Fair Work Compliance Checklist

Business Details and Structure

Confirm your business structure and legal status to ensure you meet your obligations under the Fair Work Act 2009. The type of entity you operate determines who is responsible for paying staff and how you handle tax and superannuation.

Australian Business Number (ABN) You must hold a current ABN to operate a business in Australia. Record your 11-digit ABN here. Verify this number is active on the Australian Business Register. If you operate as a company, you also need an Australian Company Number (ACN) and Tax File Number (TFN). These identifiers are essential for Single Touch Payroll reporting to the Australian Taxation Office (ATO).

Business Name If you trade under a name different from your personal or company legal name, you must register it with the Australian Securities and Investments Commission (ASIC). List your registered business name exactly as it appears on the ASIC register. Ensure your display name on customer quotes, invoices, and websites matches this registered name to avoid penalties.

Legal Structure Select the business structure that applies to your operations.

• Sole Trader: You are the individual owner legally responsible for all aspects of the business.
• Company: The business is a separate legal entity. Directors have duties under the Corporations Act 2001.
• Partnership: An association of people or entities running a business together, but not as a company.
• Trust: An entity that holds property or income for the benefit of others.

This structure dictates who is the 'employer' for Fair Work purposes. It also affects your personal liability for employee entitlements.

Workers Compensation Insurance You must hold a current Workers Compensation policy if you engage workers. Requirements vary by state and territory.

• In New South Wales, check your status with icare.
• In Victoria, ensure you are registered with WorkSafe Victoria.
• In Queensland, verify your coverage with WorkCover Queensland.

Even if you only engage subcontractors, you may still need a policy depending on your state legislation and the nature of the work performed. Confirm your policy details are up to date and the Certificate of Currency is accessible.

Payroll Tax Registration If your total Australian wages exceed the threshold set by your state or territory revenue office, you must register for Payroll Tax. Thresholds differ between jurisdictions. Keep your state revenue client number and registration date on hand for auditing purposes.

Registered Industrial Instrument Identify the Modern Award or Enterprise Agreement that covers your employees. This instrument sets out minimum wages, penalties, and loadings. Use the Fair Work Ombudsman Find my Award tool to confirm the correct award for your trade or industry. Recording this ensures you calculate pays correctly under the Fair Work Act 2009.

Step 1: Verify the Modern Award

You must identify the Modern Award that covers each employee. Most employees in the building and construction industry are covered by the Building and Construction General On-site Award 2020. Other tradespeople may fall under different awards like the Electrical, Electronic and Communications Contracting Award 2020 or the Plumbing and Fire Sprinkler Services Award 2020.

Do not assume an employee is "award-free." If you get this wrong, you risk significant back-pay claims. Use the Fair Work Ombudsman’s Award Finder tool or pay your registered employer association for advice. Keep a record of which award you selected for each employee and why. This record is vital if the Fair Work Commission audits your business.

Step 2: Determine the Correct Classification Level

Every Modern Award has a classification structure. You must assign the correct level based on the duties the employee actually performs, not just their job title. Check the award definitions carefully.

For example, under the Building and Construction General On-site Award 2020, a Level 1 worker is usually a labourer or trainee, while a Level 3 worker is a qualified tradesperson. You must pay the minimum hourly rate for that specific level. If an employee performs duties across multiple levels, they must be paid at least the highest rate applicable to those duties.

Review the duties in the award schedule. Compare them against the daily tasks of your staff. If you employ an apprentice, you must use the appropriate apprenticeship wage rates in the award based on their school year and completion of modules.

Step 3: Cross-Reference Employment Contracts

Check your written employment contracts against the award. The contract must clearly state the award and the classification level. A contract cannot provide less than what the Award or the National Employment Standards (NES) provides. If your contract says "Tradesperson" but the rate of pay is lower than the Award rate for a tradesperson, the contract terms are unlawful. You must pay the Award rate.

Step 4: Review Junior and Trainee Arrangements

If you employ juniors under 21 years of age, ensure you apply the correct percentage of the adult rate as defined in the relevant Award. For trainees, you must use the correct training wage schedule based on the qualification level and the duration of the training contract.

