In this episode of our Cross-Border Catch-Up podcast series, Patty Shapiro (San Diego) and Kristyn Lambert (New Orleans) break down what U.S. employers need to know about Australian employment law. They cover the layered framework of the Fair Work Act, modern awards, and enterprise agreements, as well as the strict procedural requirements for termination, redundancy, and discipline. The speakers also examine Australia’s proactive duty to prevent sexual harassment, a standard that goes well beyond what U.S. employers typically encounter.
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Cross-Border Catch-Up: Fair Work, Formal Process, and Proactive Duties—A Guide to Australian Employment Law
By Kristyn L. Lambert and Patty Shapiro
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Patty Shapiro: Hi, and welcome to the Cross-Border Catch-Up, the podcast for global employers who want to stay in the know about cutting edge employment issues worldwide. I’m Patty Shapiro, a cross-border employment attorney, and today I’m joined by my wonderful colleague, Kristyn Lambert, to chat about Australian employment law. Welcome, Kristyn.
Kristyn Lambert: Thanks, Patty. Really glad to be here. As you know, Australia is one of those jurisdictions that can come with a lot of surprises for US-based companies. So, I’m very excited to break it down for our listeners today.
Patty Shapiro: Same here. So, let’s set the stage. Why are we talking about Australia today?
Kristyn Lambert: Well, Australia is consistently one of the top markets for U.S. companies expanding internationally. It’s English speaking, has a stable regulatory environment, and there’s a degree of cultural familiarity that makes it an attractive first step into the Asia Pacific region. But that familiarity can be misleading because Australian employment law operates on fundamentally different principles than the U.S. system. The regulatory framework is far more prescriptive, statutory employee protections are significantly stronger, and concepts that are foundational to US employment practice, most notably at-will employment, simply don’t exist in Australia.
Patty Shapiro: That’s such a critical point. We see companies assume that because Australia feels familiar, they can just point to their U.S. playbook over and over again, and that can lead to some really expensive mistakes. You mentioned at-will employment. Let’s start there because I think it’s a major conceptual shift for U.S. employers.
Kristyn Lambert: It really is. In the United States, most employment is at-will, meaning either party can terminate the relationship at any time for any reason or no reason, as long as it’s not an unlawful reason. In Australia, that concept simply does not exist.
Patty Shapiro: So, what does termination look like in Australia?
Kristyn Lambert: Well, an employer must provide employees with minimum statutory notice based on the employee’s length of service, generally between one to four weeks. And employees who meet certain service thresholds can bring unfair dismissal claims if the termination was harsh, unjust, or unreasonable. The Fair Work Commission can order reinstatement or compensation of up to six months’ wages if a claim is successful.
Patty Shapiro: So, for U.S. listeners, the takeaway is you cannot just let someone go without a valid reason and a fair process.
Kristyn Lambert: Exactly. And that principle that employees have strong protections runs through all of Australia unemployment law. So, let’s talk about the legal framework that creates those protections.
Patty Shapiro: Absolutely. Walk us through the employment law landscape. What’s the legal framework that governs employment in Australia?
Kristyn Lambert: Well, the backbone of Australian employment law is a federal statute, the Fair Work Act of 2009. It operates in conjunction with state and territory legislation, so similar in concept to how U.S. federal and state law interacts, but within the Fair Work Act, the centerpiece is the national employment standards or the NES. There are 10 minimum employment entitlements that must be provided to all employees. Think of them as kind of like the non-negotiable floor.
Patty Shapiro: And what kind of entitlements are we talking about?
Kristyn Lambert: So, the NES covers things like maximum working hours, flexible work arrangements, parental leave, annual leave, personal and carer’s leave, long service leave, public holidays, and minimum notice of termination. For our U.S. listeners, this is much more comprehensive set of federal protections than anything in the states. There’s no federal mandate for paid annual leave or paid parental leave in the U.S., but Australia bakes that into its national standards.
Patty Shapiro: And it goes without saying, but just to be clear, no contract or agreement can go below those minimums, right?
Kristyn Lambert: That’s right. Modern awards and enterprise agreements, which I’ll talk about in just a moment, can add to the NES along with the employment contract, but they can never take away from it. That’s a critical principle.
Patty Shapiro: So, you mentioned modern awards and enterprise agreements. Modern awards are one of those concepts that doesn’t have a real U.S. equivalent. So, can you explain what those are and why they matter?
Kristyn Lambert: Yes. So, on top of the NES, you have in Australia what’s referred to collectively as industrial instruments, primarily modern awards and enterprise agreements. What they do is they establish additional minimum terms for covered employees, things like minimum pay rates, overtime, shift loadings, and penalty rates.
