Got employees? Three ways to stay out of trouble

Got employees? Three ways to stay out of trouble

If you knew what I am about to share with you, before you started your business, you would probably never have  started one in Australia. It is a legal minefield, fraught with significant risk of breaching several laws and fines of potentially hundreds of thousands of dollars. I promise, I’m not exaggerating. Then there are the other financial consequences...

As a small business owner, it is almost impossible to be across (and more importantly, stay across),  all the legislation that governs your business, behaviour and obligations, let alone those that apply to you as an employer. Unfortunately, ignorance of your obligations is not a defence.

I want to share with you some details about the areas of risk and the subsequent fines for breach:

Modern Award – almost all employees in Australia are now covered by a Modern Award. Some awards cover an industry while others cover an occupation. You may have two or three Awards relevant to your workplace. For example,  your administration employees often fall under the Clerks Award and your superannuation advisors may fall under the Banking, Finance and Insurance Award. As a business, you need to comply with all the terms and conditions under the applicable  Award(s) including minimum wages, payment of overtime and shift lengths. It is no longer OK to pay above the Award to avoid the other terms and conditions.

Each breach of the Award leaves the business exposed to $51,000 per breach and even fines for individuals of $10,200, on top of the need to pay back whatever entitlements are owed to the underpaid employee.

To protect yourself- find out your Modern Award, review the document in detail and ensure that you are compliant. This may mean increasing salaries to ensure that you meet the minimum salary requirements or maybe paying overtime.

Employment Contracts – an employment contract is a legally binding contract for both the employer and the employee. A personal plea from me - please don’t use your mate’s employment contract . These are highly likely to be inappropriate and out of date. You cannot contract out of an employee's minimum rights under the National Employee Standards. As this employment contract is legally binding, if you, as the employer go against it,  it will constitute a breach. For example, if the contract states that you will conduct an annual performance and salary review and you miss one year, you are in technical breach of that contract.

Each breach could expose you to substantial damages.

To protect yourself- get compliant employment contracts in place for permanent employees, casual employees and independent contractors and review and amend them every 2 years, (and every time there is a change to the ‘deal’).

Interview assessment and documentation – you may not know that you are required to keep interview notes and any justifications for decisions for a period of 5 years. This is in case you need to defend your decision and rationale - for example, in the case of a discrimination claim during a recruitment campaign. Many years ago, I was reviewing interview notes and the interviewer wrote about a candidate “black as the ace of spades”. The lawyers would have a ‘field day’ with this case now.

Each breach could attract damages and exposures under a variety of laws

To protect yourself- have an interview template to document and train your interviewers, so that they are very aware of their obligations around recruitment and discrimination. File these documents so that they can be found, if required, in 5 years time.

I know that the above is scary but so is starting and running a successful business - and remember, knowledge is power and hopefully you now have the power to make changes to protect you, your business and your employees. Are you safe?