Ensuring Fair Work Act Compliance: A Comprehensive Guide For Australian Businesses

In the financial year ending 2024, the Fair Work Ombudsman recovered more than $473 million in unpaid wages and entitlements for nearly 160,000 employees.

The recoveries came in a year where the Fair Work Ombudsman secured the largest penalties in its 15-year history, with the regulator’s litigations leading to $21.2 million in court-ordered penalties against employers.

That dollar figure alone should be a wake-up call for all employers. Non-compliance can be expensive and damaging, not just from a financial perspective, but also to your business reputation and employee morale.

In this guide, we’ll walk you through a number of key points on compliance with the Fair Work Act and National Employment Standards, clarify what you need to stay on top of your obligations as an employer and highlight how we can help.

At Bare Bones Consulting, we work with dozens of startups and established businesses of all sizes who originally contacted us because they felt confused or overwhelmed about workplace compliance. They informed us they didn’t have the knowledge, time or budget to deal with complex employee issues or draft their own HR documents and needed help getting things in order in a manner that was fast, effective and didn’t require their commitment to lock-in contracts or subscriptions.  Our speciality? Stripping HR back to the basics – to the bare bones – and offering clients simple, tailored and value for money HR solutions that get genuine results….and provide peace of mind.

Key Takeaways

• The Fair Work Act (“the Act”) and Fair Work Regulations govern the employer and employee relationship in Australia
• The Act defines obligations that apply to all Australian employers
• Fair Work Act compliance is critical for protecting your business and your livelihood
• You must meet National Employment Standards, Award conditions and pay rates
• Keeping accurate records and correct pay slips is required by law
• Bare Bones Consulting offers expert HR services tailored to all types and sizes of business

Need help making sense of your HR obligations? Let’s chat about how we can take concern off your plate so you can focus on running your business. Call Bare Bones Consulting on 0401 279 065.

Understanding the Fair Work Act

If you’re employing workers in Australia, the Fair Work Act 2009 applies to you. The Act forms the foundation of workplace law across this country; setting out the rights and obligations of both employers and employees.

The Act is designed to promote fair and productive workplaces. It applies to most Australian businesses and includes important roles assigned to the Fair Work Ombudsman (FWO) and the Fair Work Commission (FWC).

Role of the Fair Work Ombudsman and Fair Work Commission

The Fair Work Ombudsman is Australia’s workplace regulator. At a basic level, the FWO enforces compliance with the Fair Work Act, related legislation, awards and registered agreements. FWO also help employees and employers by providing advice, education and assistance on workplace rights and obligations.

The Fair Work Commission (FWC) is the national workplace relations tribunal. They help resolve disputes at work, create awards, approve enterprise agreements and review the minimum wage. People can lodge applications for unfair dismissal and general protections with the FWC, as well as apply for orders to stop bullying or sexual harassment.

Read more about the difference between the FWO and FWC.

Is Fair Work fair?

In our experience, yes. But they are busy: in 2023-2024, the Fair Work Ombudsman conducted over 4,000 investigations into complex or significant matters, resolved 17,500 workplace disputes, issued 2,574 Compliance Notices for unpaid wages and received over 17,000 anonymous reports for assistance with employment-related concerns.

Even if a complaint seems minor, the FWO will take it seriously. They expect employers to have their house in order in line with lawful workplace obligations. I’ve worked with businesses who were blindsided by a call from the FWO on a matter that could have been easily avoided with good advice, clear communication and the right records.

Nothing will stop a disgruntled ex-employee (or current employee) making contact with the FWO. But responding to FWO on a complaint is easier – and the outcome is more likely to go your way – when you have the right structure in place. And that means having the correct HR documentation, processes and records. Compliance with your employment obligations is not necessarily difficult. But I guarantee it will be time-consuming, drama-filled and expensive if you choose to ignore it.

Recent Changes to Fair Work Legislation

Employment laws don’t stand still. Over the past few years, we’ve seen major reforms that impact significantly on how all businesses operate. These include (but are not limited to):

• a clearer definition of casual employment and the right to request conversion to permanent employment
• the employee right to disconnect
• how employers are required to document annualised wage arrangements (e.g.: when paying a salary to Award-covered employees)
• criminalising intentional wage underpayments
• the duty to eliminate sexual harassment, discrimination, hostile workplace environments and victimisation

If you haven’t reviewed your employment documents, policies or contracts recently, now’s the time. What was considered as compliant in 2020 may not be the same case in 2025.

Key Areas of Fair Work Compliance

Fair Work compliance starts with understanding key areas associated with the laws that apply to your business. Let’s start with some basics.

Small business employers: getting things right from the start

Under the Australian Taxation Office (ATO) definition, a small business is one with aggregate turnover of less than $10 million. The Australian Bureau of Statistics has a different interpretation, with small business defined as an actively trading business with less than 20 employees.

