Please note: This article is intended to be brief information only and should not be relied or acted upon as legal advice. You should always seek legal advice tailored to your own individual circumstances. Please also note that this article is current as at the date of publication and the law may have subsequently changed since.

National vs State system employers

This article addresses issues concerning the employment of employees by “national system employers” under the Fair Work Act 2009 (Cth) (Act).

Please be aware that some employees in Western Australia (ordinarily those employed by sole traders, partnerships and non-trading corporations) are employed by “state system employers”, being employers covered by the state industrial relations system under the Industrial Relations Act 1979 (WA).

If you are not sure whether an entity is a national or state system employer, you should seek legal advice.

What is a “safety net contractual entitlement”?

Section 12 of the Act defines “safety net contractual entitlement” to mean an entitlement under a contract between an employee and an employer that relates to any of the subject matters described in:

• subsection 61(2) (which deals with the National Employment Standards); or
• subsection 139(1) (which deals with modern awards).

Put more simply, a safety net contractual entitlement is generally a contractual right which deals with any of the matters mentioned in in subsections 61(2) and 139(1) of the Act.

The matters mentioned in subsections 61(2) and 139(1) of the Act, which can found a safety net contractual entitlement, include:

• maximum weekly hours;
• requests for flexible working arrangements;
• parental leave and related entitlements;
• annual leave;
• personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave;
• community service leave;
• long service leave;
• public holidays;
• notice of termination and redundancy pay;
• Fair Work Information Statement;
• minimum wages (including wage rates for junior employees, employees with a disability and employees to whom training arrangements apply), and:
  • skill‑based classifications and career structures; and
  • incentive‑based payments, piece rates and bonuses;
• type of employment, such as full‑time employment, casual employment, regular part‑time employment and shift work, and the facilitation of flexible working arrangements, particularly for employees with family responsibilities;
• arrangements for when work is performed, including hours of work, rostering, notice periods, rest breaks and variations to working hours;
• overtime rates;
• penalty rates, including for any of the following:
  • employees working unsocial, irregular or unpredictable hours;
  • employees working on weekends or public holidays;
  • shift workers;
• annualised wage arrangements that:
  • have regard to the patterns of work in an occupation, industry or enterprise; and
  • provide an alternative to the separate payment of wages and other monetary entitlements; and
  • include appropriate safeguards to ensure that individual employees are not disadvantaged;
• allowances, including for any of the following:
  • expenses incurred in the course of employment;
  • responsibilities or skills that are not taken into account in rates of pay;
  • disabilities associated with the performance of particular tasks or work in particular conditions or locations;
• leave, leave loadings and arrangements for taking leave;
• superannuation; and
• procedures for consultation, representation and dispute settlement.

What is the effect of a contractual entitlement constituting a “safety net contractual entitlement” under the Act?

Section 542(1) of the Act provides that, for the purposes of Part 4-1 of the FW Act (which deals with civil remedies), a safety net contractual entitlement of a national system employer or a national system employee, as in force from time to time, also has effect as an entitlement of the employer or employee under the Act.

The entitlement has effect under the Act subject to any modifications, by a law of the Commonwealth (including this Act or a fair work instrument), a State or a Territory, of the safety net contractual entitlement: section 542(2).

Section 542 of the Act is not a civil remedy provision. Accordingly, any breach of a safety net contractual entitlement will not result in a contravention of a civil remedy provision (save to the extent that the subject matter of the entitlement is separately a provision of the Act or an applicable industrial instrument). As such, the Federal Court and Federal Circuit Court are unable to impose pecuniary penalties under section 546 or otherwise make orders under section 545 in respect of any breach. Furthermore, any breach would be unlikely to result in any person being accessorily liable under section 550 of the Act.

However, the Federal Court and Federal Circuit Court can arguably also order the payment of interest up to judgment under section 547 of the Act, where a person has failed to pay an amount required to be paid under the “safety net contractual entitlement”.

Does a “safety net contractual entitlement” constitute a workplace right?

This issue has particular relevance for general protections claims alleging adverse action, in contravention of section 340(1) of the Act, as a result of an employee having, exercising or proposing to exercise a workplace right.

Whilst it seems to be accepted that the entitlement under section 543 of the Act to make an application to enforce a safety net contractual may constitute a “workplace right” (within the meaning of section 341 of the Act), the question as to whether a safety net contractual entitlement will itself be a workplace right within the meaning of the Act appears to remain unresolved.

Relevant cases dealing with safety net contractual entitlements in the context of adverse action claims include Martens v Indigenous Land Corporation [2017] FCCA 896 and Aitken v Virgin Australia Airlines [2013] FCCA 981.

Leaving aside those entitlements which constitute “safety net contractual entitlements”, contractual entitlements are not generally seen as workplace rights for the purposes of section 341 of the Act: Martens v Indigenous Land Corporation [2017] FCCA 896 at [17].

How do I enforce a “safety net contractual entitlement” under the Fair Work Act?

A national system employer or a national system employee may apply to the Federal Court or the Federal Circuit Court to enforce an entitlement of the employer or employee arising under section 542(1): section 543 of the Act.

Additionally, a Fair Work Inspector may apply to the court, on behalf of an employee, for an order in relation to an employer’s contravention, or proposed contravention, of a safety net contractual entitlement of the employee in certain circumstances where the Inspector is also seeking orders in respect of the employer’s contravention or proposed contravention of:

• a provision of the National Employment Standards; or
• a term of a modern award, enterprise agreement, workplace determination, national minimum wage order or equal remuneration order (see section 541 of the Act).

Whilst proceedings cannot be brought in “an eligible State or Territory Court” to enforce a “safety net contractual entitlement” under the Act, a party may still be able to bring a claim in such courts relying on contractual or other general law principles.

Further information

If you require advice or assistance, please do not hesitate to contact us.