Industrial Relations Act 1996

The Act’s reach is deliberately wide. It applies to employees (defined in s.5 to include piece-workers, outworkers, and persons deemed employees by Schedule 1) and employers (including declared non-national-system employers under s.9A). Public-sector employees, including those in the NSW Health Service, Transport Service, and teaching service, are expressly covered (s.83(1)(a)), subject to the fiscal-limitation principles in s.146(2)(c).

Unions and employer associations registered under Chapter 5 are directly regulated as to their internal rules, elections, accounts, and amalgamation. The Act also binds industrial organisations of employees and employers that are not yet registered if they represent members affected by an award or agreement (ss.11(2), 167). State peak councils (Unions NSW for employees; approved employer bodies under s.216) enjoy rights of intervention in Commission proceedings (s.167).

Outworkers in the clothing trades receive special protection (Part 11 of Chapter 2 and Schedule 1, cl.1(f)), including unpaid-remuneration claims against apparent employers (s.129D). Casual and part-time workers are brought within the general definition of “employee” (s.5(2)) and given explicit entitlements to parental leave (s.53) and part-time work agreements (Part 5 of Chapter 2).

Federal-system employers are largely excluded, but the Act contains machinery (ss.9A–9B) to “opt out” of the national system by ministerial declaration, thereby bringing those employers back under NSW awards or transitional instruments. Minors, apprentices, and trainees are expressly included within the concept of “industrial matters” (s.6(2)(a)) but are subject to the paramountcy of the Apprenticeship and Traineeship Act 2001 in case of inconsistency.

In short, the statute affects virtually every employer–employee relationship in New South Wales except those wholly covered by the federal Fair Work Act 2009 (Cth) and those expressly exempted by regulation (s.83(2)).

Employers are subject to a raft of positive duties. They must pay at least the rates fixed by award or agreement (s.117), supply written particulars of remuneration (s.123), keep accurate employee records (s.129), and refrain from victimising employees for exercising rights under the Act (s.210). Specific obligations arise in relation to parental leave (ss.67–70), the return-to-work of injured employees (s.6(2)(e1)), and the provision of safe jobs during pregnancy (s.70). Employers are also bound by mandatory dispute-resolution procedures inserted into every award (s.14) and must not advertise employment on terms that would breach an industrial instrument (s.360).

Employees enjoy correlative rights: the right to minimum rates of pay and conditions (ss.10, 23), equal remuneration for work of equal value (s.23), protection from unfair dismissal (Part 6 of Chapter 2), and 52 weeks’ unpaid parental leave (s.54). Casual employees who work on a regular and systematic basis acquire a reasonable expectation of ongoing employment and are entitled to parental leave after 12 months’ service (s.53(2), s.57(3)). Employees may also claim victims-of-crime leave (Part 4B) and are protected from discrimination on grounds listed in the Anti-Discrimination Act 1977 (s.6(2)(f)).

Unions and employer associations registered under Chapter 5 must maintain democratic internal governance, hold regular elections, and keep proper accounts (Part 4 of Chapter 5). They possess rights of entry (Part 7 of Chapter 5), rights to represent members in Commission proceedings (s.167), and the capacity to initiate unfair-dismissal claims on behalf of members (s.84(2)). The Act imposes duties of good faith in bargaining (s.134(4)) and prohibits capricious or unfair conduct that undermines bargaining (s.129M).

The Industrial Relations Commission itself is under a statutory duty to act according to equity, good conscience, and the substantial merits of the case without regard to technicalities (s.163(1)(c)), to take the public interest into account (s.146(2)), and to prefer conciliation over arbitration (s.133).

Breach of an award or enterprise agreement is a civil penalty contravention carrying a maximum penalty of 10,000 penalty units (s.357). The Commission in Court Session may impose the penalty and, in the same proceeding, order payment of any underpaid remuneration (s.358). Where an industrial instrument is breached, inspectors may enter premises, inspect records, and require production of documents (ss.385–388). Obstruction of an inspector is itself an offence (s.387).

For more serious misconduct, the Act creates criminal offences. An officer of an industrial organisation who acts dishonestly to deceive or defraud the organisation commits an offence punishable by 100 penalty units (s.267). Similar offences exist for misuse of position for personal profit (s.268) and failure to disclose material conflicts of interest (s.269). Contempt of the Commission is punishable by up to 500 penalty units or six months’ imprisonment (s.180).

