Is the NES ready for the future?

A recent public hearing (26 March) regarding the standing committee on employment, workplace relations, skills and training’s inquiry into the operation and adequacy of the National Employment Standards (NES) under the Fair Work Act revealed the biggest priorities of the committee itself and relevant bodies.

Representatives from the Department of Employment and Workplace Relations (DEWR) and the Fair Work Ombudsman (FWO) were present at the hearing to give evidence and respond to questions regarding the ongoing inquiry, with the biggest takeaways regarding compliance, support and improvement.

Diab Harb, first assistant secretary in the employment conditions division within the DEWR, highlighted that the National Employment Standards are, by nature, “a set of minimum standards” that “obviously sits within a system which we see as a pretty clear and simple layer of entitlements”.

He identified the NES as the foundation of entitlements from which the national minimum wage, modern awards and additional enterprise agreements build upon.

FWO’s executive director of policy, Anthony Fogarty, outlined the dual role of the agency as “providing advice and ensuring compliance with the Fair Work Act.

On the accessibility of the NES, Fogarty referenced the FWO website, employer advisory service, Fair Work infoline, and a helpline dedicated to small businesses, which “are an enduring priority for us as well”.

He similarly categorised the NES as a safety net with a core set of worker entitlements from which other protections stem.

While Fogarty acknowledged that “it’s difficult for us to holistically say that everyone understands the NES”, he suggested the sheer number of inquiries (1.1 million) show a significant fluency of the framework. He added: “Of those 1.1 million, we estimate around 25 per cent of those inquiries, roughly 275,000, relate to the NES.”

The top five NES inquiry categories were annual leave, public holidays, notice of termination, personal/carer’s leave, and redundancy.

However, long-service leave, which was referenced in numerous submissions to the standing committee, was also brought up in relation to technical issues that workers face.

Anshu De Silva Wijeyeratne, DEWR assistant secretary of equity, entitlements and international branch, explained that “long-service leave, as reflected in the NES, is that the current settings were meant to essentially be a set of transitional arrangements pending the development of a national long service leave standard”.

He said: “An employee who’s covered by a pre-modern award is entitled to long-service leave in accordance with those terms.”

In short, because the long-service leave wasn’t fully standardised when the Fair Work Act 2009 was created, the system uses a hierarchy to figure out which laws apply – this could be an agreement-based priority – the older, specific workplace agreement, pre-modern award entitlement – the federal award, or state and territory safety net.

As such, it can “lead to a variety of different outcomes, depending on the specific circumstances, and [you’ll] see that reflected in the submissions that have been put forward to the committee”.

This was identified as fairly complex and not ideal given its supposed universal application.

De Silva Wijeyeratne identified two policy implications of this complexity: the difficulty of determining the relevant entitlement and the inconsistent and potentially inequitable outcomes. It was agreed that, while there may have been an intention to achieve equity, this may need to have a renewed focus going forward.

Similarly, a number of submissions discussed perceived inconsistencies surrounding parental leave. Currently, the imposition of a 12-month continuous service requirement before accessing parental leave, as outlined in the Fair Work Act, exists concurrently with the return-to-work guarantee under section 84, for people who’ve taken unpaid parental leave under the NES.

It was noted that various submissions argued that this would largely affect female workers should they need to take leave, with their jobs becoming vulnerable and only conditionally protected.

De Silva Wijeyeratne agreed that this has been raised as a policy issue over the years.

Another issue that was discussed is the awareness among young people and employees of their protections and rights.

Similarly, the relevance of the NES was discussed, with the point being raised that the NES hasn’t been holistically reviewed since 2012. In addition, it was questioned whether contemporary concerns – such as working from home, increased leave entitlements for parents and victims of domestic violence, and changes within casual and part-time work – are being considered.

Alanna Maddock, DEWR assistant secretary within the safety net branch, noted that while the National Employment Standards remain a relevant and vital set of entitlements and protections, “this is probably an opportunity for this inquiry to consider, given some of those changes in the workforce since 2009, those questions around whether access and eligibility for the standards are still meeting those community expectations of what minimum protections should be at its core”.

She said: “It’s also important for the NES to remain fit for purpose in promoting the object of the Fair Work Act, which, in 2022, [was] amended to include the promotion of gender equality and job security as well.”

“As I said, this does provide an opportunity for some of those considerations that are coming through from the proposals as to how the NES can make sure it’s meeting those community standards and expectations.”

De Silva Wijeyeratne added that entitlements around flexible work and unpaid parental leave have been addressed by the government, but concurred that “there’s an opportunity to take a more holistic look overall”.

Maddock said: “Going off some of the more substantive changes that have been made in terms of paid family and domestic violence leave, that that really has come about based on, over time, how it’s developed from being an award based provision, an unpaid provision, and then been built up through that consensus and strong evidence base to support it being part of those minimum conditions of employment.”

“This is a good example of how the foundations of the NES have been able to be influenced by changes in expectations.”

Further issues raised included the accessibility of the NES for small businesses run by those with less English fluency, whether the NES is equipped to protect workers among increased job displacement due to AI and automation, and cracking down on organisational non-compliance, especially when it affects casual workers.

As such, the general consensus was that the NES was relevant and vital, but in need of fine-tuning.

On the hearing, Emily Baxter, partner at Kingston Reid, said that it “reaffirmed its role as the foundational safety net in Australia’s workplace relations system, while also highlighting the practical compliance challenges employers and HR practitioners continue to navigate, particularly in the context of an increasingly complex modern employment framework”.

“Organisations will need to remain vigilant in ensuring their systems and processes remain aligned with activities that interplay with evolving workplace conditions, such as changes in workforce composition or flexible work practices,” Baxter said.

“It appears that any future reform to the NES is likely to be incremental – targeted technical adjustments aimed at simplifying how entitlements operate in practice, rather than wholesale structural reform.”