Although the courts have placed the employer/employee relationship within the framework of the law of contract, this has not always proved satisfactory. While contract law assumes that the parties to a contract are free and equal partners in bargaining (that is, in working out the terms of the contract), the average employee has little choice about who to work for compared with the employer's ability to engage the employee or to hire someone else who is prepared to work for less pay under less attractive conditions.

To help correct this imbalance, parliaments have set certain minimum standards that must be met by employers in any employment relationship. An employer and employee can still agree as to any terms and conditions they might want to have in the contract of employment, but if any of those terms or conditions falls below the minimum standard set by legislation, the legislation takes over and the situation is automatically corrected.

Most workers are also covered by a workplace agreement or an award. Workplace agreements and awards are industrial instruments that set the terms and conditions that must be observed in a particular workplace, occupation or industry. It is important to note that there are agreements and awards made under Federal law and agreements and awards made under State law.

There are important differences between the Federal and the State law. For example, federal awards can only deal with 15 ‘allowable matters’ but they will not apply once a workplace agreement is in place. Under State law, awards can cover a much greater range of matters and are not automatically displaced by workplace agreements.

To determine which legislation covers which workers it is necessary to look at the respective definitions in the Acts.