Government Sector Employment Regulation 2014

The Regulation’s reach is deliberately wide. The central definition in cl 3(1) of “government sector employee” means any person employed in a government sector agency. That term, by cross-reference to s 3(1) of the Act, includes the Public Service, the Teaching Service, NSW Police Force (other than the NSW Police Force senior executive), NSW Health Service, Transport Service, and certain State-owned corporations and statutory bodies when prescribed.

Within that population the Regulation distinguishes:

• Public Service non-executive employees (Division 5 of Part 4 of the Act) who receive the bulk of the conditions in Part 2.
• Public Service senior executives (Secretaries and those to whom Division 4 of Part 4 applies) who are subject to contract-based rules in Part 4, cash-out rights (cl 37), special allowance calculations (cl 21) and capped termination payments (cl 39).
• Health Service senior executives, Transport Service senior executives and senior managers, and NSW Police Force senior executives, each of whom benefit from parallel but statute-specific regimes in Parts 5–7.
• Overseas trade employees employed in international trade areas of the Department of Creative Industries, Tourism, Hospitality and Sport or the Premier’s Department who reside and work abroad; they may be engaged on contracts that prevail over the Regulation (cl 10A).
• Administrative employees of the NSW Police Force who are brought within misconduct and suspension provisions (cl 6).
• Employees moving between government sector agencies who rely on cll 28–33 and Schedule 2 for portability of leave.
• Employees seconded to political office holders under cl 35, who are subject to the Members of Parliament Staff Act 2013 conditions while on secondment but retain return rights and extended-leave accrual.
• Vice-Chancellors and chief executives of prescribed universities and State-owned corporations who must supply workforce-diversity data (cl 5 and cl 34).

Agency heads (defined in cl 3(1) by reference to employer functions) bear the bulk of the decision-making and notification obligations. The Industrial Relations Secretary, Public Service Commissioner and certain Ministers exercise residual powers. Dependants of deceased employees are entitled to payout of accrued extended leave (Sch 1 cl 5). Private-sector operators whose services are transferred to the non-government sector and whose staff are offered comparable employment lose severance rights under cl 25A.

In short, virtually every person on the NSW government payroll, and every organisation that employs them, is touched. The Regulation is not limited to “public servants” in the narrow sense; its tentacles extend to rail operators (excluded from cl 68), universities (for diversity reporting only), Landcom, Water NSW and staff of political office holders.

Employee duties are scattered but emphatic. A Public Service employee must not undertake paid outside work without agency-head permission (cl 7(1)), must report serious offences immediately in writing (cl 9(1)), must notify bankruptcy or creditor arrangements and supply further information if required (cl 10(1)), must not be absent without reasonable cause and must explain illness or emergency absences (cl 13), must submit to medical or health assessments when directed (cl 15(3)), and must produce receipts for expense claims (cl 23(2)). Senior executives are additionally bound by contract terms on confidentiality and intellectual property (cl 36(a)).

Employee rights are more voluminous. They include:

• Entitlement to public holidays and an agency-head-determined day between Boxing Day and New Year’s Day (cl 12).
• Incremental progression subject only to performance and conduct (cl 14).
• Protection against arbitrary fitness-for-duty directions; the agency head must act on nominated-medical-assessor advice and the employee regains the right to resume duty only on clear medical clearance (cl 15).
• Extended leave on a sliding scale set out in Schedule 1: 2 months per 10 years for the first decade, 5 months per decade thereafter, with pro-rata after 5 years on no-fault termination (Sch 1 cll 2–3).
• Portability of annual, sick, maternity and extended leave when moving between government sector agencies (cll 29–31).
• Recognition of prior continuous service in Commonwealth, interstate and related government agencies for extended leave (Sch 2 cl 6).
• Higher-duties allowances for temporary assignments to non-executive or executive roles, calculated on the difference between current salary and the appropriate point in the higher range, subject to 5-working-day minimums (cll 20–21).
• Cash-out of accrued annual or extended leave for senior executives (cl 37) and, in limited cases, for non-executives on transfer (cl 29).
• Fixed compensation on termination: 4 weeks (probation), up to 38 weeks or balance of term (ordinary termination), 13 weeks (unsatisfactory performance) for senior executives across all four sectors (cll 39, 41, 46).
• Return rights after secondment to political offices at the same work level (cl 35(8)).

Agency-head duties include publishing or notifying decisions (cl 4), approving increments only where performance criteria are met (cl 14), directing and funding medical assessments (cl 15(7)), determining the nature of leave during fitness absences (cl 15(6)), fixing rent deductions (cl 8), and ensuring workforce diversity planning (s 63 of the Act read with cl 34). Employers must also fund leave liabilities via Treasurer directions (cl 33) and calculate redundancy refunds on a weekly pro-rata basis (cl 24(2)).

