Once your business employs people in more than one Australian state or territory, you are inside two layers of employment law at once. The federal Fair Work Act 2009 (Cth) sets a national floor of pay and leave entitlements, while each state and territory adds its own rules on long service leave, workplace surveillance, workers compensation and work health and safety. Getting the split wrong can mean paying the wrong rates, breaching a state statute you did not know applied, or facing criminal prosecution for underpayment.
This guide sets out who each layer covers, the duties that come with it, and the practical steps to stay compliant when your workforce spans state borders.
Which system covers your employees
Australian employment law is not one single national code. The Fair Work Act applies to national system employers. Under s 14 of the Fair Work Act 2009 (Cth), that means constitutional corporations (trading or financial corporations, which covers most incorporated companies), the Commonwealth and its authorities, and a few specialised categories such as flight crew and maritime employees.
Most private-sector companies are constitutional corporations and therefore sit in the national system. The exceptions matter for smaller and unincorporated businesses:
- Queensland: after Queensland withdrew most of its referral of private-sector employment powers, employers that are not constitutional corporations, such as sole traders, partnerships and other unincorporated businesses, are now covered by the Industrial Relations Act 2016 (Qld). Section 12 of that Act states plainly that it applies only to the extent the Commonwealth Fair Work Act does not.
- Western Australia: WA never referred its private-sector employees to the Commonwealth. The state system under the Industrial Relations Act 1979 (WA) covers sole traders, unincorporated partnerships and trusts, non-trading corporations such as some charities, and their employees. Incorporated companies that trade sit in the national system.
- Everywhere else: NSW, Victoria, South Australia, Tasmania, the ACT and the Northern Territory referred their private-sector employees to the Commonwealth, so most employers there are national system employers regardless of their corporate structure.
The result is that a WA sole trader and a NSW company employing the same number of people can answer to different laws for the same kind of work. Identifying which system each employee sits in is the first compliance step, and for a business trading across borders it is not always obvious.
The federal floor: the National Employment Standards and modern awards
National system employers must comply with the National Employment Standards (the NES) in Part 2-2 of the Fair Work Act. Section 61 describes them as minimum standards that cannot be displaced, even by an enterprise agreement. The NES cover maximum weekly hours, flexible working arrangements, casual employment, parental leave, annual leave, personal and carer's leave, compassionate leave, paid family and domestic violence leave, community service leave, long service leave, public holidays, superannuation contributions, notice of termination and redundancy pay, and the Fair Work Information Statement.
On top of the NES, most employees are covered by a modern award that sets the minimum pay rates, penalty rates, overtime and allowances for their industry or occupation. Where no award applies, an employer must still pay at least the national minimum wage set by the Fair Work Commission. An enterprise agreement can replace award terms only if each employee covered is better off overall, which the Commission checks before approval.
The practical duty is paying the right rate to the right person. That means knowing which award applies to each role, checking it whenever an employee moves between roles or states, and keeping accurate time and wage records, because those records are how you prove compliance if a claim is made.
State and territory laws that still bite
Even where the Fair Work Act applies, state and territory statutes continue to regulate four areas that your employment agreements and policies must accommodate.
Long service leave
The NES includes a long service leave standard, but it operates as a safety net for national system employees not covered by a state law. Every state and territory runs its own statute, and the accrual figures differ, so in practice the state law is what sets the entitlement for most staff. Under the Long Service Leave Act 1955 (NSW), a worker in NSW earns two months of long service leave after 10 years of service, then one month for every further five years, with a proportionate payout when employment ends after 15 years. In Victoria the Long Service Leave Act 2018 (Vic) gives one sixtieth of continuous service after seven years. A business with employees in both states cannot run a single long service leave rule and stay correct in both. The state statutes also govern how service is counted when employment transfers between related entities, which is a common trap in multi-state restructures, and NSW law requires an employer to keep long service leave records for six years after an employee leaves.
Workplace surveillance
Workplace surveillance is regulated by the states, and the rules differ sharply. In NSW, the Workplace Surveillance Act 2005 (NSW) requires an employer to give at least 14 days written notice before starting camera, computer or tracking surveillance of employees. The notice must state the kind of surveillance, how it will be carried out, when it starts and whether it is continuous or intermittent. Covert surveillance is prohibited without an authority, carrying a maximum penalty of 50 penalty units. Other states and territories take different approaches through their own surveillance and privacy laws. If your monitoring policy is drafted once for a Sydney office and rolled out nationally, it can breach the law the moment a new hire starts in another state.
