Main Obligations and Duties of Employers and Employees

Last revision: Last revision:19th September 2019

An employment relationship is primarily something to be agreed between the employer and the employee.

Each party will have various rights and obligations, and these are usually set out in writing, in an Employment Agreement or in a Letter of Offer of Employment.

However, on top of this, Australian law imposes various mandatory obligations on the parties.

General considerations

It is up to the parties to decide what will be included in the employment documents. There are many important matters which may be addressed, including details of the employee's duties, salary or wages which the employee will receive, other benefits which the employee may receive, confidentiality, how and when the employment may be terminated, and liability in the event of errors by the employee.

However, at the same time, there are various laws that the parties cannot avoid, and that confirm various rights for employees, and various obligations for employers. These laws deal with such matters as minimum wages, superannuation, leave entitlements, unfair dismissal, and workplace health and safety.

If an employer fails to meet their obligations under these laws, then the employee may suffer significantly. For example, if an employer pays below minimum wage, or fails to put aside superannuation contributions for the employee, then over time this could cost the employee a significant sum of money. In addition, the law imposes significant penalties for employers who fail to meet these obligations.

Therefore, it is important for both employers and employees to understand their various rights and obligations.

What is the Difference Between an Employment Agreement and a Letter of Offer of Employment?

Both documents deal with the relationship between an employer and employee. However, an Employment Agreement provides more detail than a Letter of Offer of Employment.

In many cases, employers like to provide a Letter of Offer of Employment in the first place, to welcome the employee in and to set out the key terms in relation to their employment (such as their main obligations, commencement date, and what they will be paid). The employer may then follow this up at a later date with an Employment Agreement, which provides more details and can deal in more detail with such matters as other employment benefits, confidentiality, non-compete obligations, or intellectual property rights.

Some employers choose just to provide a Letter of Offer of Employment, deciding that it provides enough detail for their purposes. Others choose to provide an Employment Contract without first providing a Letter of Offer of Employment.

It is also worth keeping in mind that neither an Employment Agreement nor a Letter of Offer of Employment may be binding unless they are signed by the parties. Therefore it is best practice that both documents are signed by both the employer and the employee.

Typical Obligations in an Employment Agreement or Letter of Offer of Employment

As discussed above, there are many different obligations for employers and employees which may be addressed in an Employment Agreement or a Letter of Offer of Employment. Some matters which are frequently addressed include:

  • Specific details of the employee's duties - in other words, what the employee is being hired to do. This may include details about the tasks to be performed, the quality of performance that is expected, the location of work, and the hours of work.
  • The employer's obligation to pay a salary or wages to the employee - including details of how much the employer will pay, how frequently the employer will pay, and whether some kind of performance bonus will be provided.
  • Any other benefits which the employer may provide to the employee - such as travel expenses, a company car, gym membership, healthcare, or other similar benefits.
  • Details of any superannuation contributions which the employer may provide for the employee.
  • Details of any leave entitlements which the employee may have (and which the employer must pay) - including such items as annual leave, long service leave, sick leave, bereavement leave and parental leave.
  • Confidentiality obligations - which may be particularly important if the employee is likely to be handling sensitive information. Many employers also have their employees sign a separate Confidentiality Agreement, particularly if confidentiality is important to the employer.
  • Non-compete obligations - which may restrict the employee from working with the employer's competitors within a certain geographical area and for a certain period after the employee stops working for the employer. Many employers also consider having their employees sign a separate Non-Compete Agreement.
  • Rights and obligations regarding ownership of intellectual property - which may be particularly important if the employee is creating intellectual property for the employer such as written content, imagery, computer code, video or audio content. These clauses may help to clarify whether the employer or the employee owns such intellectual property, and may set out various related obligations which the parties may have, such as obligations to take steps to actually hand over the intellectual property.
  • Rights and obligations regarding minimum notice that the parties must provide in order to terminate the employment.

There are many obligations which may be required by law, and unfortunately it is not possible for us to list all of them here. Depending on the nature and the industry of employment, these obligations could be set out in various instruments, including:

  • Federal or state based legislation or regulations (including the National Employment Standards - see below).
  • Industrial awards.
  • Enterprise agreements.
  • Tribunal decisions.
  • The Employment Agreement and/or Letter of Offer of Employment.

Some typical obligations for employers which may be provided by law include:

  • Paying employees correct wages (including paying them more than the legal minimum wage).
  • Reimbursing employees for work-related expenses (such as travel expenses or other similar expenses).
  • Providing pay slips to employees.
  • Ensuring a safe working environment.
  • Obtaining adequate insurance to cover workers compensation claims by employees.
  • Paying PAYG withholding tax to the Australian Taxation Office.
  • Paying superannuation to an employee's nominated superannuation fund.
  • Other obligations as required under the National Employment Standards (see below).

National Employment Standards

In addition to the various obligations which we have already discussed, there are a number of minimum standards, called the National Employment Standards which all Australian employers in the National Workplace Relations system must provide.

The National Workplace Relations system is a collection of legislation that applies to most employees and employers in Australia. It includes the Fair Work Act 2009, the National Employment Standards, registered agreements and awards. The Fair Work Ombudsman provides information about which employees are covered by the National Employment Standards.

If the National Employment Standards apply, then the Employment Agreement, Letter of Offer of Employment, employment award, enterprise agreement or other registered agreement can not provide for conditions that are less than the national minimum wage or the National Employment Standards.

The National Employment Standards may even apply to casual employees.

Various matters are dealt with under the National Employment Standards, including:

  • Maximum weekly hours.
  • Notices of termination.
  • Redundancy pay.
  • Annual leave.
  • Parental leave and other related entitlements.
  • Carer's leave, personal leave, compassionate leave or family and domestic violence leave.
  • Community service leave.
  • Long service leave.
  • Public holidays.
  • Requests for flexible working arrangements.
  • Fair Work Information Statement.

In conclusion

Employment relationships in Australia are complicated, and may be affected by many different laws, regulations and other instruments. These are also subject to change.

As a starting point, parties should review their Employment Agreement and/or Letter of Offer of Employment for information about their rights and obligations. In many cases, these documents may also provide information as to whether any Industrial Awards, Enterprise Agreements, or specific legislation or regulations apply to the relationship.

The Fair Work Ombudsman provides useful information about the National Employment Standards. The federal government's Department of Industry, Innovation and Science provides general information about legal obligations for employers. The Department of Industry, Innovation and Science also provides information about workplace health and safety.

Each state and territory government also publishes up to date information regarding employment obligations in the relevant state or territory.

As always, if you have any doubts or concerns about your own rights or obligations, then you should seek legal advice.

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