Submissions to the Federal Government’s review of the National Employment Standards highlight several key areas of proposed change, including annual leave, casual employment, AI consultation and redundancy entitlements.

The Federal Government’s current review of the National Employment Standards (NES) has prompted a broad re-evaluation of Australia’s baseline workplace protections.

The review has sparked a range of submissions from unions and groups calling for changes to annual leave, redundancy entitlements, casual employment and more.

According to Lisa Mannering FCPHR, employment lawyer and HR consultant at Langtree Legal and member of AHRI’s ER/IR advisory panel, several key themes have emerged from the submissions.

“There may be some big-ticket changes,” she says. “But I think the devil will be in the detail, with changes to definitions providing new access to entitlements, increased casual loading, or expanded coverage that we haven’t seen before.”

Below, Mannering unpacks five issues up for debate, and how employers can get ahead of any potential changes.

1. An extra week of annual leave (25 days)

The push to move the national annual leave standard from 20 to 25 days is among the most contentious parts of the NES review.

In its submission to the review, the Australian Council of Trade Unions (ACTU) argues that the four-week standard model is 50 years old and doesn’t account for the 4.5 weeks of unpaid overtime the average Australian now performs.

Several other groups have also backed this proposal, including the Australian Services Union (ASU) and the Shop, Distributive and Allied Employees’ Association (SDA). The SDA’s submission also proposes a 2.5 per cent increase to casual loading to compensate casuals if permanents are given an extra week of leave.

Meanwhile, industry bodies including the Australian Chamber of Commerce and Industry (ACCI) have argued that the extension of annual leave is unnecessary, stating that existing annual leave entitlements are appropriate and sufficiently generous when compared internationally.

AHRI’s submission to government also opposes extending annual leave entitlements, arguing employers need stability and time to implement recent reforms. It cites survey data showing that 69 per cent of employers believe an extra week of leave would have a negative financial impact on their business.

While an additional week of annual leave would likely deliver benefits for employee wellbeing and work-life balance, Mannering notes that it may also create operational pressures.

“There will be considerations around rostering and additional absences, and employers [should consider] the potential flow-on effects to casuals and shiftworkers as well,” she says.

Employers may also need to consider impacts on enterprise agreements, where additional leave is often used as a bargaining and employee attraction tool. 

“If the annual leave entitlement increases under the NES, there may be a need to re-evaluate whether proposed agreements still meet the Better Off Overall test, or if current agreements still meet minimum entitlements,” she says.

“We’ll also need to wait and see if it impacts the maximum number of weeks accrued before employees can be directed to take leave, [which is currently] eight weeks – or 10 weeks for shiftworkers – under most awards.”

Australian employees are already sitting on around 209 million days of annual leave, and expanding leave entitlements would likely add to an already costly problem, she explains.

Read AHRI’s article on how HR can keep leave hoarding in check.

How you can prepare

While nothing is set in stone at this stage, if annual leave entitlements do increase, employers will need to manage both higher costs and more frequent absences, says Mannering. 

Key priorities might include:

• Ensuring payroll and HR systems can handle higher leave accruals and liabilities
• Stress-testing rostering and workforce capacity to manage increased absences
• Assessing whether you’ll need to rely more on casual employees and the cost implications
• Getting ahead of ‘leave hoarding’ by encouraging employees to take annual leave regularly.

2. Extending paid leave to casual workers

Several unions and groups, including SDA, ASU and the Employment Rights Legal Service, have advocated for paid leave entitlements to be extended to casual workers.

Industry bodies such as the Australian Resources and Energy Employer Association have opposed this change, arguing that “misalignment” with contemporary rostering is already driving too much litigation.

“The benefit of offering these entitlements to casuals is potentially increasing workforce participation, and [the fact that] employers won’t necessarily have the burden of casual loading – they can manage leave as they would for permanent staff,” says Mannering. 

However, she says, the deeper issue is that the legal definition of a casual worker remains inconsistent across the industrial relations system. An employee may be classified as casual in one context, but treated differently in another, making it difficult to determine who should qualify for entitlements and on what basis.

Introducing leave entitlements could blur these lines further, given that access to paid annual and personal leave seems to go against the definition of casual employment as having no “firm advance commitment” to work.

“We need to work out a clear and consistent definition of what a casual employee is before we look at how National Employment Standards would apply to them,” says Mannering.

“There’s also a real opportunity to create a fourth employment type, [which could be] a clearly defined ‘flexible permanent’ model. You’d have more flexibility than a part-time [employee], but it’s not as inconsistent as casual work.”

How you can prepare

Given the uncertainty around how casual definitions may change, Mannering’s advice is to focus on fundamentals, such as:

• Ensuring casual arrangements align with current legal definitions
• Closely monitoring any changes to the definition of casual employment as the review progresses
• Considering your organisation’s readiness for more flexible employment structures if reforms move in that direction.

3. Consulting workers on AI adoption

In its submission, the ACTU called for a new legal obligation in the NES for employers to consult employees before introducing AI that tracks performance or changes job descriptions. 

ASU also advocated for AI consultation requirements, and proposed extending paid notice periods to at least six months for workers whose roles are displaced by AI.

