Running a manufacturing business means running one of the most heavily regulated workplaces in Australia. Alongside the obvious operational pressures, you carry legal duties to every person who works for you: minimum pay and hours rules, leave entitlements, obligations to consider flexible work requests, and a personal duty to keep your factory or warehouse safe. Get any of these wrong and you face back-pay orders, court penalties and, since 2025, even criminal prosecution for deliberate underpayment.
Most of these duties come from three places: the Fair Work Act 2009 (Cth) (the FW Act) and its National Employment Standards, the modern award that covers your workforce, and the workplace health and safety legislation in the state or territory where you operate. This guide works through each obligation in turn, the consequences of non-compliance, and a checklist you can act on this week.
Who these obligations apply to
If your manufacturing business is a company, you are almost certainly a national system employer, which means the FW Act applies to you. The National Employment Standards (the NES) sit inside the FW Act and set the minimum conditions for every employee: maximum weekly hours, annual leave, personal and carers leave, parental leave, family and domestic violence leave, notice of termination, and more. You cannot contract an employee out of the NES; any agreement that tries to do so is unenforceable to the extent it undercuts the standard.
Most manufacturing and warehousing employees are also covered by a modern award. Roles on a factory floor or in a warehouse are commonly covered by awards such as the Manufacturing and Associated Industries and Occupations Award 2020, with office and clerical staff often under separate awards. The award sets minimum wage rates, classifications, overtime and penalty rates, allowances and conditions such as annual leave loading. The only reliable way to know which award covers a role is to check your obligations against the role's actual duties, not its job title, using the Fair Work Ombudsman's award finder.
Separately, every state and territory has passed workplace health and safety (WHS) laws based on the model Work Health and Safety Act. In NSW the relevant Act is the Work Health and Safety Act 2011 (NSW) (the WHS Act), and the other states and territories have equivalent legislation. These laws place the primary duty on your business as the person conducting the business or undertaking, and a separate personal duty on directors and officers.
Employment agreements
The FW Act does not require a written employment contract, but running a factory or warehouse without one is a risk you do not need to take. A written agreement records what you and the employee actually agreed: duties, hours, pay, location, leave arrangements, notice periods and any probation period. When a dispute later arises over hours or notice, the document is your best evidence of what was agreed.
Keep two things in mind. First, the agreement cannot set conditions below the NES or the applicable modern award, because those operate as a floor that overrides any inconsistent term. Second, only commit in writing to what you can actually deliver. A promise of regular overtime, a bonus or a notice period that you cannot honour creates a claim in its own right, on top of any underpayment claim.
A lawyer can draft or review your template employment agreement so that the terms match the award coverage, the classification, and the way you actually run your shifts, rather than copying a generic template.
Hours of work
Under s 62 of the FW Act, you must not request or require an employee to work more than 38 hours in a week unless the additional hours are reasonable. For part-time employees the limit is the lesser of 38 hours and their ordinary weekly hours, and the employee can refuse to work additional hours if they are unreasonable.
Whether additional hours are reasonable depends on the circumstances. Section 62 lists the factors that must be taken into account:
- Health and safety: any risk to the employee's health and safety from the extra hours, which matters most for employees doing physical labour on a production line
- Personal circumstances: the employee's personal circumstances, including family responsibilities
- Workplace needs: the needs of the workplace or enterprise
- Compensation: whether the employee receives overtime payments, penalty rates or other compensation
- Notice: how much notice was given of the extra hours, and any notice the employee gave that they could not work them
- Role and seniority: the nature of the role and the employee's seniority and responsibility
- Industry practice: whether employees in similar roles in the industry work such hours
- Agreements: what the employment agreement or award says about hours
The source of the employee's rights also matters: the award may set its own limits on ordinary hours, spans of hours and overtime triggers. Under most manufacturing awards, overtime at penalty rates applies to work beyond the ordinary hours or outside the agreed span of hours. Roster carefully and document the reasonableness assessment for any regular overtime.
