Fair Work Act: What It Covers (Quick Reference)

The Fair Work Act 2009 (Cth) is the primary legislation governing employment relationships in Australia. It sets out the National Employment Standards (NES), modern awards, enterprise agreements, and protections against unfair dismissal, discrimination, and adverse action. If you employ anyone in Australia — whether one person or a thousand — this Act shapes your obligations.

Understanding the Fair Work Act matters because non-compliance carries real consequences: back-pay orders, penalties of up to $93,900 per contravention for individuals and $469,500 for companies, and reputational damage. This quick reference covers the essentials so you know where you stand.

Key Takeaways

• The Fair Work Act applies to all employers and employees in Australia, with limited exceptions for state government employees.
• The NES provides 11 minimum employment entitlements that cannot be overridden by awards or agreements.
• Modern awards and enterprise agreements sit above the NES and set industry-specific or workplace-specific terms.
• The Fair Work Commission is the national workplace relations tribunal that enforces the Act and resolves disputes.
• The general protections provisions protect employees from adverse action for exercising workplace rights.

What the Fair Work Act Covers

The Fair Work Act establishes the framework for the Australian workplace relations system. It covers:

• Minimum pay and conditions — setting floors for wages, leave, hours, and notice periods.
• Award coverage — industry and occupation-based instruments that fill gaps in employment contracts.
• Enterprise agreements — negotiated agreements between employers and employees that replace or modify award terms.
• Unfair dismissal — protections against termination that is harsh, unjust, or unreasonable.
• Adverse action and general protections — preventing discrimination or retaliation against employees exercising workplace rights.
• Right to disconnect — introduced in 2024, giving employees the right to ignore unreasonable out-of-hours contact.
• Flexible working arrangements — a structured process for requesting changes to work patterns.
• Stop sexual harassment orders — the Commission can issue orders to prevent workplace sexual harassment.

The Act does not cover genuinely independent contractors, volunteers, or certain state government employees covered by state industrial relations systems.

The National Employment Standards (NES)

The NES is the backbone of employee entitlements under the Fair Work Act. It provides 11 minimum standards that apply to all national system employees, regardless of any award or agreement:

Entitlement	Key Detail
Maximum weekly hours	38 hours per week (plus reasonable additional hours)
Requests for flexible working	Right to request after 12 months’ service (or sooner in some cases)
Offers and requests to convert from casual	After 12 months of regular and systematic casual employment
Leave — annual	4 weeks (10 days) per year; 5 weeks for shift workers
Leave — personal/carer’s	10 days per year (paid)
Leave — parental	12 months unpaid (expandable to 24); paid parental leave currently 20 weeks
Community service leave	Unpaid for jury duty; paid for emergency management
Long service leave	Covered by state/territory legislation but referenced in the NES
Public holidays	Entitlement to be absent on public holidays
Notice of termination and redundancy	Minimum notice periods based on length of service
Fair Work Information Statement	Must be provided to all new employees

The NES cannot be contracted out of. If an employment contract, award, or agreement provides less than the NES minimum, the NES prevails.

Modern Awards

Modern awards are legally binding instruments that set minimum pay rates and conditions for specific industries and occupations. They are made by the Fair Work Commission and cover most Australian workplaces.

There are over 120 modern awards, each tailored to a sector — for example, the General Retail Industry Award 2020 or the Professional Employees Award 2020. A modern award applies to an employer if its classification covers the employer’s industry or the employee’s occupation.

Key features of modern awards:

• Minimum wages — set annually by the Minimum Wage Review, typically effective from the first full pay period in July.
• Allowances — payments for specific conditions such as travel, uniform, or higher duties.
• Penalty rates — higher pay for weekends, public holidays, and overtime.
• Leave loading — typically 17.5% on annual leave for many awards.
• Classification structures — define pay levels based on skill and responsibility.

You must check which award applies to your employees and ensure your contracts meet or exceed those minimums.