Under the Fair Work Act however, a small business employer is an employer with fewer than 15 employees at a particular time. And that’s the definition you need to use for compliance as an employer. Why? Because under the Fair Work Act, small business employers have different rights and obligations around processes to follow when dismissing a worker, paying out redundancies and the minimum employment period.

There’s little doubt if you have 5 employees, you fall into the category of small business employer. Likewise if you have 50 employees on your books: you’re not a small business employer. But what if you have 15 employees? And some are casuals? Or if you have associated business entities? Or independent contractors? Understanding the rules around Fair Work Act definitions is key to getting the right information to make smart decisions. We can help with you knowing what you need to know.

Getting the right information

Let’s get real: most businesses are started by people with experience in a particular field. But rarely do business owners have experience in HR or employment law. Advice is often sought through Google, “a friend who works in HR” or possibly an Accountant or Bookkeeper.

Your Accountant is most likely great at accounting and interpreting ATO definitions and obligations. But because of the differences between accounting and HR laws, it may not be realistic to expect this person to have a great grasp on employment obligations. And the obligation to comply with the Fair Work Act lies on you as the employer. Why take the risk?

National Employment Standards (NES)

The National Employment Standards (NES) are minimum entitlements that apply to all employees covered by the national workplace relations system. These entitlements form the foundation of Australian employment law. Any employment contract, award, or enterprise agreement cannot provide for conditions less favourable than those outlined in the NES.

At time of writing, the NES entitlements include:

1. Maximum weekly hours – 38 weekly hours of work, plus reasonable extra hours.

2. Flexible working arrangements – in some situations employees can ask to change how they work.

3. Changing from casual to permanent employment – in some situations, employees have the right to request a change to their employment status from casual to permanent (part-time or full time).

4. Parental leave and related entitlements – up to 12 months’ unpaid leave and a right to ask for an additional 12 months’ unpaid leave. Also covers other maternity, paternity and adoption-related leave.

5. Annual leave – 4 weeks’ paid leave per year, plus an extra week for certain shift workers.

6. Other leave – personal/carer’s leave, compassionate and bereavement leave and family and domestic violence leave:

• 10 days paid personal/carer’s leave (includes sick leave)
• 2 days’ unpaid carer’s leave as required
• 2 days’ compassionate leave (unpaid for casuals) as required
• 10 days’ paid family and domestic violence leave (in a 12-month period).

7. Community service leave

• unpaid for voluntary emergency activities
• up to 10 days of paid leave for jury duty (after 10 days is unpaid).

8. Long service leave – this varies for Awards older than 2010 and newer Modern Awards.

9. Public holidays – a paid day off on each public holiday, except where the employer reasonably asks the employee to work.

10. Superannuation contributions – superannuation contributions are covered by the NES for most employees. Employers already have an obligation to pay superannuation contributions for eligible employees under superannuation guarantee laws. If an employer complies with the super guarantee they will also meet their obligations under the NES.

11.Notice of termination and redundancy pay – based on the employee’s length of service:

• up to 4 weeks’ notice on termination (plus an extra week for employees aged over 45 and in the job for at least 2 years)
• up to 16 weeks’ severance pay on redundancy.

12. The Information Statements – employers must give the Fair Work Information Statement to all new employees, and must also give the Casual Employment Information Statement to all casual employees.

Each of these entitlements apply based on employment type and situation, so it’s essential to understand how the NES apply to your operation and workers.

When I work with clients, I often find they’re across most of the NES requirements, but they miss key elements such as handing out Information Statements or following redundancy obligations. In my experience, it’s the small things that have the potential to trip you up. And the penalties? Failure to issue an employee a copy of the Fair Work Information Statement is a breach of the NES and the Fair Work Act. This can result in a court imposing civil penalties against the employer of up to $64,000 per contravention for companies and up to $12,500 per contravention for individuals. A potentially expensive oversight.

Modern Awards

Modern Awards build on the NES and apply to specific industries or occupations.  Awards contain information on who the Award covers, classification (levels) of employment, rates of pay, penalty rates, overtime, allowances and general conditions such as breaks or rostering.

As a business owner, it’s critical (and a lawful obligation) to identify which Award applies to each employee. This can vary, depending on duties and the principal function of a role, not necessarily the person’s job title. And this means even a small business employer can have a number of Awards to interpret and comply with. Many compliance issues I’ve witnessed stem from employees using the wrong award, incorrect Award classification, failure to pay correct allowances or loadings or not apply an applicable Award to their employees at all.

Understanding Awards and applying them correctly is key to ensuring you’re paying your staff fairly and lawfully. And keeping you out of hot water with the Fair Work Ombudsman. It makes sense to know what you need to know, right?