Step 5: Annual Wage Reviews

The Fair Work Commission updates minimum wage rates annually on 1 July. You must update your payroll systems to reflect these new rates. Relying on last year's pay rates is a breach of the Fair Work Act 2009.

Base Rates of Pay

You must verify the base rate of pay for every employee. This rate is not a figure you decide on your own. It is the minimum rate set out in the relevant modern award for your industry or the registered enterprise agreement that applies to your business. If no award or agreement covers the work, you must pay at least the National Minimum Wage as set by the Fair Work Commission.

Check the employee’s classification within the award. Modern awards contain detailed classification descriptions. For example, a tradesperson might be classified as a Level 1 or Level 2 depending on their qualifications and the complexity of the work. Ensure the pay rate matches the correct classification. Rates usually increase annually on 1 July. You must apply these increases from the first full pay period on or after that date.

Casual Loading

Casual employees are entitled to a higher hourly rate than full-time or part-time employees to make up for the lack of benefits like annual leave and sick leave. This is called the casual loading. Most modern awards prescribe a casual loading of 25 percent. You must apply this percentage on top of the base rate for the correct classification.

Be aware that some registered enterprise agreements have different casual loadings. You must follow the agreement. In addition to the loading, you must also pay any applicable allowances, penalties, and overtime to casual employees. A casual rate is not a flat fee that covers all situations.

Overtime Rates

Overtime applies when an employee works beyond their ordinary hours of work. Ordinary hours are usually 38 hours per week, but the specific spread of hours is defined in the relevant award. For example, an award might state ordinary hours are 7am to 6pm Monday to Friday. Any work outside these times is often considered overtime.

The rate for overtime is typically time and a half for the first two or three hours and double time thereafter. However, this varies significantly between awards. Some awards have a daily overtime trigger after eight hours of work. You must consult the specific overtime clause in the modern award or enterprise agreement. An employee cannot agree to "cash out" overtime unless a registered agreement allows it or the employee is a high income earner under specific sections of the Fair Work Act 2009.

Weekend and Public Holiday Penalties

Weekend work attracts penalty rates to compensate employees for working unsociable hours. These rates are usually higher than the base rate and higher than casual loading if the employee is casual.

• Saturdays: Commonly time and a half.
• Sundays: Commonly double time.
• Public Holidays: Generally double time and a half or a minimum payment for a shift.

Check the penalty rates in the modern award. Some awards, particularly those for the building and construction industry, have specific rates for early morning starts and night shifts. You must calculate these penalties correctly on top of the base rate. Failure to pay weekend penalties is a common breach of the Fair Work Act 2009 and can lead to significant back-pay claims.

Pay Slips

You must provide a pay slip to each employee within one working day of paying them. You can issue this electronically or on paper, but it must be in a format that is accessible and printable. If you send it via email or text, ensure the employee can open and save it.

Every pay slip must include specific details as set out in the Fair Work Regulations 2009. You must clearly state your business name and the employee’s name. Include the date of payment and the pay period it covers. The gross pay and net pay must be visible. Detail any loadings, bonuses, or allowances separately. You must also list the amount paid for superannuation and either the fund name or the employee's super account number.

If you make any deductions, the pay slip needs to show the amount and the category. Common deductions include tax or salary sacrifice arrangements. You cannot make deductions unless the employee agrees in writing or the Fair Work Act 2009 specifically allows it.

Timesheets and Rosters

You must keep records that accurately show the hours worked by your employees. This is critical for tracking overtime, penalty rates, and leave entitlements. You can use time clocks, apps, or manual logbooks, but the system must be reliable.

Under the Fair Work Regulations 2009, you must keep a record of the start and finish times for any employee who is paid an hourly rate. This helps prove you paid the correct base rate and any applicable weekend or public holiday penalties.

General Record Keeping

Keep all employment records for a minimum of seven years. This is a non-negotiable requirement under Australian law. The seven-year period starts from the day the record is made. If an employee leaves, you still need to keep their records for seven years.

Secure Storage

You must store records in a secure and accessible format. If you keep digital records, back them up regularly. Protect them from unauthorised access, tampering, or loss. If a Fair Work Inspector requests access, you must provide the records within strict timeframes.

