What is the Australian Fair Pay Commission & Standard – Does It Affect Your Business?

The Australian Fair Pay Commission came into being on 14th December 2005 and takes over from the Australian Industrial Relations Commission in its wage setting capacity.

The ‘standard’ equates to the minimum conditions of employment that an employee is entitled to working in Australia

The ‘standard’ applies to constitutional corporations (incorporated) from 27 March 2006.

For non constitutional corporations (unincorporated) employee relations matters will be subject to the various state industrial relations commissions. You could say there is going to be double standards and this could well effect your business.


The standard replaces the safety net of minimum wages and conditions and preserves and establishes minimum conditions of employment for;

1 Annual Leave

2 Annual Leave Loading

3 Personal / Carers Leave

4 Maximum ordinary hours of work

5 Minimum wages

6 Parental Leave

Minimum Wages

1 Federal Minimum Wage ($12.75 per hour)

2 Minimum Award Classification rates of pay

3 Minimum wages for juniors, trainees, apprentices and the disabled

4 Minimum wages for Piece Workers

5 Minimum Casual Default Loading of 20%

Annual Leave

1 4 weeks annual leave for fulltime workers

2 5 weeks annual leave for shift workers

3 Annual leave is cumulative and accrued monthly

4 Proportionate annual leave

Cashing Out Annual Leave

1 Employees can cash out up to two weeks annual leave by written request if they are subject to an Australian Workplace Agreement or Federal Collective Agreement.

2 An employer cannot insist on an employee ‘cashing out leave’

3 There are potential Tax Implications

4 There are potential Workplace Health & Safety Concerns (Fatigue)

5 The employer can insist that the employee take annual leave for operational purposes if the business is subject to shut down over a season (Christmas period).

Parental Leave

1 12 months unpaid parental leave after 12 months continuous service

2 Casual workers included where they have a reasonable expectation of ongoing employment.

Personal / Carers Leave

1 10 days per year paid leave- cumulative

2 2 days unpaid leave for emergencies – casual employees are included

3 Unpaid leave can be taken in broken periods i.e. half day

4 Employers have the right to request documentary evidence of leave taken – medical certificate or if unable to get employee to sign a statutory declaration.

Compassionate Leave

1 2 days paid leave to visit the serious ill, a dying relative or attend a funeral

Hours Per week

1 38 hours per week ordinary hours

2 Hours can be averaged out (seasonal requirements)

3 Employees can be requested to work extra reasonable hours

4 Overtime and penalty rates remain part of awards and agreements unless removed through bargaining.

While naturally the ‘devil’ is in the detail it is important to recognise that these rules may be subject to change over the next 6 months.

Employers need to take expert advice when considering the implications to their business as the implication are Australia wide.

If you are unsure as to how the ‘standard’ applies to your business or whether you are an incorporated or unincorporated entity you may need to speak with us.

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