Busting 5 Myths of Employment Law

Employment law can be a minefield for both employees and employers alike.

Many people are unsure of their rights and obligations and are swayed by inaccurate advice.  We bust five myths of employment law.

1. The award does not apply when employees are paid above award

The provisions of an award will usually still apply even where an employee is paid more than the minimum rate set by an applicable modern award.  Certain “high income employees” can be an exception.  All entitlements under the award concerning hours of work, holidays, termination, overtime etc still apply.  It may also be that penalties are calculated on the higher rate of pay. For example, calculation of time and a half or double time for weekend work may be calculated at the higher contractual rate not the award rate.

2. Annual leave does not accrue for employees working long rosters with long breaks from the workplace  (eg. employees work a roster of 14 days on 14 days off)

The 14 day off period is not annual leave.   All employees are entitled to a minimum 4 weeks annual leave.  This entitlement is increased by 1 week (to 5 weeks) for shift workers.  Annual leave entitlement accrues throughout the year and accumulates from year to year.  If an employee has accrued annual leave which has not been taken, it must be paid out on termination of employment.  Payment of accrued annual leave on termination is at the same rate as if the employee is taking the annual leave.  Therefore, any leave loading payable must also be paid on termination.

3. Annual leave can always be cashed out

Annual leave can only be cashed out in accordance with the Fair Work Act 2009.

The Fair Work Act 2009 states that a modern award or enterprise agreement may make provision for cashing out of annual leave as long as a balance of 4 weeks annual leave remains.   Most modern awards do not contain any provision permitting the cashing out of annual leave.

An agreement/award free employee may agree with his/her employer to cash out accrued annual leave as long as a balance of 4 weeks annual leave remains.

Each time annual leave is cashed out; it is to be recorded by written agreement between the employer and employee.  The payment must be what the employee would have received had he/she taken annual leave.

4. Casual employees who work like permanents are still casuals if that’s what they are called and how they are paid

Casual employment is employment which is on an informal, uncertain and irregular basis.  Employees who work a regular systematic hours and have an expectation of ongoing employment are likely to be deemed permanent employees.

Even where a contract of employment states the employee is a casual and the employee receives casual loading, they may be deemed permanent employees.

If a casual employee is deemed to be permanent he/she may have an entitlement to statutory payments such as personal/carers leave and holiday leave even where he/she has received casual loading.

Additionally, the employee may have access to a claim for unfair dismissal (in certain circumstances).

5. The length of notice I have to give is the same as my pay period

Pay frequency is not an indication of the notice requirements to terminate the employment relationship.

The length of notice required to terminate employment is as agreed between the employer and the employee (usually in a contract or appointment letter).  If there is no agreement then “reasonable” notice must be given.

However, this is subject to the National Employment Standards (NES), and awards, which set out the minimum applicable notice period, depending on period of service and age.  As the NES and awards set out the minimum notice period a contract of employment cannot enforce a shorter period.  However, particularly where “reasonable” notice applies, the required notice period could be longer (and even substantially longer) than the minimum notice periods set out in the NES or an award.  This is one reason why a written employment agreement is essential.