Pay, entitlements and wage theft
Your pay obligations start with classification. Every employee covered by a modern award must be classified at the level that matches the work they actually perform, and paid at least the award rate for that classification, including overtime, penalty rates and allowances where they apply. Employees not covered by an award must be paid at least the national minimum wage.
Underpayment is not just a civil problem anymore. From 1 January 2025, the wage theft offence in the FW Act makes it a criminal offence to intentionally underpay an employee's wages or other entitlements. A corporation convicted of the offence faces a maximum penalty of $7,825,000, or three times the value of the underpayment if that is greater. Individuals face up to 10 years imprisonment and fines of up to $1,565,000. The offence targets intentional conduct, but deliberate choices like classifying workers incorrectly to pay them less, or knowing an employee is being underpaid and doing nothing, can expose you. Small businesses with fewer than 15 employees can rely on the Voluntary Small Business Wage Compliance Code to demonstrate compliance, but the safest approach is to fix any underpayment promptly rather than rely on the code.
Leave entitlements
The NES gives every employee a suite of leave entitlements. The ones that matter most in a manufacturing workforce are:
- Annual leave: full-time and part-time employees accrue four weeks of paid annual leave per year of service (five weeks for shiftworkers defined as such under an award). Leave accrues progressively and any unused balance must be paid out on termination. If your award provides for annual leave loading, commonly 17.5%, it must be paid when leave is taken.
- Personal and carers leave: employees other than casuals get 10 days of paid personal and carers leave per year, accruing progressively, to cover their own illness or injury or to care for an immediate family or household member. Part-time employees accrue a pro-rata amount and casuals receive unpaid personal and carers leave.
- Family and domestic violence leave: every employee, including part-time and casual employees, is entitled to 10 days of paid family and domestic violence leave in each 12-month period. It is available in full at the start of each period, does not accumulate, and can be taken to deal with the impact of family and domestic violence, such as attending court or finding new accommodation.
- Compassionate leave: employees are entitled to compassionate leave when an immediate family or household member dies, or suffers a life-threatening illness or injury, with paid leave for non-casual employees.
- Parental leave: an employee with at least 12 months of continuous service is entitled to 12 months of unpaid parental leave associated with the birth or adoption of a child, and may request an extension of up to a further 12 months. Regular casual employees qualify after 12 months of regular employment. Notice requirements apply, and the total leave cannot extend beyond 24 months after the birth or placement.
- Long service leave: this entitlement comes from state and territory legislation rather than the NES, and the rules vary. Check the long service leave rules in each state or territory where your business operates.
Flexible work requests
Certain employees have a statutory right to request a change in their working arrangements, and the request is not optional to consider. Under s 65 of the FW Act, an employee can request changes to hours, patterns of work or location if they are pregnant, the parent or carer of a child of school age or younger, a carer within the meaning of the Carer Recognition Act 2010 (Cth), have a disability, are 55 or older, or are experiencing family and domestic violence or caring for someone who is.
Under s 65A, you must respond to the request in writing within 21 days. You may refuse only if you have discussed the request with the employee, genuinely tried to reach an agreement, and the refusal is based on reasonable business grounds. Practicality is a legitimate consideration: a request to work from home is unlikely to be reasonable business grounds-compliant to refuse outright, but it is a reasonable ground where the role cannot be performed remotely, such as operating production line machinery. Unresolved disputes about refusals can be taken to the Fair Work Commission.
The key discipline is process: respond in writing, on time, and be able to show that you discussed the request and genuinely tried to find a workable arrangement before refusing.
Workplace health and safety
WHS is where manufacturing businesses face their highest-risk obligations. Under s 19 of the WHS Act, your business must ensure, so far as is reasonably practicable, the health and safety of workers and of other people who might be affected by the work. Section 17 requires you to eliminate risks to health and safety so far as reasonably practicable, and where elimination is not practicable, to minimise them.