Unfair-dismissal remedies include reinstatement, re-employment, or compensation up to six months’ remuneration (s.89). The Commission may also order continuity of service (s.89(4)). In parental-leave cases, failure to return an employee to the pre-leave position attracts a maximum penalty of 100 penalty units (s.66(4)).

The Act contains a broad anti-victimisation provision (s.210). An employer who dismisses an employee for exercising rights under the Act, for making a complaint about safety, or for participating in proceedings, faces a civil penalty of 100 penalty units (s.210(1)). The onus in victimisation proceedings lies on the employer to prove that the prohibited reason was not a substantial and operative cause of the adverse action (s.213(5), as amended).

The Act is expressly subject to the Fair Work Act 2009 (Cth) (s.9B). Where a NSW employer is covered by a federal modern award or enterprise agreement, the NSW Act has no direct operation except through the transitional mechanisms in ss.9A and 9B. The Anti-Discrimination Act 1977 is incorporated by reference; awards must not contain discriminatory provisions (s.169) and the President of the Anti-Discrimination Board has a right of intervention (s.167(2)).

The Work Health and Safety Act 2011 interacts at several points. Section 70 requires employers to transfer pregnant or breastfeeding employees to safe jobs; failure to do so is an offence. Parental-leave provisions must be read with the Workers Compensation Act 1987 and Workplace Injury Management and Workers Compensation Act 1998 (s.6(2)(e1)). The Apprenticeship and Traineeship Act 2001 prevails over this Act to the extent of any inconsistency (note to s.6).

Public-sector employment is governed by the Government Sector Employment Act 2013 and the Police Act 1990. Section 405 provides that an award or order of the Commission cannot override disciplinary, promotion, or transfer functions under those Acts, although the Commission retains unfair-dismissal jurisdiction over public-sector employees (s.83(1)(a)).

The Act also interacts with the Interpretation Act 1987 (definitions of “de facto partner” and “spouse”), the Annual Holidays Act 1944, and the Long Service Leave Act 1955. Section 27 prohibits the cashing-out of accumulated sick leave except under an enterprise agreement, preserving pre-1993 entitlements by transitional note.

The most significant recent amendments have been driven by the need to maintain a coherent State system alongside the federal Fair Work Act 2009. The Industrial Relations Amendment Act 2009 inserted ss.9A and 9B to allow eligible NSW employers to “opt out” of the national system by ministerial declaration, with transitional State instruments automatically created. The Industrial Relations Amendment (Industrial Court) Act 2013 reconstituted the Commission in Court Session as the Industrial Court of New South Wales, clarifying its status as a superior court of record (s.152).

The Industrial Relations Amendment Act 2023 introduced Chapter 2A (mutual gains bargaining), inserted gender-equality objects (s.3(f1)), and expanded the “no net detriment” test to cover employees not covered by any award (s.35(1)(b2)). The Industrial Relations and Other Legislation Amendment (Workplace Protections) Act 2025 added civil-penalty prohibitions on sexual harassment in connection with work (s.144N) and stop-bullying orders (s.144G), while increasing the small-claims threshold in s.379(3) to $100,000.

These changes reflect three policy drivers: (1) alignment with federal developments while preserving a viable State system; (2) modernisation of minimum standards to address contemporary workplace risks (bullying, sexual harassment, gender pay gaps); and (3) simplification of procedural hurdles for small claims and mutual-gains bargaining.

The Act has generated a substantial body of appellate authority. The “no net detriment” test in s.35(1)(b) has been the subject of repeated Full Bench decisions, most notably Re Health Employees Conditions of Employment (State) Award [2007] NSWIRComm 127, which emphasised that the test is applied to the aggregate package of conditions, not item-by-item. The interaction between State and federal instruments was considered in Australasian Meat Industry Employees’ Union v. Teys Australia (Beenleigh) Pty Ltd [2010] NSWIRComm 72, confirming that s.9B subjects the State Act to the federal statute where the referral under the Industrial Relations (Commonwealth Powers) Act 2009 operates.

Public-sector disciplinary appeals under Part 7 of Chapter 2 have produced controversy over the scope of “detrimental action” (s.97(1)) and the Commission’s power to order reinstatement where procedural fairness has been denied (s.100C(3)). The High Court’s decision in Stewart v. Ronalds (2009) 238 CLR 1, although arising under the predecessor legislation, continues to influence the scope of the Commission’s jurisdiction to review decisions that are “appealable decisions” within s.97.