The Industrial Relations Secretary’s role in rent deductions (cl 8) and the Public Service Commissioner’s nomination of medical assessors (cl 15(8)) add layers of central control.

The Regulation itself contains no offence-creating provisions or direct monetary penalties. Enforcement occurs through the Act’s disciplinary suite. Section 69 of the Act (misconduct) applies to Public Service and prescribed government sector employees; cl 6 extends it expressly to NSW Police Force administrative staff. Misconduct can include breach of cl 7 (outside work), cl 9 (failure to report charges), cl 10 (bankruptcy) or cl 13 (unexplained absence). Sanctions range from reprimand to termination without compensation (cl 39(2), cl 41(2), cl 46(2)).

Unsatisfactory performance is dealt with under s 68 of the Act, but cl 6A excludes Rail Corporation New South Wales, Sydney Trains and NSW Trains. Fitness-for-duty non-compliance can lead to cessation of duty and pay deduction (cl 15(3)–(5)).

Industrial enforcement occurs via the Industrial Relations Commission under the Industrial Relations Act 1996 for award-covered conditions. Breach of contract by a senior executive may trigger the compensation caps rather than common-law damages. Recovery of overpaid increments or unentitled allowances is effected by salary deduction or debt recovery. Repayment of redundancy payments on re-employment (cl 24) is a statutory debt; failure to refund can be set off against new salary.

The Public Service Commissioner and agency heads possess wide discretionary powers whose exercise is amenable to judicial review for legal error, but the Regulation’s “reasonableness” tests (e.g. cl 23(3)) give agencies substantial latitude.

The Regulation is expressly subject to State industrial instruments (cll 11, 19, 27). Where an award or agreement is more beneficial, it prevails. It constantly cross-references the Act: definitions in s 3, misconduct (s 69), suspension (s 70), unsatisfactory performance (s 68), workforce diversity (s 63), secondments (s 64), temporary assignments (s 66), senior executive contracts (s 39), and termination (s 41).

It stitches itself into the Health Services Act 1997 (employer functions for Health Service senior executives, s 116 and s 121H), the Transport Administration Act 1988 (ss 68N, 68Q), the Police Act 1990 (ss 40–41 for NSW Police Force senior executives), the Members of Parliament Staff Act 2013 (conditions during political secondments), the Public Holidays Act 2010, the Anti-Discrimination Act 1977 (EEO plans), the Superannuation Guarantee (Administration) Act 1992 (Cth) (notional salary calculations), and the Interpretation Act 1987.

Transitional provisions in Schedule 4 preserve pre-24 February 2014 recruitment, probation, excess-employee and EEO processes. Clause 10A(3)(b) expressly allows overseas trade employee contracts to prevail over the Regulation and the General Rules. Clause 25A(4) is subject to industrial instruments and cl 39. Schedule 2 cl 2 preserves pre-2014 Commissioner declarations about Commonwealth and interstate agencies.

The Regulation therefore operates as interstitial legislation: it fills gaps, resolves overlaps and creates exceptions, but never displaces superior statutory or award rights.

The text records amendments from 2014 to 2025. Early changes (2014 No 74, 2014 (123)) refined statutory-body inclusions. 2016 amendments inserted cl 6A (rail exclusions from s 68), updated leave clauses, added Health Service senior executive rules (Part 5) and adjusted redundancy repayment to reflect new senior-executive categories. 2017 amendments inserted Part 6 (Transport) and Part 7 (NSW Police Force), reflecting the progressive extension of the senior-executive employment framework to non-Public-Service sectors.

Clause 10A (overseas trade employees) was inserted in 2015 (810), amended in 2023 and 2024 to update department names and relax delegation limits, responding to the need for agile international trade staffing. Clause 10B (private-to-public transfers) was added in 2024 (485) to facilitate outsourcing reversals without triggering full merit processes. Clause 6B (delegations) was inserted in 2024 (236) and substituted in 2025 (86) to authorise the Ministers administering Service NSW and the Children’s Guardian Act, aligning with machinery-of-government changes.

These changes reflect three policy drivers: (1) sectoral harmonisation—bringing Health, Transport and Police executives under comparable contract and compensation regimes; (2) operational flexibility—light-touch rules for overseas staff and reverse-outsourcing; and (3) administrative efficiency—updating delegations and clarifying exclusions. Each amendment has been grafted onto the 2014 structure rather than prompting a wholesale rewrite, producing the layered complexity visible today.

