Fair Work Act 2009 Australia: Closing Loopholes, Rights, Enforcement

The Fair Work Act 2009 is Australia’s main workplace law. It sets the minimum pay and conditions, dismissal rules, and dispute-resolution machinery that apply to most employees and employers in the country, and it has been substantially rewritten by the 2024 Closing Loopholes reforms and the wage theft provisions that took effect on 1 January 2025.

Who the Act Covers

The Act runs the national workplace relations system, which covers employees of “constitutional corporations” (most private-sector incorporated businesses), Commonwealth government employees, and workers in industries like maritime and aviation that fall under federal constitutional power.¹

Most states have referred their industrial relations powers to the Commonwealth, so the Act covers virtually all private-sector workers in New South Wales, Queensland, South Australia, Tasmania, Victoria, the ACT, and the Northern Territory. Western Australia is the exception. Unincorporated businesses there, such as sole traders and partnerships, stay under WA’s own state system.¹ State public-sector employees in most states also sit outside the national system and are governed by their own state legislation.

The National Employment Standards

At the core of the Act are the National Employment Standards, or NES. These are the minimum entitlements every national system employee is guaranteed, regardless of industry or contract. No award or enterprise agreement can strip them away or drop them below the statutory floor.²

The main NES entitlements are:³

A maximum of 38 ordinary hours per week for full-time employees, plus any additional hours that are reasonable.
Four weeks of paid annual leave per year, or five weeks for shift workers who regularly work Sundays and public holidays.
10 days of paid personal and carer’s leave each year for illness or to care for an immediate family member.
Two days of paid compassionate leave per occasion.
10 days of paid family and domestic violence leave in any 12-month period.
Up to 12 months of unpaid parental leave for each parent, with a right to request another 12 months.
Community service leave, long service leave, and public holidays.
A right for eligible employees to request flexible working arrangements.

Superannuation now sits inside the NES as well, so unpaid super can be pursued through the Fair Work system as well as the ATO. Employers must contribute 12% of an employee’s ordinary time earnings. From 1 July 2026, “Payday Super” rules require employers to pay superannuation at the same time as wages instead of quarterly, which should make missing contributions easier for workers to spot.⁴

On termination, the NES sets a minimum notice period tied to length of continuous service, from one week (under a year) up to four weeks (five or more years). Employees aged 45 or older with at least two years of service get an extra week.² Redundancy pay runs on a sliding scale from four weeks (at least one but under two years of service) up to 16 weeks (nine to ten years), then drops back to 12 weeks for employees with 10 or more years, a quirk that traces to a 2004 industrial relations decision.⁵

Awards and Enterprise Agreements

The NES is the floor, but actual pay and conditions for most employees are set by modern awards. These are industry- or occupation-specific instruments maintained by the Fair Work Commission that set minimum wages, overtime, weekend and public holiday penalty rates, and allowances. More than 100 modern awards cover fields from retail and hospitality to mining, health care, and professional services.⁶

A workplace can negotiate an enterprise agreement to tailor conditions, often with union involvement. Before the Commission approves one, it must pass the Better Off Overall Test: the Commission must be satisfied that every employee covered would be better off overall under the agreement than under the relevant modern award.⁷ The Commission also runs an Annual Wage Review each year that lifts the national minimum wage and flows through to award rates.⁸

What the Closing Loopholes Reforms Changed

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 was the biggest overhaul in years, and its provisions have rolled in through 2024 and 2025.⁹

A New Definition of Casual

A worker is now casual only if there is genuinely no firm advance commitment to ongoing work, assessed by looking at the practical reality of the arrangement, including whether the employer regularly offers shifts, whether the employee works a consistent pattern, and whether permanent employees do the same work.¹⁰ Casuals who believe they no longer meet the definition can give written notice to convert to permanent employment after six months of service, or 12 months with a small business. The employer has 21 days to respond in writing after consultation, and must accept or give reasons for refusing.¹¹

Fixed-Term Contract Limits

Fixed-term contracts are now capped at two years, including any extensions or renewals, and can only be extended or renewed once. Employers can’t offer a new fixed-term contract for the same work if it would push the total past two years or if the previous contract already used its renewal option. Ignore these limits and the contract does not automatically end on its stated expiry date, which effectively converts it into ongoing employment.¹²

Right to Disconnect

Since August 2024 for larger employers and August 2025 for small businesses, employees have the right to refuse to monitor, read, or respond to contact from their employer or third parties outside working hours, unless the refusal is unreasonable. The law doesn’t stop employers sending after-hours messages. It protects the employee’s choice to ignore them.¹³

Whether a refusal is unreasonable depends on the reason for the contact, how disruptive it is, whether the employee is paid for being available, their level of responsibility, and personal circumstances such as caring duties. Contact required by law, like an emergency recall under an award, can’t be refused.¹³

Employee or Independent Contractor

From 26 August 2024, the test for distinguishing an employee from an independent contractor in the national system changed. The old approach focused on the written contract. The new “whole of relationship” test looks at the real substance of the arrangement, including the degree of control the business exercises, who bears financial risk, who supplies tools and equipment, and whether the worker can delegate tasks.¹⁴

Sham contracting, where an employer tells a worker they are a contractor when the relationship is actually one of employment, remains illegal unless the employer reasonably believes the arrangement is genuine. The amendments also gave the Fair Work Commission new powers over “employee-like” workers on digital platforms, including setting minimum standards and hearing disputes about unfair deactivation.⁹

Pay Secrecy

Employees have a protected workplace right to share, or not share, information about their pay and conditions with anyone they choose. Pay secrecy clauses in contracts, awards, and enterprise agreements are unenforceable, and an employer that takes adverse action over such a discussion is exposed to the same penalties as any general protections breach.¹⁵