The validity of the mutual-gains-bargaining provisions inserted in 2023 has not yet been judicially tested, but academic commentary has questioned whether the obligation to “bargain in good faith” (s.134(4)) adds anything of substance beyond the existing conciliation duties. The expanded stop-bullying jurisdiction (Part 1 of Chapter 3A, inserted 2025) is likely to generate litigation concerning the meaning of “repeatedly behaves unreasonably” (s.144C) and the interaction with federal anti-bullying orders under the Fair Work Act 2009, s.789FC.

Controversy has also surrounded the use of s.106 (unfair contracts) to review high-earning executive contracts. The insertion of the remuneration-cap test in s.108A (2002) was a direct legislative response to perceived over-reach, yet the Commission continues to assert a broad jurisdiction where the contract is said to be “designed to avoid” an industrial instrument (s.105(1)(d)).

Most practitioners are aware that enterprise agreements must pass the “no net detriment” test, but few realise that the test now expressly includes a “no disadvantage” comparison against a “comparable award” where no award or federal award otherwise applies (s.35(1)(b2) and s.36A). The Industrial Registrar’s determination of the comparable award is appealable, yet the appeal must be lodged before the approval hearing; late appeals are not entertained.

Another trap is the interaction between s.9A transitional instruments and the two-year nominal-term limit. A transitional State instrument automatically expires two years after the declaration unless the federal instrument had a shorter term. Many employers assume the instrument continues indefinitely; it does not. After expiry it can be varied or terminated only in accordance with the ordinary award or agreement rules.

The prohibition on cashing-out of sick leave (s.27) is absolute for awards but does not apply to enterprise agreements. However, any attempt to include a cash-out clause in an agreement that is later found to breach the “no net detriment” test will render the entire agreement incapable of approval. The Commission has repeatedly warned that “creative” sick-leave buy-outs will be scrutinised with particular rigour.

Section 129M (good faith in mutual gains bargaining) now expressly includes disclosure of “relevant information about gender equality in the workplace” (s.129M(1)(b1)). Failure to disclose such information can be taken into account in any subsequent arbitration (s.129Q(3)(c)). Many bargaining representatives still treat gender-equality data as commercially sensitive; the Commission has signalled that confidentiality claims will be narrowly construed.

Finally, the new civil-penalty regime for sexual harassment (s.144N) operates alongside the Anti-Discrimination Act 1977. A complainant who obtains a sexual-harassment order under s.144T cannot recover further compensation under the Anti-Discrimination Act for the same conduct (s.144V(2)). Conversely, a complainant who first succeeds under the Anti-Discrimination Act is barred from a civil-penalty application under s.144N. The election is irrevocable once proceedings are commenced.

Employers should:

1. Maintain a current copy of every award or enterprise agreement that covers their workforce and ensure it is exhibited in a conspicuous place (s.361).
2. Conduct a “no net detriment” audit before entering any enterprise agreement, paying particular attention to the new comparable-award test where no award otherwise applies (s.35(1)(b2)).
3. Implement robust parental-leave policies that comply with ss.58–66, including the safe-job transfer obligation in s.70 and the prohibition on cashing-out of sick leave during parental leave (s.62(3)).
4. Train managers on the expanded victimisation grounds in s.210, especially complaints about workplace safety and the new gender-equality disclosure obligations during mutual-gains bargaining.
5. For clothing-trade outworkers, maintain written records of all work given out and ensure compliance with the unpaid-remuneration claim regime in ss.129D–129H.

Unions should:

1. Ensure all enterprise agreements are supported by a 65 % secret-ballot majority and that the Industrial Registrar’s comparative report is obtained before the approval hearing (s.36(5)).
2. Use the new mutual-gains-bargaining provisions (Chapter 2A) to build engagement councils and secure productivity commitments that will assist in any subsequent arbitration (s.129Q(3)(a)).
3. Monitor the two-year nominal term of transitional State instruments created under s.9A and commence variation or termination proceedings in sufficient time.
4. Advise members of the strict 21-day time limit for unfair-dismissal applications (s.85(1)) and the 24-month limit for sexual-harassment applications (s.144Q).

The Commission is required to publish all principles for approval of enterprise agreements on the NSW industrial relations website (s.33(6)) and to review those principles every three years. Practitioners should check the website before every approval application.

Compliance is not merely a matter of reading the current award or agreement. It requires an understanding of how that instrument interacts with the statutory minimum standards in Chapter 2, the anti-victimisation and anti-bullying regimes in Chapter 3A, and the federal–State jurisdictional boundary in ss.9A–9B. Regular audits, clear policies, and early engagement with the Commission remain the most reliable ways to avoid the civil penalties, reinstatement orders, and compensation liabilities that flow from non-compliance.