National Employment Standards (NES) Summary

The Government has released its final National Employment Standards (NES) that will apply to, and provide 10 minimum entitlements for, all employees. The NES are to replace the Australian Fair Pay and Conditions Standard (AFPCS) currently in force under the Workplace Relations Act 1996 (WR Act). It is expected that the NES will come into effect in January 2010. The details of the NES are summarised below.

Many of the entitlements under the NES are similar to those already covered by the current AFPCS. Essentially the NES involves a continuation and further development of the AFPCS, with the inclusion of well-established industrial relations “standards”, such as severance pay and jury duty.

The key changes are:

• Maximum weekly hours of work – the maximum weekly hours of work will continue as 38 hours per week, plus reasonable additional hours. Unlike the AFPCS, the NES do not allow an employer and employee to agree on an applicable averaging period (although an averaging period may be specified in an award).
• Flexible working arrangements for parents – after 12 months' continuous service, employees caring for children under school age may request flexible working arrangements. Employers may refuse only on reasonable business grounds and must set out those grounds in a written response to the employee.
• Parental leave – after 12 months' continuous service, employees will continue to be entitled to 12 months' unpaid parental leave and can request an extension of up to another 12 months' leave. The employer may refuse this request only on reasonable business grounds.
• Cashing out leave – the ability to cash out leave is a matter that can be dealt with in modern awards only.
• Community service leave – employees engaging in community service activities, including jury service and voluntary emergency management activities, can take reasonable leave for the period of those activities, plus reasonable travel and rest time. An employer's liability to pay employees for jury service will be limited to 10 days, regardless of the total absence.
• Notice of termination and redundancy pay – the NES will introduce severance pay (to a maximum of 16 weeks' pay) for employees made redundant. Small businesses (fewer than 15 employees) are exempt. Employees employed for a specified time or task, and probationary, casual, seasonal and trainee employees, are also excluded. The NES notice entitlement for termination is the same as under the Workplace Relations Act 1996 (Cth).
• Fair Work Information Statement – employers will be required to give employees a statement (to be published by Fair Work Australia) either before, or as soon as practicable after, commencement of employment.

A summary of the NES follows.

1. Maximum weekly hours
Consistent with the provisions in the current AFPCS.  Under the NES the standard/maximum weekly hours of work for an employee will be 38 hours per week (or for an employee who is not a full-time employee, the lesser number of hours which are their ordinary hours of work per week), and an employer may request or require an employee to work reasonable additional hours. Unlike the current AFPCS, the maximum weekly hours of work for an employee under the NES may not be averaged over a 12 month period, however a modern award may provide for a specific averaging period.
In considering whether additional hours are reasonable for the employee concerned under the NES, it will be necessary (in addition to the current considerations ), to consider: (a) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for or a level of remuneration that reflects an expectation of working additional hours; (b) the usual patterns of work in the industry in which the employee works; (c) the nature of the employees role and their level of responsibility; and (d) whether the additional hours are worked in accordance with averaging provisions of a modern award.

2. Requests for flexible working arrangements
The NES will provide that a permanent employee who: (a) has completed at least 12 months of continuous employment with the employer; and (b) who is a parent or has responsibility for the care of a child under school age; may make a request for a change in their working arrangements to assist the employee to care for the child. Casual employees who have been employed on a regular and systematic basis for at least 12 months and have a reasonable expectation of continuing work may also make a request. The request must be made in writing, specify the changes sought by the employee, and the reasons for the change. The AFPCS had no equivalent provision.

The NES does not define what a change in the working arrangements for an employee may be, however provides examples including changes to the hours of work, patterns of work and location of work. Employers must respond to the employee within 21 days of the request either granting the request, or refusing the request. If an employer refuses the request, the refusal may only be made on reasonable business grounds, and the reasons for the refusal must be given in writing to the employee.