Patty Shapiro: And what exactly is a modern award?
Kristyn Lambert: So, a modern award is essentially a set of employment standards set by the Australian government that applies to specific industries or occupations. They’re not something that the employer negotiates. They’re set by the Fair Work Commission, and they apply automatically based on the employee’s workplace and/or job duties.
Patty Shapiro: Are awards common in Australia?
Kristyn Lambert: So yes, they are extremely common. There are 122 different modern awards in Australia. And here’s the important part. Different employees in the same establishment may be subject to different awards. Again, it’s related to workplace, but it’s also related to job functions. So, when you’re hiring a new employee, your organization must determine whether the employee is covered by a modern award because that instrument will determine specific terms and conditions of employment in addition to those minimum entitlements provided by the NES.
Patty Shapiro: So, it’s not just a one size fits all. Can you give us some examples?
Kristyn Lambert: Sure. So, there’s the retail award, which applies to service supervisors, store managers and sales assistants at retail good stores, but there’s also the restaurant industry award, which applies to servers, chefs, and clerical employees at dine-in restaurants. And then there’s the hospitality award, which applies to servers and chefs at restaurants located inside hotels. So even though a lot of these roles can seem similar, you can see how different awards apply to different types of establishments and roles.
Patty Shapiro: And determining which award applies isn’t always straightforward, right?
Kristyn Lambert: That’s such an important point. It can be quite complicated. We generally recommend seeking legal advice to determine the appropriate award. Getting the award classification wrong can result in underpayment claims and penalties, which is a serious risk to employers.
Patty Shapiro: Now, what about employees who aren’t covered by any modern award?
Kristyn Lambert: So that’s a really good question. Employees can be award free, and if they are award free, it means they’re, as you said, not subject to a modern award, but they’re still going to be covered by the NES. So that NES is kind of the safety net for everyone. The award is an additional layer on top if an employee is covered by an award, but even if an award does not apply, the NES baseline protections always apply.
Patty Shapiro: So, lots of awards talk about penalty rates, and I know that term trips up a lot of U.S. employers. Can you explain what penalty rates are?
Kristyn Lambert: Yeah. So, the term penalty rate refers to additional pay when an employee works hours or days outside of the ordinary kind of Monday to Friday work week. It can include weekend work, overtime work, work on public holidays, employees subject to an industrial instrument may be entitled to additional pay, so one and a half or two times their ordinary hourly rate, let’s say, for working on a public holiday or a Sunday, for instance. So similar to kind of what we see for non-exempt employees with respect to overtime, but the modern award is going to be very clear about whether penalty rates apply. And as I said, they could apply to overtime, but they can also apply to other work outside of the ordinary work week.
Patty Shapiro: So, if you have staff working on Sundays or public holidays, you could have penalty rates like double pay, is that right?
Kristyn Lambert: That’s right. That’s right. And it’ll depend on the specific modern award and the terms of that award.
Patty Shapiro: And then there are enterprise agreements. How do those fit in?
Kristyn Lambert: So, an enterprise agreement is something U.S. employers are going to be a little more familiar with because essentially, it’s a bargaining agreement negotiated between an employer and its employees, so typically through a union. Once an enterprise agreement is approved by the Fair Work Commission, they become legally binding so they can provide more favorable terms than a modern award, but again, they can’t go below the NES.
Patty Shapiro: So, the layering goes federal and state law at the bottom, modern award on top, and enterprise agreements potentially on top of that, and then the employment agreement?
Kristyn Lambert: Exactly. Exactly. And so, you can see there are multiple layers. And of course, if there’s a conflict anywhere within those layers, the more favorable provision for the employee is ultimately going to prevail.
Patty Shapiro: Let’s shift over to leave entitlements because there are some significant differences there, as well.
Kristyn Lambert: Absolutely. So, the NES guarantees full-time employees four weeks of paid annual leave per year, which accumulates year to year and must be paid out on termination. There’s no use it or lose it approach like you see in the U.S.
Patty Shapiro: What about sick leave and parental leave?
Kristyn Lambert: So, full-time employees get 10 days of paid personal or cares leave per year, and parental leave is significant. Employees with 12 months of service are entitled to 12 months of parental leave. The government funds part of this with 24 weeks of paid leave currently. I think that’s going to be increasing to 26 weeks in this year, later this year, but compare that, of course, to the U.S. where FMLA provides only 12 weeks of unpaid leave. So, some pretty big changes for a U.S. employer who’s used to the scheme in the states.
Patty Shapiro: Yeah, pretty significant differences. And then there’s a thing called long service leave, which has no U.S. equivalent at all.
