Fair Work Act 2009

The FW Act binds the Crown in each of its capacities (s 37) and applies to the national system. A national system employee is an individual employed, or usually employed, by a national system employer (ss 13-14). National system employers include constitutional corporations, the Commonwealth, Commonwealth authorities, bodies corporate incorporated in a Territory, and persons carrying on activity in a Territory. The Act's coverage was extended by State referrals (Divisions 2A and 2B of Part 1-3) so that it now applies to almost all private-sector employees in every State and Territory, plus many public-sector and local-government employees.

Employees covered include full-time, part-time, casual, and fixed-term employees. The ordinary meanings of "employee" and "employer" are supplemented by statutory tests (s 15AA, inserted in response to CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2). Casual employees are defined by the absence of a firm advance commitment to continuing and indefinite work (s 15A). Special deeming rules apply to TCF outworkers (Part 6-4A, Division 2).

Employers range from small businesses (defined in s 23 as those with fewer than 15 employees) to large corporations. The Act does not generally cover State public-sector employees unless they are brought into the national system by referral or specific provision. Certain employers are excluded (e.g. some State public-sector bodies declared not to be national system employers under s 14(2)).

Employee organisations (unions) and employer organisations play a central role. They can be bargaining representatives, apply for modern award variations, appear in FWC proceedings, and enforce breaches. Workplace delegates now have statutory rights that must be reflected in modern awards and enterprise agreements (ss 149E, 205A, 350C).

Regulated workers (employee-like workers on digital labour platforms and regulated road transport contractors) are not employees but are covered by minimum standards orders, guidelines, and collective agreements under the new Chapters 3A and 3B (inserted by the Fair Work Legislation Amendment (Closing Loopholes) Acts 2023 and 2024). Road transport contractual chain participants are also regulated.

Outworker entities in the textile, clothing and footwear (TCF) industry are subject to special record-keeping, payment, and right-of-entry rules (Part 6-4A).

The Fair Work Commission (FWC) and Fair Work Ombudsman (FWO) are the two principal institutions. The FWC is the independent national workplace relations tribunal; the FWO is the regulator, investigator, and educator. Both are covered by the Act in their capacity as employers.

Finally, the Act affects third parties such as franchisors (who can be held responsible for underpayments by franchisees under s 558B), labour-hire providers (regulated labour hire arrangement orders under Part 2-7A), and persons in road transport contractual chains (Chapter 3B).

Employers' duties are extensive. They must comply with the NES (s 44), modern awards (s 45), and enterprise agreements (s 50). They must pay at least the modern award or national minimum wage (ss 206, 293), provide payslips and keep records (ss 535-537), make superannuation contributions (s 116B), consult on major workplace change and roster changes (ss 205, 145A), and not take adverse action because an employee has exercised a workplace right (s 340). Employers must not engage in sham contracting (s 357), misrepresent employment as independent contracting, or fail to prevent sexual harassment (new Part 3-5A).

Employees' rights mirror these duties. They have the right to the NES, award or agreement rates, protection from unfair dismissal (after the minimum employment period), general protections (Part 3-1), and the right to organise and bargain collectively. The right to disconnect is now protected by a term that must be included in modern awards and can be included in agreements (s 333M). Employees can request flexible working arrangements and have those requests considered in accordance with statutory criteria (ss 65-65C). Casual employees have conversion rights and can notify their employer if they believe they are no longer casual (Division 4A of Part 2-2).

Bargaining representatives (employers, employee organisations, and appointed agents) must meet the good faith bargaining requirements (s 228): attending meetings, disclosing information (other than confidential or commercially sensitive material), responding to proposals, giving genuine consideration, and refraining from capricious or unfair conduct. Breach can lead to bargaining orders (s 230).

Unions have rights of entry (Part 3-4), can represent members in disputes, and can initiate or participate in bargaining. Delegates' rights are now expressly protected (s 350C) and must be the subject of a term in awards and agreements.