“There are no [consultation] requirements under the NES currently,” says Mannering. “But awards provide a framework for consultation if there’s major workplace change, which includes technology. So workplaces covered by awards already have that obligation.”

Regulation in this area is also beginning to emerge beyond awards and the NES. In New South Wales, for example, the recently passed Work Health and Safety Amendment (Digital Work Systems) Bill places obligations on employers to manage risks associated with AI, algorithms and digital platforms.

While stronger consultation requirements could improve transparency and worker protections, additional regulation in this area might create barriers to tech adoption. 

“Particularly for a small business, where you’re trying to get efficiency and productivity gains through the use of AI, having to stop and run a consultation process when you don’t necessarily know the outcome of that AI software might mean people avoid the uptake,” she says.

How you can prepare

As expectations around AI governance evolve, employers should focus on strengthening their existing consultation and change management processes to get ahead of further regulation.

That might include: 

• Reviewing your current consultation requirements under awards and when they apply to technology changes
• Considering the benefit of consultation, regardless of the obligation, to generate ideas, seek feedback and create a more open workplace culture
• Factoring in time and process for employee consultation when implementing new systems
• Keeping track of emerging obligations, particularly in WHS, where AI is increasingly being treated as a safety issue.

4. Strengthening reproductive health and parental work rights

Another key theme from submissions to the NES review is bolstering protections for parents and those trying to conceive.

In its submission to the review, the Health Services Union (HSU) argues that the definition of parental leave should be expanded to include reproductive health leave.

The HSU argues this is essential for pre-pregnancy workers, and calls for 12 days of paid leave for IVF treatments, endometriosis management and screenings to ensure parents don’t exhaust their sick/annual leave before they fall pregnant.

“Female participation in the workforce is [a big factor], but it’s also about reproductive leave for both males and females to help them grow families and address fertility issues,” says Mannering. “It’s a broader [scope] than the menopause leave or menstruation leave that’s been discussed previously.”

Other submissions, including one from Monash University, argue that the 12-month continuous service requirement to access unpaid parental leave should be removed.

Mannering explains that this would address a disconnect between workplace entitlements and government-funded parental leave pay.

“Sometimes people aren’t eligible for parental leave because they haven’t completed 12 months of continuous service, but the government payment scheme doesn’t have the same qualifying entitlement, so you end up in a situation where people may qualify for parental leave pay, but not for the workplace leave component.” 

How you can prepare

To get ahead of these potential changes, Mannering suggests the following steps:

• Identifying whether your HRIS/payroll system can support new leave types and eligibility rules easily
• Considering how broader access to leave may affect workforce availability and resourcing
• Keeping an eye on how leave entitlements and government-funded parental pay interact to avoid gaps or inconsistencies.

5. Changes to redundancy entitlements for long-serving employees

Another topic gaining attention in the NES review is redundancy entitlements for long-serving employees.

Under the current framework, redundancy pay increases with tenure up to nine years of service (16 weeks maximum), before dropping to 12 weeks once an employee reaches 10 years. 

The original rationale was that long service leave would also be paid at that point, offsetting the reduction.

However, submissions from several groups including ACTU and the Law Council of Australia have called for a reassessment of this rule, arguing that the drop-off is counterintuitive and penalises workers for reaching a decade of service.

“The other push that we’ve seen is around whether redundancy pay should be payable for small businesses,” says Mannering. “It would be great for employees, particularly if you’re a long standing employee in a small business, but it would definitely have a financial impact.” 

How you can prepare

If redundancy entitlements are expanded, employers will need to prepare for greater financial exposure. Key steps include:

• Ensuring sufficient cash flow to meet increased severance obligations if changes are introduced
• Auditing long-tenured employees to understand where higher redundancy liabilities may sit across your workforce
• Factoring potential entitlement increases into workforce planning and organisational change scenarios.

The ongoing debate around compliance burdens

Submissions from several industry groups have raised concerns about the cumulative compliance burden created by ongoing workplace reforms.

Australian Industry Group has opposed any dramatic changes to the NES, arguing that the review should focus on “equilibrium, simplification and reduction of regulatory burden” rather than major change.

AHRI’s submission also called for the review to “prioritise simplification and consolidation of NES provisions”, and suggests broadening the scope of the review to improve the clarity of how the NES interacts with modern awards and enterprise agreements (for example, by reducing duplication and ambiguity in areas such as notice periods, weekly hours and redundancy entitlements).

The Australian Small Business and Family Enterprise Ombudsman’s submission highlights the impact of regulatory change on small businesses in particular, and calls for a “think small business first” approach to NES reform that involves early, genuine consultation and clearly considers the impact on micro and small employers.

“The financial impact of some of these changes will mean small businesses need to consider better systems, improve management of leave accruals and allocate time to better compliance,” says Mannering.

“What we see is that small businesses want to comply, but time constraints, a lack of dedicated HR professionals in the business and complex IR systems impedes their ability to comply… And there’s a real opportunity here for a streamlined and accessible approach for small businesses.”

For organisations of all sizes, the priority now should be closely monitoring changes as they develop, especially where small shifts in definitions or eligibility could have a significant operational impact.