Worker rights in Victoria, employer obligations under federal and state law

If you employ staff in Victoria, you answer to two sets of laws at the same time. The Fair Work Act 2009 (Cth) sets the federal baseline for pay, leave, records and dismissal. Victorian laws add separate duties for workplace health and safety, equal opportunity and long service leave. Getting either set wrong is expensive. Underpayments attract civil penalties, and in Victoria a dishonest underpayment is a crime that can put a director in prison.

This guide explains who the obligations apply to, what each duty requires, what the penalties are, and the practical steps you can take to stay on the right side of the law.

Who the workplace obligations apply to

Most Victorian private-sector employers are national system employers under the Fair Work Act 2009 (Cth). That includes every Pty Ltd company and most partnerships, trusts and sole traders. National system employers must meet the National Employment Standards (the NES), any applicable modern award or enterprise agreement, and the Act's rules on records, pay slips, deductions and dismissal.

Victorian laws then add a second layer for employers with staff working in the state:

Workplace safety: the Occupational Health and Safety Act 2004 (Vic) applies to employers operating in Victoria.
Equal opportunity: the Equal Opportunity Act 2010 (Vic) applies to Victorian workplaces.
Long service leave: the Long Service Leave Act 2018 (Vic) sets entitlements for employees whose long service leave is not otherwise dealt with by a federal award or enterprise agreement.

Privacy is the one area where a turnover threshold matters. Under s 6D of the Privacy Act 1988 (Cth), a business is a small business if its annual turnover for the previous financial year was $3 million or less. Small businesses are generally exempt from the Australian Privacy Principles, although the exemption does not apply in some situations, for example where the business trades in personal information or is a health service provider. Separately, s 7B(3) exempts private-sector employers from the APPs for acts or practices directly related to a current or former employee's employment record.

If you are not sure whether your business sits inside the federal system, the Victorian system, or both, take advice early. The obligations below assume the usual case: a private-sector employer in Victoria.

The baseline: the National Employment Standards

The NES is a set of minimum entitlements that applies to every national system employee. Section 44 of the Fair Work Act 2009 (Cth) makes it unlawful for an employer to contravene any NES provision, and it is a civil remedy provision, which means the Fair Work Ombudsman or an employee can seek penalties. The NES covers:

Maximum weekly hours: 38 hours for a full-time employee, with additional hours permitted only if they are reasonable (s 62).
Leave: annual leave, paid personal and carer's leave, compassionate leave, family and domestic violence leave, and unpaid parental leave.
Flexible work: eligible employees can request flexible working arrangements, and you must consider the request properly and respond within the required time.
Public holidays: paid public holidays, with substitution rules where an award or agreement allows.
Ending employment: minimum notice of termination and redundancy pay.
Information statements: the Fair Work Information Statement for new employees, and the Casual Employment Information Statement for casuals.

Most employees are also covered by a modern award or enterprise agreement that sets minimum pay rates, classifications, allowances, penalty rates and overtime on top of the NES. The NES is a floor, not a ceiling. Where an award, agreement or contract gives more, the higher standard applies.

Pay correctly and make only lawful deductions

The two most common causes of underpayment are the wrong award classification and unpaid overtime, penalties or allowances. For every role, identify the correct modern award and classification before you advertise, and review the position again at each annual wage review and whenever the award changes. Pay superannuation guarantee contributions on ordinary time earnings at the legislated rate, and pay them on time.

Deductions from wages are tightly controlled. Under s 324 of the Fair Work Act 2009 (Cth), you can deduct an amount from an employee's pay only if:

the employee has authorised the deduction in writing and it is principally for the employee's benefit, or
the deduction is authorised by an enterprise agreement, a modern award or an order of the Fair Work Commission, or
the deduction is authorised by a law of the Commonwealth, a state or a territory, or by a court order.

A deduction that does not fit one of those categories is unlawful, even if the employee agreed to it verbally. A verbal agreement to a deduction is not an authorisation under s 324.

Keep records for seven years and issue compliant pay slips

Employers must keep time and wages records for seven years. The records must be legible, in English and readily accessible to a Fair Work Inspector, and they must cover employer and employee details, pay rates and gross and net amounts paid, deductions, hours worked including overtime, leave taken and balances, superannuation contributions, and how the employment ended.

Pay slips must be given to the employee within one working day of pay day. A pay slip must show the employer's and employee's names, the employer's ABN (if any), the pay period, the date of payment, gross and net pay, the hourly rate and hours worked if the employee is paid by the hour, loadings, allowances and penalty rates, any deductions, and superannuation contributions. There is no legal requirement to show leave balances on a pay slip, although it is best practice to do so. Fair Work Inspectors can issue infringement notices for missing or incorrect pay slips, and it is unlawful to give a pay slip you know is false or misleading.

Provide a safe workplace under Victorian OHS law

Under s 21 of the Occupational Health and Safety Act 2004 (Vic), an employer must, so far as is reasonably practicable, provide and maintain a working environment that is safe and without risks to health. The Act spells that general duty out as specific obligations to:

provide and maintain safe plant and systems of work,
make arrangements for safety in the use, handling, storage and transport of plant and substances,
keep each workplace under your management and control in a condition that is safe and without risks to health,
provide adequate facilities for the welfare of employees, and
provide the information, instruction, training and supervision employees need.

WorkSafe Victoria regulates and enforces the Act. In practice, compliance means identifying hazards, assessing risks, putting controls in place, training and supervising staff, and consulting employees about health and safety. WorkSafe's current enforcement approach also treats psychosocial hazards such as bullying, excessive workload and work-related stress as risks that must be managed like any other hazard.