Unfair Dismissal

An employee who is fired and believes the termination was harsh, unjust, or unreasonable can apply to the Fair Work Commission. To be eligible, they must have completed a minimum employment period of six months, or 12 months where the employer is a small business with fewer than 15 employees.¹⁶ They also need to earn below the high income threshold, which is $183,100 from 1 July 2025 and is indexed annually, unless they are covered by a modern award or enterprise agreement.¹⁷

If the Commission finds the dismissal was unfair, it can order reinstatement or compensation. Compensation is capped at the lower of six months of the employee’s pay or half the high income threshold, which is $91,550 for 2025–26. The cap resets each 1 July with the threshold.¹⁸

The Small Business Fair Dismissal Code

Small businesses with fewer than 15 employees can rely on the Small Business Fair Dismissal Code. If the employer followed the Code’s procedures, the dismissal is considered fair regardless of the outcome. For serious misconduct such as theft, fraud, violence, or sexual harassment, the employer can dismiss immediately without warning, provided they genuinely believed the conduct occurred and made reasonable inquiries.¹⁹

For performance or conduct issues short of serious misconduct, the Code requires the employer to warn the employee that their job is at risk, give them a chance to improve, and let them have a support person present in discussions about possible dismissal. That support person cannot be a lawyer acting in a professional capacity. If a claim is filed, the employer carries the burden of proving they complied with the Code.¹⁹

General Protections

The general protections provisions sit alongside unfair dismissal and are in many ways broader. They prohibit an employer from taking adverse action against a person because they exercised, or proposed to exercise, a workplace right. Workplace rights include joining a union, making a complaint about employment conditions, taking lawful leave, and discussing pay. There is no minimum employment period and no high income threshold to qualify.²⁰

Adverse action includes dismissal, demotion, refusal to hire, changing duties to the worker’s disadvantage, and discrimination based on attributes like race, sex, disability, or union membership. When a general protections claim is brought, the burden reverses: the employer must prove the adverse action was not motivated by the prohibited reason. Courts can award uncapped compensation, including damages for non-economic loss, and can impose civil penalties against the employer or the individuals responsible.

Civil penalties are large. For an individual, up to $19,800 per contravention or $198,000 for a serious contravention. For companies with 15 or more employees, up to $495,000 per contravention, or for serious contraventions, $4,950,000 or three times the underpayment amount, whichever is greater.²¹

Wage Theft Is Now a Crime

From 1 January 2025, intentionally underpaying workers is a criminal offence. The offence is committed when a person is required to pay an amount to or on behalf of an employee (wages, leave entitlements, or superannuation) and intentionally engages in conduct that results in non-payment.²²

An individual convicted of wage theft faces up to 10 years in prison, a fine of up to $1.65 million or three times the underpayment (whichever is higher), or both. A company faces fines of up to $8.25 million or three times the underpayment. These provisions target deliberate conduct, not honest mistakes: an employer who miscalculates an award rate faces civil enforcement, while one who knowingly pays below the minimum or doctors time records faces prosecution.²²

Who Enforces the Act

Two bodies do most of the work, and they are not the same. The Fair Work Commission is the independent tribunal that sets minimum wages, approves enterprise agreements, and resolves disputes over pay, dismissal, and other workplace matters through conciliation, mediation, and in some cases binding arbitration. It can also order that unprotected industrial action stop. Since March 2023, it has had jurisdiction to make orders stopping workplace sexual harassment, which a worker can apply for within two years of the last incident.²³

The Fair Work Ombudsman is the statutory agency that enforces compliance. It provides free advice, publishes pay calculators and fact sheets, and investigates complaints about underpayment and other breaches.²⁴ Fair Work Inspectors can enter workplaces, examine employment records, and interview staff. Where they find a breach, they can issue compliance notices requiring back-pay or other remedies. For serious or deliberate exploitation, the Ombudsman can commence civil proceedings for penalties and compensation, or refer the matter for criminal prosecution under the wage theft provisions.²⁵

1
Fair Work Commission. Who Australia’s National Workplace Relations System Covers
2
Fair Work Commission. National Employment Standards
3
Fair Work Ombudsman. National Employment Standards
4
Fair Work Ombudsman. Tax and Superannuation
5
Fair Work Ombudsman. Notice of Termination and Redundancy Pay Fact Sheet
6
Fair Work Ombudsman. List of Awards
7
AustLII. Fair Work Act 2009 – Section 193 Passing the Better Off Overall Test
8
Fair Work Commission. Annual Wage Reviews
9
Fair Work Commission. The Closing Loopholes Acts – What’s Changing
10
Fair Work Ombudsman. Casual Employees
11
Fair Work Ombudsman. Becoming a Permanent Employee
12
Fair Work Ombudsman. Fixed Term Contract Employees
13
Fair Work Ombudsman. Right to Disconnect
14
Fair Work Ombudsman. Independent Contractors
15
Fair Work Ombudsman. Pay Secrecy
16
Fair Work Commission. What Is the Minimum Period of Employment
17
Fair Work Commission. High Income Threshold
18
Fair Work Commission. The Formula to Calculate Compensation
19
Fair Work Commission. What Is the Small Business Fair Dismissal Code
20
Fair Work Ombudsman. Protections at Work
21
Fair Work Ombudsman. Litigation
22
Fair Work Ombudsman. Criminal Prosecution
23
Fair Work Commission. Sexual Harassment Disputes Benchbook
24
Fair Work Ombudsman. Powers of Fair Work Inspectors Fact Sheet
25
Parliament of Australia. Chapter 4 Powers of the Fair Work Ombudsman