413% for those aged 70 years whose taxable income is $90,000 or less for singles and $180,000 or less for families.

The offset entitlements are indexed annually.

Child care subsidy

A child care subsidy is available in circumstances where the individual:

  • Cares for a child aged 13 or younger (14 to 18 with a disability), who's not attending secondary school, unless an exemption applies
  • Uses an approved child care service
  • Pays the child care fees
  • Meets residency and immunisation requirements

The amount of Child Care Subsidy depends on each family's circumstances, but the government provides a Payment and Service Finder, which people can use to estimate how much subsidy they are entitled to.

Some families can qualify for an Additional Child Care Subsidy on top of the basic one, that is intended to provide extra help with covering the child care fees. It's awarded in three cases:

  • a grandparent taking care of the child
  • an individual is transitioning to work
  • an individual is experiencing temporary financial hardship
Spouse contribution tax offset

Under certain conditions, an employee can receive a tax offset when they contribute to a spouse's superannuation fund or retirement savings account (RSA). They have to be a resident, and their spouse's assessable income should not exceed $40,000 (including reportable fringe benefits and employer superannuation contributions). The contribution the employee can make is maxed out at $3,000. The amount of the tax offset depends on the exact income of the spouse and the precise contribution. The maximum is $540 and applies if the spouse's assessable income (including reportable fringe benefits and employer superannuation contributions) is under $37,000.

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Overview

CURRENCY
$ Australian Dollar
WORKING HOURS
38 hours / week
PUBLIC/BANK HOLIDAYS
8 days per year
CAPITAL
Canberra
LANGUAGE
English
REMOTE WORKERS
1,100,000
MINIMUM HOURLY SALARY
$20.33
TAX YEAR
1st Jul - 31st Jun
DATE FORMAT
DD / MM / YYYY
MISCLASSIFICATION PENALTIES
Misclassification fines of up to AU$54,000, plus AU$10,800 per manager involved in addition ot back-paying employee entitlements and interest.
FUN FACT
It would take more than 27 years to visit one new Aussie beach every day.
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