Workers compensation
Every state and territory runs its own workers compensation scheme, with its own insurer, claim forms, premiums and return-to-work obligations. A workplace injury in Adelaide is handled under South Australian law even if the payroll sits in Melbourne, and disputes about a claim go to that state's regulator or tribunal. Your insurance broker should place the correct policy for each state where employees work, because a single national policy will not cover every state-specific obligation.
Work health and safety
Work health and safety is harmonised but not uniform. Under the model Work Health and Safety Act 2011 (Cth), a person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of workers and of other people affected by the work. Most states and territories have adopted the model law, while WA and Victoria run their own statutes. The duty attaches to the business, not the workplace, so an employer with a head office in one state and workers in another owes the duty in every jurisdiction where work is performed, and the regulator in each state can investigate an incident.
Where disputes and complaints go
Who hears a dispute depends on which system the employee sits in. National system employees take unfair dismissal and general protection claims to the Fair Work Commission, and underpayment complaints to the Fair Work Ombudsman. Employees in the Queensland and WA state systems take equivalent claims to the Queensland Industrial Relations Commission and the WA Industrial Relations Commission instead. The dismissal of a Queensland sole trader's employee is not automatically an unfair dismissal matter under the Fair Work Act; the state tribunal may be the only forum, and its procedures and time limits differ from the federal ones.
The cost of getting it wrong
Underpayment is no longer just a civil matter. From 1 January 2025, intentionally underpaying an employee's wages or entitlements is a criminal offence under the Fair Work Act. The Fair Work Ombudsman can investigate and refer matters for prosecution, and a court can impose up to 10 years imprisonment on an individual, or fines of up to three times the underpayment, capped at $1.82 million for an individual and $9.1 million for a company.
The offence does not catch honest mistakes, and the Ombudsman has published a Voluntary Small Business Wage Compliance Code that small businesses can follow to avoid referral for prosecution. The criminal provisions also apply differently to employees of sole traders, partnerships and other unincorporated entities in NSW, SA, QLD, Tasmania and Victoria: for those employees the offence does not cover superannuation, long service leave pay and a few related entitlements. Civil penalties for underpayment and record-keeping breaches remain available alongside the criminal route.
A compliance checklist
Working through these steps will keep a multi-state workforce on the right side of both layers of law:
- Map your workforce: confirm which system each employee sits in, using the corporate form of the employing entity and the state where the work is performed.
- Check awards and rates: identify the modern award for each role and pay at or above the floor, including penalty rates and overtime.
- Reconcile long service leave: apply the state statute for each state where employees work rather than one national rule.
- Review surveillance policies: check camera, computer and tracking monitoring against each state's notice requirements before rollout.
- Place state insurance: confirm workers compensation cover in every state where employees work.
- Confirm WHS duties: identify each workplace and the regulator that can investigate an incident there.
- Keep accurate records: time and wage records are your defence in any underpayment claim, civil or criminal.
- Review documents when roles change: an employment agreement or policy drafted for one state can become non-compliant when an employee's state of work changes.
When a lawyer should be involved
An employment lawyer's main value in this situation is the mapping. A practitioner can confirm which industrial system applies to each part of your workforce, identify the state statutes that touch your industry, and review your employment agreements and policy suite so a single set of documents works across borders. That review should cover the governing law clause, long service leave treatment, surveillance and privacy policies, and termination procedures, because each of these is where state and federal law interact in unexpected ways.
Start with a state-by-state map of your workforce
Employers who get multi-state employment wrong rarely fail because they ignored the Fair Work Act. They fail because they assumed the national system meant one set of rules for everyone. Long service leave accrual, surveillance notice, workers compensation and even which tribunal hears a dismissal claim all change at state borders, and those differences are exactly where underpayment and breach claims come from.
The first action this week is not a new policy. It is a list of every employee, their usual state of work, and the corporate form of the entity that employs them. From that list a lawyer can tell you which system applies to each person and which state statutes you are already inside. Everything else in this guide follows from that map.