3. Parental leave and related entitlements
The entitlement to parental leave under the NES will be generally the same as is currently provided for under the AFPCS, except that it has been extended to same sex couples. Eligible employees will be entitled to a period of 12 months starting from the birth/placement of the child. Generally only one parent may be on leave (other than a concurrent period of three weeks), and the leave is unpaid. The NES will however introduce a right for an employee on parental leave to request an extension of their period of parental leave for an additional 12 months. The employee will be required to give their employer 4 weeks notice, and the employer must agree to the requested extension, unless the employer has reasonable business grounds for refusing. The NES does not provide any guidance as to what reasonable business grounds would justify a refusal.

The provisions of the AFPCS dealing with unpaid special maternity leave, and the right of an employee to be transferred to a safe job (or take paid no safe job leave) will be retained under the NES, as will the right of an employee on finishing a period of unpaid parental leave to return to their pre-parental leave position. In addition, if an employee is on unpaid parental leave and their employer makes a decision that will have a significant effect on the status, pay or location of the employee's pre-parental leave position, the employer must take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect of the decision on the pre-parental leave position.

4. Annual leave
The NES will provide that employees are entitled to: (a) 4 weeks of annual leave; and (b) for an employee employed under a modern award who falls within the definition of a shift worker in the modern award, an additional 1 week annual leave; for each year of service with their employer. The leave entitlement will accrue throughout the year. The entitlement to the additional week's annual leave for a shift worker under the NES will be much broader than the additional entitlement under the AFPCS, as it will be based upon the award definition of a shift worker and not a statutory definition.

The NES requires annual leave to be taken at a time agreed between the employer and the employee, and an employer must not unreasonably refuse to agree to a request. Unlike the AFPCS, the NES will not provide for the following matters (however a modern award may provide for them): (a) provisions for the cashing out of paid leave; (b) shut downs; (c) requiring employees to take periods of annual leave; and (d) dealing with extensive accumulation of leave.

5. Personal/carer's leave and compassionate leave
The NES will provide an entitlement to personal/carer's leave which is generally in line with the AFPCS. Employees, other than casual employees, will be entitled to take personal/carer's leave:

(a) because the employee is unfit for work because of a personal illness or injury affecting the employee (personal leave); or
(b) to provide care or support to a member of the employee's immediate family or household because of:
(i) a personal illness or injury affecting the member; or
(ii) an unexpected emergency affecting the member (carer's leave).
Employees, other than casual employees, will be entitled to up to 10 days of personal/carer's leave in each year, which accrues throughout the year and will accumulate with no limitation. Unlike under the AFPCS, there is no cap on the amount of carer's leave an employee may take in any year. Further, the entitlement for all employees, including casual employees, who do not have an entitlement to paid personal/carer's leave to have up to 2 days of unpaid carer's leave will be retained under the NES.

The notice and evidentiary requirements for the taking of personal/carer's leave under the NES will be generally the same as under the AFPCS, however the evidence which is required need only be evidence that would satisfy a reasonable person, rather than the current requirement for a medical certificate or statutory declaration. However, a modern award can contain different evidence requirements.

As was the case under the AFPCS, the NES will afford all employees an entitlement to 2 days compassionate leave (which is paid leave for all employees except casual employees) on each occasion that a member of the employee's immediate family or household: (a) contracts or develops a personal illness or sustains a personal injury that poses a serious threat to his or her life; or (b) dies.

i.e. an employee (other than a casual employee) is entitled to:

• 10 days of paid personal/carer’s leave for each year of service; 
• 2 days of paid compassionate leave per occasion; 
• 2 days of unpaid carer’s leave per occasion (if paid carer’s leave is exhausted).

a casual employee is entitled to:

• 2 days of unpaid compassionate leave per occasion; and
• 2 days of unpaid carer’s leave per occasion.

6. Community service leave
An employee who engages in an eligible community service activity, being jury service or carrying out a voluntary emergency management activity (or other activities which may be prescribed in the future), will be entitled under the NES to be absent from work for the time when the employees is engaged in the activity and any reasonable travelling and rest time, so long as the absence is reasonable in the circumstances. In the case of jury service, the absence need not be reasonable. Employees wishing to take community service leave under the NES must give notice to the employer of their absence as soon as is reasonable practicable, and must provide evidence to satisfy a reasonable person that the absence was due to the employee engaging in an eligible community service activity.