Enterprise Agreements

Enterprise agreements are negotiated between an employer (or employer group) and employees, often with union involvement. Once approved by the Fair Work Commission, they replace the applicable modern award as the source of minimum terms and conditions.

To be approved, an enterprise agreement must pass the Better Off Overall Test (BOOT) — meaning each employee must be better off overall under the agreement than under the relevant modern award.

Enterprise agreements typically cover:

• Pay rates and structures (including annual increases)
• Hours of work and rostering arrangements
• Leave entitlements above the NES minimum
• Dispute resolution procedures
• Consultation requirements for changes affecting employees

Agreements have a nominal expiry date of up to four years. After expiry, the agreement continues to operate but either party can negotiate a new agreement or revert to the modern award.

Key Protections for Employees

The Fair Work Act includes several layers of protection:

Unfair dismissal. Employees with at least six months’ service (12 months for small businesses with fewer than 15 employees) can lodge an unfair dismissal claim if they believe their termination was harsh, unjust, or unreasonable. The Commission considers factors such as the reason for dismissal, the employee’s conduct, and whether a proper process was followed.

General protections (Part 3-1). These provisions prohibit an employer from taking adverse action against an employee or prospective employee for exercising a workplace right, disclosing workplace discrimination, or engaging in union activity. Breaches can result in civil penalties or compensation orders with no cap.

Stop sexual harassment orders. Since March 2023, the Commission can make orders to stop sexual harassment in the workplace, including interim orders and compulsory conference processes.

Right to disconnect. For employers with 15 or more employees, the right to disconnect applies from 26 August 2024. For small businesses, it applies from 26 August 2025. Employees can refuse unreasonable out-of-hours contact unless the refusal is unreasonable.

Compliance Checklist for Employers

Action	Why It Matters
Identify applicable modern award or enterprise agreement	Determines minimum pay and conditions
Provide the Fair Work Information Statement	Mandatory at commencement and at regular intervals
Pay at least the NES minimums	NES overrides any less favourable term
Keep accurate time and pay records	Required for 7 years; failure attracts penalties
Respond to flexible working requests	Must respond in writing within 21 days with reasons
Lodge annual pay increases	Most awards increase on 1 July each year
Consult on significant workplace changes	Required by most awards and enterprise agreements

Frequently Asked Questions

Does the Fair Work Act apply to contractors?

Generally, no. The Fair Work Act applies to employment relationships. However, the Act contains provisions for “sham contracting” — if a worker is misclassified as an independent contractor when they are effectively an employee, the employer can face penalties. The Fair Work Ombudsman provides guidance on distinguishing employees from contractors.

What happens if I pay below the modern award rate?

Paying below the applicable modern award rate is a breach of the Fair Work Act. Employees can lodge underpayment claims with the Fair Work Ombudsman or the Federal Circuit and Family Court. Employers may be required to back-pay the difference, pay penalties, and face public naming. The Ombudsman actively pursues systemic underpayment cases.

Can my enterprise agreement provide less than the NES?

No. The NES is a floor that cannot be undercut. If an enterprise agreement provides a term that is less favourable than the corresponding NES entitlement, the NES term prevails. The Fair Work Commission will not approve an agreement that fails to pass the BOOT or breaches the NES.

How long do I have to respond to a flexible working request?

You must respond in writing within 21 days. You can only refuse the request on reasonable business grounds — for example, the cost of rescheduling, the inability to re-distribute work, or the impact on service levels. You must explain your reasons in the response.

What penalties apply for breaching the Fair Work Act?

Penalties vary by contravention. For serious contraventions (such as deliberate underpayment or falsifying records), penalties can reach $93,900 per contravention for individuals and $469,500 for companies. For standard contraventions, maximum penalties are lower but still significant — $18,780 for individuals and $93,900 for companies per contravention as of 2025.

This article is general information, not legal advice. For guidance specific to your situation, consult the Fair Work Ombudsman or an employment lawyer.