Because the Regulation is largely facilitative, reported litigation is sparse and usually arises under the parent Act. Challenges have centred on:

• Whether an agency head’s refusal of higher-duties allowance under cl 20 or 21 is reviewable (generally answered “no” on the basis that it is an administrative discretion not affecting legal rights).
• The meaning of “comparable employment” in cl 25A(2) when services are transferred to non-government bodies; industrial tribunals have emphasised the “overall” no-less-favourable test rather than isolated terms.
• The interaction between cl 15 fitness-for-duty directions and workers-compensation legislation; courts have upheld the Regulation’s medical-assessor pathway provided procedural fairness is afforded.
• Senior-executive termination payments. In several unreported Industrial Court matters, executives have argued that “remuneration package” in cl 39 includes non-cash benefits; the Commissioner’s determinations under cl 38(2) have usually been treated as conclusive.
• Recognition of prior Australian Defence Force service under Sch 2 cl 10. Disputes have turned on whether service was “full-time” and whether the 12-month re-employment window in cl 4(1)(a)(ii) was met.

Controversies have also arisen administratively. Unions have criticised the cash-out provisions (cl 37, Sch 1 cl 4) as undermining the “long-service” philosophy. The exclusion of rail operators from unsatisfactory-performance processes (cl 6A) was a negotiated industrial compromise that attracted parliamentary comment. The breadth of cl 9’s reporting obligation (any “serious offence”) has raised privacy concerns, although the Regulation ties the term to s 69 of the Act.

No High Court or Court of Appeal decision has struck down any clause; the Regulation has survived largely intact because its drafting repeatedly defers to industrial instruments and superior statutes.

Most practitioners miss three traps. First, the interaction between cl 14(4) and performance-management systems: until an agency’s system expressly sets increment criteria or 1 July 2015 (whichever is earlier), increments remain discretionary. Many agencies assumed the transitional provision expired in 2015 and stopped documenting decisions; that has produced back-pay claims years later.

Second, cl 25A’s “comparable employment” test is deceptively strict. Even if salary, hours and duties are identical, an “unreasonable increase in journey to work” (cl 25A(2)(d)) can preserve redundancy entitlement. Agencies have lost tribunal cases because they failed to lead evidence on travel times.

Third, senior-executive contracts that simply incorporate the Regulation by reference still require the additional matters in cll 36, 40, 43 and 45 to be expressly addressed. The Public Service Commissioner, Health Secretary, Transport Secretary and Commissioner of Police each hold separate opinions on what is “necessary or convenient”; a contract drafted for a Public Service Secretary will not automatically satisfy a NSW Police Force senior-executive contract. Failure to address capability-based assessments has led to disputes about whether termination was “for unsatisfactory performance” (13 weeks) or “misconduct” (zero).

Another subtle point: Sch 1 cl 8(2) reduces extended-leave deductions for public holidays only while the employee is already on extended leave. It does not create an extra holiday entitlement. Agencies that have paid out leave without making this distinction have overpaid.

Finally, cl 4’s notification obligation is broader than it appears. A decision need only be published “in such manner as the person considers necessary”. In practice this has been used to justify minimal intranet notices; employees have succeeded in arguing that inadequate notice prevented them from exercising appeal or review rights under the Act.

Compliance begins with mapping. Agencies should maintain a clause-by-clause responsibility table assigning cl 9 reporting, cl 15 medical directions, cl 14 increment approvals and cl 4 notification duties to specific officers. Senior-executive contracts must be templated with the mandatory cl 36 (or equivalent) clauses and reviewed by the relevant central agency (Public Service Commission, Ministry of Health, Transport, Police) before signature.

For leave portability, HR systems must capture “recognised service” under Schedule 2 at the point of engagement. The 2-month and 12-month windows in cl 4(1)(a) should be hard-coded into onboarding checklists. When services are transferred to the non-government sector, agencies must document the comparable-employment offer with evidence of prior-service recognition, similar duties, overall no-less-favourable terms and journey-to-work impact; failure on any element preserves the severance liability.

Fitness-for-duty processes require a pre-nominated list of medical assessors from the Public Service Commissioner and a standard direction letter that warns of immediate cessation of duty. All health information must be handled in accordance with the Privacy and Personal Information Protection Act 1998; the agency head’s obligation to supply “reasonably required” employment information (cl 15(7)) must be balanced against that statute.

Allowances under cll 20–23 require written determination before the assignment commences, recording the salary point chosen and the proportion of duties. The 5-working-day and 3-month exceptions must be applied mechanically; spreadsheets that automatically suppress allowances below thresholds have been held to satisfy the “determined before the employee starts” rule.

Annual compliance audits should test a sample of overseas trade employee contracts for prevalence clauses (cl 10A(3)(b)), political-secondment agreements for the six mandatory matters in cl 35(3), and redundancy-repayment calculations under cl 24(2). Because the Regulation is amended by disparate instruments, agencies should subscribe to the NSW legislation alert service and maintain an annotated working copy that records which clauses were inserted or substituted when.

Finally, decision-makers should treat cl 4’s notification obligation as a risk-management tool: a brief all-staff email or intranet post citing the clause number and attaching the decision is usually sufficient to defeat later claims of ignorance. In an era of machinery-of-government changes, the safest compliance posture is to assume every employee is covered unless a specific exclusion (cl 6A, cl 24(4), cl 10A) can be positively identified.