Regulated workers (employee-like platform workers and road transport contractors) have rights to minimum standards orders, collective agreements, protection from unfair deactivation or termination, and remedies for unfair contract terms (Chapter 3A).

The FWC has power to make modern awards, approve agreements, issue bargaining orders, make intractable bargaining declarations, deal with disputes, and set minimum wages. The FWO can investigate breaches, commence proceedings, and issue compliance notices.

The FW Act is primarily enforced through civil remedy provisions. Breaches of the NES, modern awards, enterprise agreements, or general protections attract civil penalties. The maximum penalty for a contravention is 300 penalty units for a serious contravention (s 557A) and 60 penalty units otherwise (s 539). For a body corporate the amounts are five times higher (s 546(2)). Courts can order compensation, reinstatement, and pecuniary penalties. The FWO is the principal litigant but employees, unions, and (in limited cases) inspectors can also bring proceedings.

Criminal offences are rare but exist for certain corrupting benefits (Part 3-7) and for providing false or misleading information in certain contexts. The Act also contains accessory liability (s 550) and deemed liability for bodies corporate (s 793).

Compliance notices can be issued by the FWO (s 712A). Small business employers can access the Voluntary Small Business Wage Compliance Code (s 327B).

Enforcement is supported by a reverse onus in some general protections cases (s 361) and by the ability of the FWC to make stop orders for bullying (s 789FC) or sexual harassment (s 527F).

Penalties are paid to the Commonwealth unless the court orders otherwise. Courts have broad discretion to order any appropriate remedy (s 545).

The FW Act is intended to cover the field in relation to State and Territory industrial laws (s 26). It expressly excludes State laws that deal with wages, hours, leave (other than long service leave or leave for victims of crime), unfair dismissal, and right of entry. However, it preserves State laws on non-excluded matters such as workers' compensation, occupational health and safety, long service leave (except for employees entitled under the NES), and anti-discrimination (ss 27, 28).

Interaction with the NES: modern awards and enterprise agreements cannot exclude the NES; they can only supplement it (s 55). Terms that contravene s 55 have no effect (s 56).

Modern awards and enterprise agreements: an enterprise agreement prevails over a modern award to the extent of any inconsistency (s 57), but designated outworker terms continue to apply (s 57A). Only one enterprise agreement can apply to an employee at a time (s 58).

General protections (Part 3-1) operate alongside the rest of the Act and protect workplace rights, freedom of association, and prohibit discrimination. They apply to action taken in a referring State (ss 30G, 30R).

Fair Work (Registered Organisations) Act 2009 regulates unions and employer associations and works in tandem with the FW Act.

Superannuation legislation (Superannuation Guarantee (Administration) Act 1992, Superannuation Industry (Supervision) Act 1993) is expressly preserved; the FW Act requires employers to make superannuation contributions to avoid a superannuation guarantee charge (s 116B).

Anti-discrimination laws are preserved (s 27(1A)). An enterprise agreement cannot contain a discriminatory term (s 195).

Work health and safety laws are not displaced; right of entry for OHS purposes is regulated by both the FW Act and State WHS Acts.

Migration law: the effect of the Migration Act 1958 on the validity of contracts is disregarded for the purposes of the FW Act (s 40B).

State referral laws extended the national system to most employees in all States (Divisions 2A and 2B of Part 1-3). The Act only applies in a referring State to the extent supported by the reference (ss 30H, 30S).

The FW Act has been amended more than 70 times since 2009. The most significant recent changes are contained in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, and the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024.

The 2022 Act introduced the same-job, same-pay provisions for labour hire, strengthened the better off overall test, allowed the FWC to arbitrate intractable bargaining disputes, removed the requirement for a secret ballot for protected action in some cases, and expanded the objects to include gender equality and job security.