Community service leave will generally be unpaid under the NES, except in the case of jury service for an employee who is not a casual employee, where the employee will be entitled to their base rate of pay (ie exclusive of incentives, loadings, allowances, or overtime or other penalty rates) for the first 10 days of jury service. ie, in relation to jury service leave, an employee (other than a casual employee) is entitled to ‘make-up pay’ which is the difference between what the employee receives in respect of jury service (not including any expense related allowances) and the employee’s base rate of pay for their ordinary hours of work for the time that the employee is absent on jury leave.

Whilst the AFPCS does not provide for community service leave, other protections are currently afforded to employees for carrying out a voluntary emergency management activity under the WR Act (generally around protection from termination of employment).

7. Long service leave
The NES refers to other instruments to determine the long service leave entitlement of an employee. Whilst there is a desire for a uniform long service leave entitlement for employees throughout Australia, the NES appears to retain the current entitlements for employees. Until a uniform long service leave NES is developed, long service leave entitlements in pre-modernised awards, NAPSAs or state or territory laws will be preserved to ensure they cannot be bargained away.

8. Public holidays
Employees will be entitled to be absent from work on a day or a part-day that is a public holiday under the NES, and is also entitled to be paid for his or her ordinary hours that would have normally been worked at their base rate of pay.  An employer will be able to request an employee work on a public holiday, but the employee may refuse the request if the request is not reasonable or the refusal is reasonable.

The NES sets out a number of considerations to determine whether a request to work or a refusal to work is reasonable, which are generally the same as the considerations under the WR Act. Importantly however, when determining whether a refusal to work on a public holiday is unreasonable, a workplace agreement, award or other industrial instrument, contract or policy which outlines the requirement to work on a public holiday does not have to be considered under the NES as a separate consideration, whilst under the WR Act currently it is a separate consideration.

9. Notice of termination of employment and redundancy pay
The NES provides for the same minimum notice periods to be afforded to employees as the WR Act on the termination of their employment. The NES confirms the requirement for the notice of termination of employment to be in writing. In addition, the NES clarifies the notice that is to be provided to an employee where they work for a business which has been transmitted.

Importantly, the NES will introduce for the first time a statutory entitlement to redundancy pay for permanent employees whose employer employs 15 or more employees (including certain casual employees). The entitlement to redundancy pay reflects the Australian Industrial Relations Commission (Commission) standard, which is a scale of between 4 and 16 weeks depending upon the employee's period of continuous service with the employer.
Certain employees will be excluded from the NES redundancy pay entitlement, including: (a) an employee employed for a specific period of time or for a specific task; (b) an employee serving a period of probation or a qualifying period of employment; (c) an employee who is terminated for serious misconduct; (d) an employee with less than 12 months continuous service; (e) casual employees; (f) seasonal employees; (g) trainees; (h) apprentices; (i) an employee covered by a modern award with an industry specific redundancy scheme; or (j) other employees who may be prescribed in the future.

Also, the NES redundancy pay entitlement will not apply in the case of a transmission of business where the employee accepts employment with the new employer, or rejects an offer of employment with the new employer which recognises the employee's service with the old employer, and the terms and conditions of employment offered to the employee are substantially similar to, and no less favourable than, their current terms and conditions of employment.

The proposed redundancy pay NES provides that an employee is entitled to redundancy pay if the employee’s employment is terminated at the initiative of the employer because the employer no longer requires their job to be done by anyone because of the insolvency or bankruptcy of the employer.  However there is no entitlement to redundancy if the employee is employed by a business with fewer than 15 employees. 

10. Fair Work Information Statement
Fair Work Australia (FWA), the body to replace the Commission and the Australian Fair Pay Commission, is required under the NES to publish a statement called the Fair Work Information Statement (Statement). The Statement will detail various matters including: (a) the NES; (b) modern awards; (c) agreement making; (d) the right to freedom of association; (e) the role of FWA; and (f) any other matters which may be prescribed in the future.

The NES will require an employer to provide each employee with a copy of the Statement before or as soon as practicable after the employee commences employment.