One of the first steps that our team carries out for clients who have taken out an HR subscription* with Employment Innovations, is to perform a Compliance Audit to uncover any compliance issues regarding Australia’s complex workplace laws.

This includes assessing which modern awards apply to the business, reviewing whether the business is complying with the National Employment Standards set out in the Fair Work Act 2009 and checking any employment contracts and workplace policies that are in place for compliance issues.

This allows us to then work together with businesses to fix any “red flag” areas and to put steps in place to reduce compliance risks.

We have analysed the data we have received from the audits we conducted in 2020 to provide a summary of the areas where businesses most commonly face compliance issues or do not fully understand their workplace obligations.

* includes our HR Essentials & HR Partner subscriptions.

We set out some of the key findings below:

 

44% of employers were not sure which modern awards applied to their business

A modern award is a set of rights and obligations that applies to employers and employees in a particular industry or occupation. There 122 modern awards in total and the majority of employees in Australia are covered by a modern award.

The question of award coverage is complex and will depend not only on the role an employee performs but also where they perform the role. For example, someone working in an administrative role in the retail sector will be covered by the General Retail Industry Award if they perform their work at a retail establishment, but by the Clerks Private Sector Award where they perform administrative work away from a retail establishment (e.g. at a head office).

To complicate matters further, very senior employees do not tend to be covered by an award (although how senior will vary from award to award), and some occupations do not generally have awards that apply to them, such as lawyers and accountants (although there are exceptions, such as when an accountant works in an industry covered by the Banking, Finance and Insurance Award).

There is also a “Miscellaneous Award” which covers employees who are not covered by any other award – although only certain levels of employees.

Given this complexity, it is not surprising that 44% of the businesses that we carried out compliance audits for did not know which award (or awards) applied to their employees. Getting award classification right is, however, perhaps the most important factor in ensuring your business complies with workplace laws.

Modern awards set minimum rates of pay (usually including an obligation to pay higher rates for working weekends, evenings and long hours). Without understanding which award applies to each employee, it is impossible to determine with any certainty what the minimum rate of pay your employees are entitled to. Furthermore, modern awards contain an obligation to inform employees which award applies to them and their classification under it – businesses must first understand award coverage in order to do this.

Our Workplace Advisors and HR Partners are experts in determining award coverage and advising on the obligations that arise under awards. We will make sure you know with certainty what awards apply to your business and what this means for how you operate your workplace.

 

Download Employment Innovations' 10 Point Compliance Check to stay ahead of your compliance obligations and complete a quick and easy health check to assist you in understanding where you stand.

 

87.5% of business did not have adequate employment contracts in place

A significant number of the businesses we audited had no employment contracts in place or those that existed required significant improvement.

Although there is no specific legal obligation to issue a written employment contract to staff, it is a fundamental step to protecting a business’ interests.

A written employment contract ensures that there is certainty as to the terms and conditions under which the employee is employed and avoids disputes in the future regarding matters such as: whether the employee is permanent or casual; what notice period is required to terminate employment; whether the employee’s wages or salary is designed to cover payment for all work they perform or whether they are entitled to extra payments (e.g. for working overtime).

Some of the issues that frequently arose in the contracts we reviewed included:

  • Stating that permanent employees could be terminated without notice during a probationary period. Employees are still entitled to the statutory minimum notice period even in a probationary period (generally this is one week, although can be longer, see for example the Professional Employees Award).
  • Not having an appropriate “offset” or “set off” clause. Such a clause states that an employee’s whole wages or salary are designed to meet any entitlement that might arise under a modern award. Without such a clause an employee may become entitled to payments for overtime, allowances, annual leave loading, etc regardless of the level of wages/salary.
  • Not setting out the number of hours a part-time employee works per week, what days they will work and their start and finish times. Most awards have very strict rules about setting out details of the hours a part-time employee will work (and further provide that hours worked outside of these hours will be treated as overtime). Many employers fall into the trap of providing part-time employees with varying hours or fail to provide details of the actual working pattern (even if they state the employee will work a set number of hours per week).
  • Not having appropriate protections regarding employees competing or stealing clients from the business. Without an appropriate “restraint of clause” in an employment contract, it can be difficult to prevent employees from joining a competitor, setting up their own business in competition or attempting to steal clients or intellectual property.