Minimum Wages

The minimum wage is the base rate of pay an employee must receive for ordinary hours worked. It applies to adult employees who aren’t covered by an award or enterprise agreement.

As of 1 July 2024, the national minimum wage is $24.10 per hour or $915.90 per week for a full-time employee (before tax). This rate applies to employees aged 21 and over who are not classified under a modern award or registered agreement.

The Fair Work Commission reviews the national minimum wage each year. The annual wage review considers factors such as:

• cost of living and inflation
• economic conditions
• wage growth across industries
• employment levels and business capacity to pay increases to wages
• submissions from unions, employer groups and government bodies

In many cases, employees are covered by a Modern Award that sets out the minimum rate of pay an worker has to receive for work performed. This Award minimum rate of pay is often higher than the national minimum wage. Award rates also increase each year, usually in line with the Commission’s decision.

To stay compliant, you need to check:

• whether your employees are covered by an Award
• what their classification is under that Award
• what overtime, penalties, loadings and allowances apply
• the most current pay rates from 1 July each year

I always remind clients: paying below the minimum – whether by mistake or oversight – is still underpayment. Even a few dollars per week, if left unchecked, adds up quickly and can result in FWO backpay orders, fines and reputational damage to your business.

Staying on top of minimum wage changes is a small but crucial part of doing the right thing by your team. And protecting your business.

Record-Keeping Requirements

Good record-keeping is the backbone of HR compliance. If you can’t prove you’ve done the right thing, the Fair Work Ombudsman will often assume you haven’t.

Recent legislative changes mean that reverse onus of proof now applies to breaches of the National Employment Standards, a Modern Award or an enterprise agreement. Under these laws, employers who do not meet record-keeping or pay slip obligations and cannot give a reasonable excuse must disprove allegations in wage claims made in court instead of the FWO having to prove there was a breach.

You must keep accurate records of pay, hours, leave and superannuation for each employee. These records need to be accessible and kept for at least 7 years. Poor record-keeping is one of the most common breaches I see and in most cases, fixing the issue does not necessarily have to be time-consuming, complex or costly.

Maintaining the right records protects your business and makes it simple to resolve issues when they arise.

Pay Slips

Pay slips must be issued to employees within one business day of being paid, even if the employee is on leave. Pay slips need to include key details including the Employer’s and employee’s name, employer ABN (if applicable), the pay period, hours worked, gross and net pay, superannuation, deductions, and any loadings or penalties.

Even something as small as one missing line item on a pay slip has the potential to cause confusion or worse: result in a Fair Work Ombudsman audit or penalty. Well-drafted pay slips allow your team to understand how they’ve been paid each pay cycle and go toward demonstrating you’re running a professional business – all actions that contribute to your reputation and trustworthiness as an employer of choice.

Termination of Employment

Ending employment must be done fairly and under defined employment laws and process.  Whether termination results from ongoing performance issues, serious misconduct or redundancy, there are clear rules under the Fair Work Act on how each of these must be addressed.

Fair dismissal requires a valid reason and a fair process. That means giving the employee a chance to respond to your concerns, documenting the steps you’ve taken, and ensuring the decision wasn’t harsh, unjust or unreasonable. Many unfair dismissal applications succeed because the employer’s process wasn’t followed properly…not because the reason for the termination wasn’t valid.

Redundancy is about the role no longer being required, not the person. If the job is no longer needed due to genuine operational reasons, and you’ve followed the proper consultation steps under the applicable Award (including consideration of redeployment options), it may be considered a genuine redundancy.

Small businesses (fewer than 15 employees) have different obligations and redundancy pay requirements, but you still need to handle any redundancy situation through the correct Award steps and timeframes. Consequences of not doing so? Your employee may make an application for unfair dismissal. And that can mean FWO directs to reinstate the employee (including any continuity of service and pay or benefits the employee lost while they were not at work) or pay an amount of compensation: up to 6 months of an applicant’s remuneration immediately before being dismissed.

When letting someone go, you must provide the correct notice period, either worked or paid in lieu of notice. Under the NES (and most Awards), the notice period is:

• 1 week for under 1 year of service
• Up to 4 weeks, depending on the individual’s period of continuous service
• 1 additional week if the person is aged over 45 with 2+ years of service

Final pay must include all outstanding entitlements such as wages, annual leave, and redundancy pay if it applies. Most final payments should be made within 7 days of the last working day, depending on the Award.

While never enjoyable, when done correctly, termination of employment is a straightforward process. Done poorly, it can lead you to a range of claims, penalties, stress and time incurred for everyone involved. Our tip? Find someone with genuine HR experience to guide you through the process before you make the decision to pull the trigger.

Avoiding Fair Work Compliance Pitfalls

Even with the best intentions, it’s easy to slip up on Fair Work compliance obligations. The following is a general list of where we see many businesses go wrong and how to avoid these common pitfalls.