Kristyn Lambert: That’s right. So long service leave is paid leave earned after lengthy service. So typically, two months after 10 years of continuous service, but that can vary by state. In some states, it’s five years, seven years, but it must be paid out on termination once the employee reaches the threshold.
Patty Shapiro: Let’s shift to the disciplinary process because this is another area where U.S. employers get tripped up.
Kristyn Lambert: Oh yes. This is a big one. Australia requires employers to comply with rigid formal processes before issuing performance coaching or disciplinary action. You cannot just issue a warning or a performance improvement plan without convening a formal disciplinary meeting first. That meeting must be scheduled at least 48 hours in advance. The employee must be notified in writing of the reasons for the meeting. The employee has the right to bring a support person, including an attorney, and to present their explanation or mitigating circumstances before the company issues any discipline. So, you can see very rigid, very formal compared to kind of what we’re used to here in the U.S.
Patty Shapiro: Yeah. And very much like an internal hearing, if you will.
Kristyn Lambert: Yes.
Patty Shapiro: And all of that has to happen even before you issue a written warning.
Kristyn Lambert: Yes. So, the employer’s going to send the formal letter inviting the employee to the meeting. There’s certain notice that applies in that situation. During the meeting, the employee’s manager and the HR representative is typically present and the employee gets to kind of explain each incident, each allegation, and critically the employer may not issue a determination or any discipline at the meeting itself. The employer’s required to consider the employee’s explanations first and then issue a formal written outcome letter afterwards. So disciplinary actions such as a written warning or a PIP may only accompany that later outcome letter.
Patty Shapiro: Yeah. So completely different from what most companies are used to in the U.S. because here you might just pull someone aside and hand them a written warning on the spot, but this is a very rigid process.
Kristyn Lambert: Exactly. So, kind of that scenario, pulling someone aside, disciplining them on the spot, that approach could seriously undermine your position if the employee later challenges the discipline or the termination because these processes are required.
Patty Shapiro: Let’s look at a different way of exiting employees. What about redundancy?
Kristyn Lambert: Yes. So same situation in that there are strong procedural requirements in the redundancy context as well, and they’re quite detailed. So, a redundancy is where an employer no longer requires the employee’s job to be performed by anyone because of changes in the operational requirements of the business. So, it’s not a shifting of duties, but it’s a, we no longer need these duties to be performed here in Australia. And if that happens, the employee is entitled to notice of the dismissal and potentially a redundancy payment based on their years of service.
Patty Shapiro: And what kinds of payments are we talking about here?
Kristyn Lambert: So, the scale ranges from four weeks pay to one to two years, for one to two years of service, all the way up to 16 weeks pay for nine to 10 years of service. And there are consultation obligations that are triggered under modern awards and enterprise agreements if the employer proposes major changes like a restructuring, a relocation or dismissals that are likely to have significant effects on the employees.
Patty Shapiro: Tell us a little bit more about the consultation process because it’s quite structured.
Kristyn Lambert: Yes, very. So, the employer must notify affected employees and their representatives of the proposed changes and consult with them. So, each affected employee is again invited to a formal individual meeting, and they’re given the opportunity during the meeting to offer alternatives to redundancy. The employer may not make or communicate any firm decision until after the entire consultation process has been completed. And where there are 15 or more proposed redundancies, the employer may be obligated to notify and consult with the employees’ unions and notify relevant public authorities.
Patty Shapiro: And what happens if an employer skips these steps?
Kristyn Lambert: So, failure to comply with consultation obligations can result in fines. The employee could make an unfair dismissal claim, and an employee also has standing to actually seek an injunction, which if granted, could prevent the entire proposal from proceeding until the consultation requirements have been met.
Patty Shapiro: And there’s one major difference I want to make sure we highlight, and it’s one that really reflects a global trend, but that Australia has been ahead of the curve on, the proactive duty to prevent sexual harassment.
Kristyn Lambert: Yes. This is a really important topic, and you can see Australia takes procedure pretty seriously, right? And under Australia’s Respect at Work Act, employers have a positive duty to prevent and eliminate workplace sex discrimination, sexual harassment and victimization. So, it’s not just a reactive obligation, meaning you can’t wait for a complaint and then respond or react to the complaint. You actually, as an employer, have to take proactive steps to eliminate harassment in the workplace before it happens.
Patty Shapiro: And can you speak to how that differs generally from the U.S. approach?