What to Record

For every employee, you need a complete set of records. This includes their name, address, and occupation. You must record the commencement date and their employment type, such as full-time, part-time, or casual. Keep a copy of their signed Fair Work Information Statement. The rate of pay must be documented, including how you calculated it to ensure it meets the relevant Modern Award or Enterprise Agreement.

You must also track leave balances. Record the amount of annual leave, personal leave, and long service leave accrued. When an employee takes leave, log the date taken and the remaining balance. Keep records of any superannuation contributions you make, showing the amount and the date you paid it into the fund.

Tax and Superannuation

Single Touch Payroll (STP) Reporting

You must report employees’ tax and super information to the Australian Taxation Office (ATO) every time you pay them. This system is called Single Touch Payroll (STP). Under the Taxation Administration Act 1953, you cannot wait until the end of the financial year to report wages.

For each pay run, you need to send the following data directly to the ATO through your compliant payroll software:

• Gross wages and tax withheld.
• Superannuation liability.

Ensure your software is STP Phase 2 compliant. This requires more detailed information, such as employee income types and withholding calculations. You must provide payslips to your employees within one working day of payment. These slips must detail the amount of tax withheld and the super contribution amount.

Quarterly Superannuation Guarantee

You are legally required to pay superannuation contributions for all eligible employees. This is dictated by the Superannuation Guarantee (Administration) Act 1992. The current minimum contribution rate is 11.5 per cent of an employee’s ordinary time earnings (OTE). You must check the ATO website regularly, as this rate is scheduled to increase.

Key Payment Rules:

• Due Date: Payments are due quarterly. The cut-off dates are the 28th of October, January, April, and July.
• Super Choice: If an employee does not choose a specific super fund, you must pay their super into your employer-nominated fund. This fund must be a complying fund that offers a MySuper product.
• Clearing House: If you have fewer than 19 employees or a total annual payroll of less than $1 million, you can use the ATO’s Small Business Superannuation Clearing House. This service lets you pay super to all employees in one single transaction.

Non-Negotiable Deadlines If you do not pay the full amount by the quarterly deadline, you must pay the Superannuation Guarantee Charge (SGC). This charge is not tax-deductible and includes interest and an administration fee. This applies even if you are only one day late.

You must pay super directly to the fund. You cannot pay contributions to the employee as a cash substitute or use it to offset their owed wages. Record these payments clearly in your bookkeeping software for the end of financial year reconciliation.

Work Health and Safety Obligations

You must ensure the business meets its primary duty of care. This means providing and maintaining a work environment that is without risks to health and safety. This requirement is non-negotiable under the Work Health and Safety Act 2011 (Cth) or equivalent state legislation.

Check that you have an up to date WHS policy. This document must outline how you manage risks. For tradespeople, this includes specific procedures for working at heights, using hazardous chemicals, and operating heavy machinery. You must conduct regular risk assessments for every job site. Record these assessments and keep them accessible.

Verify that all workers have completed relevant safety training. Induction training is mandatory for new employees. You must provide personal protective equipment (PPE) at no cost to the worker. Inspect this equipment regularly to ensure it is in good working order.

You need a clear process for reporting incidents. If an incident occurs, you must notify Safe Work Australia or your state regulator immediately if it results in serious injury or death. Failure to notify can result in heavy fines.

Termination Procedures

Terminating an employee requires strict adherence to the Fair Work Act 2009. You must provide the correct notice period based on the employee's length of continuous service. Using the wrong period can lead to a claim for unfair dismissal.

Check the Fair Work Ombudsman pay calculator or the National Employment Standards (NES) for current entitlements. Generally, the notice period ranges from one week to four weeks. Employees over 45 years old with at least two years of service are entitled to an additional week.

You must pay out all accrued annual leave and long service leave on termination. Final pay must be processed within seven days of the employment ending, or according to the relevant award or registered agreement.

Provide the notice in writing. The letter should state the date of termination and the reason for dismissal. If the dismissal is based on serious misconduct, such as theft or violence, no notice period is required. You must have evidence to support the misconduct claim before taking this step.

Review the Small Business Fair Dismissal Code if you employ fewer than 15 people. This code provides a checklist to ensure the dismissal is fair. If you follow the code, it creates a defense against an unfair dismissal claim. Always keep records of the termination process and the reasons for your decision.