Common Compliance Errors

Most compliance mistakes occur through:

• Underpayment of wages due to the employer using the incorrect Award/s or classifications
• Treating employees as contractors when they’re not
• Failing to follow the correct steps when making a role redundant
• Paying Award-covered employees an annual salary and not documenting this arrangement correctly
• Failing to apply annual leave loading under an applicable Award
• Not providing Award entitlements like leave, breaks or allowances
• Failing to keep proper records or issue compliant pay slips

These mistakes often happen because business owners are busy or unsure of the correct steps. But regulators don’t accept “I didn’t know” as an excuse. And penalties for non-compliance can be significant.

Practical Tips for Compliance

Like to stay on track? Consider these simple tips

• Audit your HR documents, payroll process and records on an annual basis
• Ensure your staff are classified correctly under the right Award
• Make sure your Contracts of Employment have the correct wording on how you remunerate your employees
• Provide team leaders with basic training in workplace obligations
• Obtain expert advice before actioning any dismissal, redundancy or changes to an employee’s remuneration or employment contract

In my experience, consulting a genuine HR expert early can save you thousands in backpay, penalties or legal fees. It also helps you sleep better at night.

Not sure where you stand? Why not consider a review of your current HR function? Even if you decide not to move forward after our free initial consultation, you’ll walk away with a clearer understanding of what’s possible for your business.

Call us on 0401 279 054 to book your complimentary consultation.

Bare Bones Consulting: Your Partner in Fair Work Compliance

At Bare Bones Consulting, we specialise in helping businesses navigate the complexities of workplace relations without unnecessary jargon or volumes of paperwork. We understand compliance with your employment obligations can feel overwhelming…and that’s where we can help.

We bring over 25 years of experience in human resources, industrial and employee relations and workplace training to your business. Our experience spans HR Manager-level roles in industries such as 5-star hotels, IT, Healthcare, Sales, Oil and Gas, Mining, Construction and Manufacturing. Our current client group operates across a diverse range of sectors such as Marketing and Communications, Engineering, Construction, Property Development, Food Manufacturing and Technology, Healthcare, Trades, Retail, Transport and Distribution, Legal and Professional Services, Veterinary, Pharmaceutical, and more.

We tailor our approach to suit your business, not the other way around. And there are no subscriptions or membership fees: pay when you use us.

Our services span what you need to ensure compliance:

• audits to identify gaps or risks in your current HR function
• tailored workplace policies and contracts
• advice on managing underperformance, terminations and redundancy
• training for owners, managers and teams on Fair Work Act obligations
• on-call advice when questions or issues arise
• support with disputes or investigations, including representation and response preparation
• counselling services to employees and business owners

We’ve helped numerous businesses update their HR documentation, implement correct pay structures, and train owners, managers and staff to avoid common employment pitfalls. Bottom line? Fair Work compliance isn’t a one-size-fits-all situation: you need solutions that fit your business, your industry and your people. That’s what we deliver.

Conclusion

Fair Work compliance isn’t just about avoiding fines or ticking boxes – it’s about creating a fair, productive and sustainable workplace for everyone. When you understand and meet your obligations as an employer, you’re protecting your business, supporting your team and contributing to better outcomes for Australian workers across the board. And setting yourself apart as a place people want to work.

We’ve seen firsthand how businesses benefit from getting compliance right. You avoid costly mistakes, reduce the risk of disputes and build a workplace that people want to be part of. It’s not just good for business – it’s good for employee engagement, retention of the best people and your reputation in the community as an employer.

To recap, here are your key compliance takeaways:

• The Fair Work Act (“the Act”) and Fair Work Regulations govern the employer and employee relationship in Australia and set obligations that apply to all Australian employers
• You must meet all National Employment Standards and apply the applicable Modern Award (or Awards) for your employees
• Stay up to date with minimum wage changes, and make sure your employment records and pay slips are complete and accurate
• Handle employee underperformance, termination and redundancy situations with care and guidance to avoid legal repercussions
• Be proactive with regular HR audits and reviews of your employment documents and HR processes
• Having an experienced HR professional on call makes things simple
• Compliance protects your business, contributes to more satisfied and productive workers and avoids time-consuming and potentially expensive interactions with the Fair Work Ombudsman.

Fair Work compliance might seem an overwhelming objective, but it doesn’t have to be. When you break it down into planned steps – and get the right support – it becomes manageable and even empowering.

At Bare Bones Consulting, we support businesses of all sizes with HR services. We know your time is tight and your budget is limited. We’re here to help you get the essentials in place, avoid unnecessary drama and get things right the first time. At a value for money price.

Need a hand with Fair Work compliance? Let’s get started. We promise to keep things simple, practical and tailored to your business. Contact us on 0401 279 065 or fill out our online enquiry form.