The 2023 and 2024 Acts closed perceived loopholes. They created a new category of employee-like workers performing digital platform work or road transport work, empowered the FWC to make minimum standards orders and guidelines for those workers, introduced a road transport objective, established the Road Transport Advisory Group, and gave the FWC power to make road transport contractual chain orders. Casual employment was redefined (s 15A) and casual conversion rights strengthened. The right to disconnect was inserted (ss 333M-333Q). Paid family and domestic violence leave was made a permanent NES entitlement. The definition of small business employer was increased from 15 to 20 employees for unfair dismissal purposes. Sham contracting provisions were tightened. Criminal liability for wage theft was introduced in some jurisdictions, and the FWO was given new powers.

These changes were driven by concern that the original 2009 framework had not kept pace with the growth of the gig economy, labour hire, and non-standard work. The legislature sought to extend protections without undermining the enterprise bargaining focus of the Act. The road transport changes responded to decades of advocacy about safety and pay in that industry. The 2024 amendments also responded to High Court decisions on the employment/contractor distinction by inserting the multi-factorial test (s 15AA) while allowing high-income contractors to opt out.

The FW Act has generated a large body of case law. Early controversies centred on the constitutional validity of the national system. The High Court upheld the use of the corporations power (s 51(xx)) in New South Wales v Commonwealth (2006) 229 CLR 1 ("Work Choices case"), which paved the way for the 2009 Act.

Key cases on agreement approval include One Key Workforce Pty Ltd v CFMEU (2018) 262 FCR 527, where the Full Federal Court held that the BOOT requires a global assessment and that the FWC must consider the views of all employees, not merely a sample. CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 fundamentally changed the test for distinguishing employees from independent contractors, leading to the statutory response in s 15AA.

General protections litigation has been voluminous. Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 clarified that the test for adverse action is whether the prohibited reason was a "substantial and operative" factor. Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union ("CFMEU") (2018) 262 CLR 648 (the "Brodie" case) confirmed that union officials can be personally liable.

Industrial action cases such as Esso Australia Pty Ltd v AMWU (2015) 253 CLR 243 established that protected action must be authorised by a protected action ballot and that "pattern bargaining" is restricted.

The better off overall test has been controversial. The Loaded Rates cases and Shop, Distributive and Allied Employees Association v Beechworth Bakery (2020) 297 IR 40 illustrate the difficulty of comparing agreements that contain loaded rates or annualised salaries with awards that contain penalty rates. The 2022 amendments sought to clarify the BOOT by requiring the FWC to consider only reasonably foreseeable patterns of work.

Casual employment was the subject of WorkPac Pty Ltd v Rossato (2021) 271 CLR 456, which held that a casual employee is one with no firm advance commitment to continuing and indefinite work. The legislature responded with a new statutory definition (s 15A) and conversion rights.

Right of entry cases have examined the balance between union access and employer property rights (CFMEU v Fair Work Ombudsman (2018) 360 ALR 194).

The expansion of the Act to gig workers has already produced litigation testing the boundaries of "employee-like" status and the validity of minimum standards orders.

Controversies also surround the intractable bargaining provisions. Unions argue they do not go far enough; some employers fear compulsory arbitration. The road transport provisions have been criticised by some as overly prescriptive and by others as insufficient to address safety concerns.

The High Court's decision in Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 (implied term of mutual trust and confidence) and subsequent legislative responses illustrate ongoing tension between common-law and statutory rights.

Most practitioners know the big-ticket items, but the following "gotchas" catch even experienced lawyers.

1. The BOOT is not a mechanical comparison. The FWC must undertake a global assessment. A term that appears beneficial on its face (e.g. a loaded rate) may fail the BOOT if it disadvantages employees in foreseeable low-penalty-rate rosters. The 2022 amendments requiring the FWC to consider only reasonably foreseeable patterns of work have reduced but not eliminated uncertainty.

2. Casual conversion is now an ongoing right. An employee can notify the employer at any time after 6 months (12 months for small business) that they believe they are no longer casual (s 66AAB). The employer can only refuse on limited grounds (s 66AAC(4)). Failure to respond correctly can lead to disputes that the FWC can arbitrate (s 66MA). The new definition (s 15A) looks to the real substance of the relationship, not merely the written contract.