 

At Employment Innovations, our HR subscriptions* come with access to template employment contracts, drafted by lawyers, which will ensure your business will have all the protection it needs.

* includes our HR Essentials & HR Partner subscriptions.

 

Download Employment Innovations' free Employment Contract template pack.

 

84% of business did not have adequate workplace policies in place

A significant number of businesses we audited did not have adequate workplace policies in place.

Whilst there is usually no strict legal obligation to introduce particular workplace policies, there are exceptions. In some jurisdictions, it is unlawful to carry out surveillance of employee’s computer usage (e.g. reviewing which websites were accessed or the content of emails sent or received) unless the employer has an appropriate policy in place. There are also legal requirements for certain businesses to have in place a “Whistleblower Policy” to deal with the procedure for (and protection of) employees making complaints about wrongdoing in the business.

Whilst other policies may, in a sense, be “optional”, in reality, without such a policy in place, an employer will face significant legal risks. For example, unless an employer has implemented a proper sexual harassment policy, it will be virtually impossible to defend a claim by an employee who has been sexually harassed at work that the employer should be liable (even if the employer did not know the harassment was occurring). This is because unless employers have done all they reasonably can to prevent harassment occurring, they can be held to be liable for any harassment that occurs. The first step in preventing sexual harassment occurring is to have a policy which clearly sets out that harassment is not tolerated. Similar points arise regarding discrimination, bullying & harassment and grievance policies.

Aside from mitigating legal risks, policies are useful tools to set out expectations regarding employee behaviour (social media usage, alcohol consumption, etc) and for setting out procedures that must be followed (requesting/taking leave, work-related travel, etc).

All Employment Innovations’ HR subscriptions* come with unlimited access to any HR document you need, including a huge suite of policies, as well as template letters, notices and other documents.

* includes our HR Essentials & HR Partner subscriptions.

 

Download Employment Innovations' free HR Policy template pack.

 

71% of businesses were not confident that their managers fully understood processes for terminating employment and for managing misconduct and poor performance

Terminating employment – whether by way of redundancy, or for misconduct, poor performance or due to ill-health – is a difficult, and potentially risky, business.

It is unsurprising that this is an area where businesses struggle, given the processes that employers must follow to avoid a claim in (for example) unfair dismissal, are usually quite lengthy and complicated.  To avoid a claim this might require:

  • formal disciplinary or consultation meetings where employees are accompanied by a support person before any decision to terminate their employment is taken;
  • for the employee to be issued with a series of formal warning letters (in misconduct matters);
  • for the employee to have been subject to a “Performance Improvement Plan” (or other similar processes) in a poor performance matter.

 

Employers frequently lose unfair dismissal claims in the Fair Work Commission due to procedural errors in the processes followed when dismissing an employee, even when there is found to have been a valid reason to terminate their employment.

Our Workplace Advisors and HR Partners frequently guide clients through the processes that must be followed to safeguard against risks of successful claims, as well as providing the necessary documentation needed to terminate an employee’s employment.

Our HR subscriptions* also include representation by lawyers in any employment claim brought against the business (up to and including the first conciliation hearing) at no extra costs.

 

Employment Innovations' HR Resources Library - Download free guides, checklists, templates & award summaries

 

If you would like further information on any of Employment Innovations’ HR Solutions, please do not hesitate to contact us.

* includes our HR Essentials & HR Partner subscriptions.

 

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About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advicelegal servicespayroll solutionsmigrationhuman resource management and HR software.

 

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.

 

 

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