Kristyn Lambert: Sure. So, in the U.S., the general framework is more reactive. An employer can raise an affirmative defense to harassment by showing that it had a policy and then a complaint procedure in place and that the employee failed to use them. In Australia, having a policy on the books is just not enough. Employers have an affirmative duty to ensure a safe work environment by eliminating physical and psychosocial risks and a separate affirmative duty to prevent sex discrimination and sexual harassment under the Sex Discrimination Act of 1984. So, additional obligations may arise under state or territory law or pursuant to the applicable modern award, but you can really say that it’s the affirmative nature of the duty that really makes this distinct from the U.S. approach.
Patty Shapiro: So, what does that look like in practice?
Kristyn Lambert: Sure. So, in Australia, employers are at a minimum going to need to implement anti-bullying, sexual harassment, discrimination and equal opportunity policies. And while there’s no explicit legal requirement to have these specific policies, it’s really the affirmative nature of the duty, right? Make them very strongly recommended steps to meet your obligations and avoid potential criminal charges because that is kind of what’s at stake, a potential criminal charge of an unsafe system of work.
Patty Shapiro: Yeah. Let me just say that again for our listeners. A criminal charge, it’s a serious consequence.
Kristyn Lambert: Yes. And again, very different than kind of what we’re used to here in the U.S. And I think another important practice is training component. So anti-harassment training must, at a minimum, define sex discrimination, sexual harassment and victimization. It should also address hostile work environment and the employer’s positive duty to take proactive steps to eliminate sexual harassment. The training should explain how complaints should be raised, how they’ll be investigated, and cover how to identify, minimize, prevent, control and respond to harassment. So, training is not just a recommended best practice, it’s actually required in Australia.
Patty Shapiro: That might be a little more familiar for our U.S. listeners because here in the States, we have a sexual harassment training that’s required at set frequencies, but there’s no specific frequency requirement for training in Australia.
Kristyn Lambert: Right. So, there’s no frequency requirement, but employers must train new employees, of course, and provide training at a frequency that kind of ensures existing employees are aware of the policies. So, in practice, we generally see annual or semi-annual refresher training, but really and truly, the employer’s just going to be held to kind of a reasonable standard.
Patty Shapiro: And I think that’s a really important point for U.S. companies because Australian framework goes a bit further in this obligation. It’s not just about checking a box and saying you’ve done the training at the required frequency. It’s about demonstrating comprehensively that you’re affirmatively preventing harassment from occurring.
Kristyn Lambert: Right. Absolutely.
Patty Shapiro: All right. Let’s do a quick fire recap for our listeners. If you’re a U.S. company expanding into Australia, here are the key things to remember.
Kristyn Lambert: So first, the employment law landscape is layered. The Fair Work Act of 2009 is the primary federal legislation, and the National Employment Standards or NES set 10 non-negotiable minimum entitlements for all employees, but state and territory laws add further obligations in areas like discrimination, workplace safety, and long service leave.
Patty Shapiro: Second, modern awards and enterprise agreements add an additional layer of requirements on top of the NES, covering minimum pay, overtime, penalty rates, leave and more, and they vary by industry and occupation. So, you must determine which award applies to each employee.
Kristyn Lambert: Third, at-will employment does not exist in Australia. You need a valid reason, statutory notice, and procedural fairness for every termination, and employees who meet the service threshold can bring unfair dismissal claims.
Patty Shapiro: Fourth, leave entitlements are far more generous than in the U.S. Four weeks of paid annual leave, 10 days of personal leave, up to 12 months of parental leave, community service leave, and long service leave.
Kristyn Lambert: Fifth, the formal disciplinary and redundancy processes are important and rigorous. For discipline, 48 hours written notice, the right to a support person, the opportunity to respond, and no discipline at the meeting itself. For redundancy, there must be consultation, individual meetings, and again, no decisions until the process is complete.
Patty Shapiro: And six, the employers have a proactive duty to prevent sexual harassment. And this goes beyond just having a policy. It requires affirmative steps to eliminate discrimination and harassment, including robust training and meaningful compliance measures.
Kristyn Lambert: Absolutely. So really, Patty, the bottom line is Australia is a fantastic market, but it requires U.S. employers to fundamentally rethink how they manage the employment relationship. What works in the U.S. will not automatically work in Australia, and the penalties for getting it wrong can be significant.
Patty Shapiro: Well said, Kristyn. Thank you so much for walking us through all of this.
Kristyn Lambert: Thank you, Patty. It’s been a pleasure.
Patty Shapiro: And thank you to our listeners for joining us on this episode of the Cross-Border Catch-Up. We hope this breakdown helps you as you plan your expansion into Australia. Remember when in doubt, get legal advice before you make a move. Follow us to stay in the know about cutting edge employment issues worldwide.
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