3. Undertakings given under s 190 or s 212 bind only the giver. Where multiple employers are covered by an agreement, an undertaking given by one employer does not bind the others. This can create differential application that is difficult to administer.

4. The "better off overall" assessment for variations is not the same as for the original agreement. When varying an existing agreement, the FWC compares the agreement as proposed to be varied against the current agreement (or the award if no agreement currently applies). This can produce counter-intuitive results.

5. Delegates' rights terms are now mandatory. Modern awards must include a delegates' rights term (s 149E). Enterprise agreements must include a term that is at least as favourable as the award term or the term is taken to be the award term (s 205A). Many existing agreements will need to be varied on their next review.

6. The road transport and digital platform regimes sit outside traditional employment law. Minimum standards orders can be made for "employee-like workers" who are not employees (Chapter 3A). Steps taken by a digital labour platform operator to comply with those orders are disregarded when determining employment status (s 15KA). This creates a parallel regulatory universe.

7. Section 15AA does not apply to all relationships. The new employment/contractor test does not apply to certain provisions (e.g. Divisions 2A and 2B of Part 1-3, and Part 3-1 to the extent it relies on ss 30G or 30R). High-income contractors can opt out (ss 15AB-15AD), but the opt-out notice can be revoked only once.

8. Protected action ballots are still required for protected industrial action, but the 2022 amendments allow the FWC to make a single ballot order for multiple employers in limited circumstances. The interaction with the new intractable bargaining provisions remains untested.

9. Small business redundancy pay is not always zero. If a small business becomes bankrupt or goes into liquidation (other than a members' voluntary winding up) and the size reduction was caused by terminations, redundancy pay may be payable (s 121(4)).

10. The FWC can now make an intractable bargaining declaration even if bargaining has not completely broken down. The test is whether there is "no reasonable prospect of agreement being reached" (s 235(2)(b)). This is a lower threshold than the previous "serious and sustained" breach requirement.

Employers should adopt a three-pillar compliance strategy.

Pillar 1 – Know your instruments. Identify every modern award or enterprise agreement that covers each class of employee. Use the FWC's award finder and keep a register. Review agreements every time they approach their nominal expiry date. Ensure that any new agreement passes the BOOT by modelling rosters that reflect actual or reasonably foreseeable patterns of work.

Pillar 2 – Systems and training. Implement payroll systems that automatically apply the correct base rate, loadings, penalties, and casual loading (if any). Train managers on the right to disconnect, flexible work requests, and consultation obligations. Maintain accurate records (seven years for most pay records). Have a clear process for responding to employee notifications under the casual conversion provisions.

Pillar 3 – Risk management. Conduct regular audits for underpayments, especially in industries with complex penalty rates or allowances. Have a documented process for responding to right-of-entry notices and for dealing with sexual harassment complaints. For labour-hire or gig work, understand whether a regulated labour hire arrangement order or minimum standards order applies. If bargaining, appoint a bargaining representative early and keep detailed records of all communications to demonstrate good faith.

Employees and unions should:

• Ensure they understand their award or agreement. The FWO's pay calculators are a good starting point.
• Exercise rights (e.g. flexible work requests, conversion from casual) in writing and keep records.
• For unions, ensure that any proposed agreement is thoroughly modelled against the award and that all mandatory terms are included.
• Use the new delegates' rights provisions to ensure delegates have access to reasonable paid time, facilities, and training.

All parties should be aware that the FWO and FWC publish extensive guidance. The FWO's Fair Work Handbook and the FWC's Benchbooks are updated regularly. When in doubt, obtain specific legal advice; the penalties for systemic underpayments can be enormous, and the FWO has shown a willingness to pursue accessory liability against directors and franchisors.

Compliance is not a set-and-forget exercise. The legislative landscape continues to evolve rapidly. Businesses that treat the FW Act as a dynamic compliance obligation rather than a static rulebook will be best placed to avoid penalties, disputes, and reputational damage.