Take positive steps against discrimination and sexual harassment

The Equal Opportunity Act 2010 (Vic) prohibits discrimination in employment on the basis of protected attributes and prohibits sexual harassment and victimisation. It also imposes an active duty on employers. Under s 15, an employer must take reasonable and proportionate measures to eliminate discrimination, sexual harassment and victimisation as far as possible. The size of your business, its resources and its operational priorities are relevant to what is reasonable and proportionate, but the duty is not optional, and the Victorian Equal Opportunity and Human Rights Commission can investigate compliance with it without waiting for a complaint.

Sexual harassment is defined in s 92 as an unwelcome sexual advance, an unwelcome request for sexual favours, or other unwelcome conduct of a sexual nature, in circumstances in which a reasonable person would have anticipated that the other person would be offended, humiliated or intimidated. Practical steps include clear policies, training, accessible reporting pathways, and dealing with complaints promptly and fairly.

Track long service leave under the Victorian scheme

Under s 6 of the Long Service Leave Act 2018 (Vic), an employee who completes seven years of continuous employment with one employer becomes entitled to long service leave on ordinary pay equal to one sixtieth of their total period of continuous employment, less any long service leave already taken. This is a separate Victorian entitlement that operates alongside the federal system, and it can apply to employees who have no long service leave entitlement under a federal instrument. If an employee's long service leave is dealt with by a federal award or enterprise agreement, check what that instrument provides, because it may displace or supplement the state scheme. Keep leave records accurate from day one; the seven-year clock starts when the employee starts.

Use fair process when employment ends

Ending employment is where process failures become claims. Under s 387 of the Fair Work Act 2009 (Cth), the Fair Work Commission must weigh a defined list of factors in deciding whether a dismissal was harsh, unjust or unreasonable, including whether there was a valid reason related to the employee's capacity or conduct, whether the employee was notified of that reason and given an opportunity to respond, whether they were allowed a support person, whether they were warned about unsatisfactory performance, and the size of the employer's enterprise and its human resources expertise.

If a dismissal is found to be unfair, the Commission can order reinstatement or compensation, and an application must be made within 21 days of the dismissal taking effect. For redundancy, make sure it is genuine, consider redeployment, and pay the correct notice and redundancy entitlements. The Fair Work Act also protects employees from adverse action linked to a workplace right, such as making a complaint about pay, so respond to grievances without retaliation. Document each step as you go.

What happens if you get it wrong

The consequences depend on which duty you breach:

Federal civil exposure: contravening the NES or other Fair Work Act provisions exposes you to civil penalties, back-pay orders and compensation. The Fair Work Ombudsman investigates underpayments and can take matters to court, and an unfair dismissal finding can cost reinstatement or up to six months' pay in compensation.
OHS penalties: a breach of the s 21 duty carries a maximum of 1,800 penalty units for an individual and 9,000 penalty units for a body corporate. Penalty units are indexed annually, so at current unit values the company maximum is a seven-figure fine. WorkSafe can also issue improvement and prohibition notices.
Criminal wage theft: under the Wage Theft Act 2020 (Vic), dishonestly withholding an employee's entitlements is a criminal offence. A body corporate faces up to 6,000 penalty units, an individual faces up to 10 years' imprisonment, and s 13 makes officers of a company liable to be prosecuted personally for an offence committed by the business.
Equal opportunity: the Victorian Equal Opportunity and Human Rights Commission can investigate the positive duty and conciliate complaints of discrimination and sexual harassment.
Records and pay slips: missing or incorrect records and pay slips can attract infringement notices and penalties, and in an underpayment dispute the court can require you to prove you did not underpay.

A working compliance checklist

Work through this checklist to stay on top of the obligations above:

Identify the award and classification for every role, and review them at each annual wage review.
Pay minimum rates, penalties, overtime, allowances and superannuation on time.
Keep time and wages records for seven years and issue pay slips within one working day.
Run risk assessments for physical and psychosocial hazards, and keep training records.
Maintain discrimination and harassment policies with clear reporting pathways.
Track leave accruals accurately, including Victorian long service leave.
Respond to flexible work requests in writing and within the required time.
Document performance issues, warnings and termination decisions.
Review payroll processes regularly to make sure every deduction is lawful.

When you need a lawyer

Employment law in Victoria is layered, and the instruments change constantly. A lawyer can help you map awards and classifications across your workforce, review employment contracts and workplace policies against the NES and any applicable award, audit payroll for underpayment and deduction issues, respond to regulator enquiries from the Fair Work Ombudsman, WorkSafe or the Commission, defend an unfair dismissal or general protections claim, and assess criminal wage theft exposure before it becomes a problem. The most cost-effective time to involve a lawyer is before you hire, before you restructure, or as soon as a complaint is made, not after a regulator letter arrives.

The line between a payroll error and a crime

Most underpayments in Victoria start as mistakes: a wrong classification, a missed penalty rate, a payroll software error. The Wage Theft Act 2020 (Vic) criminalises something narrower and more serious: dishonestly withholding an employee's entitlements. Two features of the offence catch employers by surprise. First, employee consent does not make a withholding lawful if it takes pay below the legal minimum. Second, directors and officers can be prosecuted personally for an offence committed by the business, even if the company itself is not prosecuted.

If you find an underpayment, fix it promptly, document the correction and the processes that let it happen, and get advice before the matter becomes adversarial. This week, have your payroll reviewed for classification and penalty rate errors. In Victoria, a pay mistake you fail to correct can cost you more than money.