The Fair Work Act is the main law governing employment in Australia. If you employ people, it sets the floor you have to meet, no matter how small your business is.

The two parts that do the work

Two parts of the system handle most of the day to day.

The National Employment Standards, or NES, are minimum entitlements that apply to most employees: maximum weekly hours, the various kinds of leave, public holidays, notice of termination and redundancy, and the right to request flexible working. You can offer more than the NES, never less.

Modern awards sit on top for particular industries and occupations. They set minimum pay rates, penalty rates, overtime, allowances and more. Most small business employees are covered by an award.

It applies to you regardless of size

The Act applies whether you employ one person or one hundred. There are some tailored rules for small business, such as the Small Business Fair Dismissal Code, which can protect smaller employers who follow a fair process. But the core obligations still apply, and Fair Work actively recovers underpayments every year.

Recent changes worth knowing

The Act has been through significant reform. A few that matter for small business:

  • Since 26 August 2024, a new test decides who is an employee and who is a contractor, based on the whole relationship rather than just the contract.
  • A right to disconnect lets employees refuse unreasonable out-of-hours contact. It applies to small business employers from 26 August 2025.
  • Intentionally underpaying employees became a criminal offence from 1 January 2025. Genuine mistakes are treated differently from deliberate underpayment, which is part of why getting your setup right matters.

The practical takeaway

  • The NES and any relevant award set your minimum obligations.
  • Written contracts should reflect at least those minimums and the real arrangement.
  • Termination and dismissal have process rules worth understanding before you need them.
  • When something is unclear, checking early is far cheaper than fixing it later.

You do not need to memorise the legislation. You need the parts that apply to your business set up correctly, which is exactly what a Health Check is for.