In a manufacturing environment that means safe plant and equipment, safe systems of work, safe handling and storage of substances, adequate facilities, and information, training and supervision for workers. Manual handling, machine guarding, forklifts and moving plant, noise, hazardous chemicals and working at height are the recurring hazards, and the duty extends to contractors and visitors on site, not just your own employees. You must also consult with workers about health and safety matters and, where required, with their health and safety representatives, and report notifiable incidents to the regulator.
Officers, including directors, have their own duty under s 27 of the WHS Act to exercise due diligence to ensure the business complies. That duty is personal: it cannot be delegated, and it requires officers to understand the business's safety risks, verify that resources are in place to address them, and respond to incidents.
Penalties under the WHS Act are severe. Under NSW law, with a penalty unit currently valued at $110 under s 17 of the Crimes (Sentencing Procedure) Act 1999 (NSW), the maximum penalties for a body corporate are roughly $9.9 million for a category 1 offence (engaging in conduct with gross negligence or recklessness that exposes a person to the risk of death or serious injury), about $2 million for a category 2 offence (failure to comply with a duty exposing a person to such a risk) and about $668,000 for a category 3 offence (failure to comply with a duty). Category 1 offences also carry up to 10 years imprisonment for individuals. The other states and territories have comparable maximums under their equivalent legislation.
The cost of getting it wrong
The Fair Work Ombudsman (the FWO) enforces the FW Act, awards and agreements, and its current maximum civil penalties per contravention, which a court can impose, are:
- Individuals: up to $21,840 per contravention, and $218,400 for serious contraventions
- Companies with fewer than 15 employees: up to $109,200 per contravention, and $1,092,000 for serious contraventions
- Companies with 15 or more employees: up to $546,000 per contravention, or for underpayment-related contraventions the greater of $546,000 and three times the underpayment, and up to $5,460,000 for serious contraventions
These figures are set out on the FWO's litigation page. A serious contravention is one where the employer knew it was contravening a workplace law, or was reckless as to whether it was. Courts can also order back-pay with interest, compensation and reinstatement, and the FWO can issue compliance notices and infringement notices without going to court.
Record-keeping failure carries its own consequence. If you do not keep proper time-and-wages records or issue payslips and an employee makes a wage claim, the reverse onus applies: you must prove that you paid correctly, rather than the employee having to prove you did not.
A practical compliance checklist
Run through this checklist periodically, and especially whenever you hire, change a role's duties or rework a roster:
- Know your coverage: identify which modern award (if any) covers each role, based on actual duties
- Classify correctly: check every employee's classification against the award's classification definitions
- Pay correctly: audit base rates, overtime, penalty rates, allowances, leave loading and superannuation
- Keep records: maintain accurate time-and-wages records and issue payslips for every pay run
- Roster lawfully: test rosters against s 62 of the FW Act and award overtime rules
- Manage leave: track annual leave accrual and pay out balances on termination
- Respond to flexible work requests: respond in writing within 21 days, with genuine discussion first
- Keep a current WHS risk register: consult with workers and train staff on the hazards in your workplace
- Fix errors fast: if an underpayment is found, correct it promptly and document the correction
When to get a lawyer
A workplace lawyer is worth engaging before problems crystallise, not after. Practical times to involve one include drafting or reviewing your employment agreement template, deciding on award classifications for new or changed roles, running or reviewing a pay audit, responding to a FWO investigation or a wage claim, responding to a flexible work request that you intend to refuse, and managing a WHS incident, regulator visit or prosecution. A lawyer can also advise on terminations and redundancies, where procedural errors are expensive.
Where to start this week
If you take one action this week, pull your employee list and check two things: the award coverage and classification of each role, and whether your pay rates match. Incorrect classification is the most common way manufacturing businesses drift into underpayment, and since 1 January 2025 it is the fastest route to criminal exposure if the underpayment is deliberate. Then sit down with your WHS risk register, because the safety duty is yours personally as much as the business's, and regulators treat manufacturing as a priority industry. Getting those two foundations right protects you against the two biggest financial and legal risks your business faces.