Employment law – what you need to know
Employment law can seem overwhelming, particularly if you’re a new business without knowledge or experience of HR. When you’re committing to hiring staff, it’s important to be aware of your rights, their rights, and ultimately, what you need to do to ensure you, they, and the business are protected.
Legal framework – the fundamentals of forging a legal working relationship.
Firstly, all national system employees are covered by the National Employment Standards (NES), which sets out ten minimum standards that cover core entitlements for work hours, leave and termination of a contract. Chances are that your team will be covered by the NES - the majority of Australian employees will be, the principle exception being some state and local government staff members.
Once you’ve established that your employee is covered by NES, the next step is to establish whether they are covered by an award, a contract of employment or a ‘common law’ employment arrangement.
An award contains the minimum terms and conditions of employment for employees including pay rates, leave entitlements, overtime and other conditions. Awards relate to particular industries or occupations and the minimum standards required for those occupations, to reflect a standard across the sector at each level of experience.
For example, if you work as a hairdresser, the Hair and Beauty Industry Award 2010 [MA000005] will apply.
A common legal agreement for small businesses, particularly those outside standard ‘trades’, will be the contract of employment. One thing to be aware of is that a contract could be verbal, not always written.
A contract of employment sets out the terms and conditions of employment. It cannot contain terms which are below the legal minimums set out in the NES, awards, enterprise agreement or other registered agreements that may apply.
Common law employment arrangement is fundamentally a civil contract and provides the foundation for all employment relationships. It encompasses a number of duties that an employee has to adhere to, as follows:
the duty to obey orders – they must be lawful and reasonable;
the duty of care and competence – employees must perform work with a level of skill and competence and must exercise reasonable care at work, which includes looking after the employer’s property;
the duty to indemnify – an employer may be entitled to an indemnity from the employee for expenses occurring out of their negligence;
the duty to provide faithful service – this is a duty of loyalty, or the duty of fidelity or good faith;
The duty to hand over inventions – any and intellectual property. This means intellectual property made by the employee in the course of employment belongs to the employer;
The duty of disclosure – there is no common law duty to reveal pertinent information but there is an obligation to respond truthfully to direct questions posed in the recruitment process in order to validly form the contract;
The duty of confidentiality – the employee should not use the employer’s confidential information for their personal benefit.
RIGHTS – the basic, fundamental elements you are obliged to offer to your staff
Firstly, all employers are required to provide a copy of the NES 10 minimum standards of employment to new employees. It’s a standard document, so keep it saved in your HR file or make it part of the induction process.
The NES sets out the minimum standards of employment conditions for Australians. The NEW NES standards were recently updated on 1 July 2019. The updated version must be provided to new and existing employees, so if you haven’t shared it with the team yet, do so as soon as possible.
These minimum employment standards must be adhered to, and any contract you have with an employee cannot supersede these, or omit any of these standards. The exception to this relates to an agreement regarding flexible work arrangements. These can vary from the NES slightly, but only if the employee can be proved to be better off overall. This is called the BOOT test, and in essence, stipulates that an employee can be no worse off than the minimum standards.
If an employee is covered by an award it’s important to be aware of the minimum conditions in relation to leave and benefits. The Award system tends to cover trade and industries, there are currently 122 Modern Awards in Australia. Some professions are not covered, such as lawyers and accountants, which have specific measures relating to their industry.
In some instances, you might need to explore the miscellaneous award – this is when there is no applicable award and the NES applies as the minimum standard. You may have seen recent controversy relating to The Hospitality Industry (General) Award 2010. It’s been under scrutiny for being very complex for both parties to interpret, leading to many employers being sued for breaching it, sometimes unknowingly, leading to heavy penalties.
EMPLOYEE RELATIONS AND IR – What to be aware of day to day
Problems in the workplace:
In an ideal world, we’d all have team members who are happy, do an excellent job, work well with their colleagues, customers and stakeholders, and don’t have the misfortune to have issues outside of work affecting their day to day. But we’re all human, and as such issues will arise, some unavoidable, that may need you to address at some point.
Unfair dismissal – Ideally, something you won’t have to experience, but it’s worth being prepared and armed with the facts should it arise. The provisions relating to unfair dismissal are found in the Fair Work Act in part 3-2, particularly section 385.
A person has been unfairly dismissed where:
The person has been dismissed; and
The dismissal was harsh; and
The dismissal was harsh, unjust or unreasonable; and
The dismissal was not consistent with the Small Business Fair Dismissal Code; and
The dismissal was not a case of genuine redundancy.
The Small Business Fair Dismissal Code provides protection against unfair dismissal claims for businesses with fewer than 15 employees.
It provides the process for dismissing employees fairly for small businesses. If you are in the unfortunate position of having to let someone go, there are a number of things to bear in mind:
Firstly, an employee must have been employed by their employer for a minimum of six months (or twelve months if the employer is a small business) to be eligible to apply for unfair dismissal.
That person has 21 days from the day after the dismissal to apply to the Commission, which will be tasked to determine whether it was harsh, unjust or unreasonable.
When dismissed, there must be a valid reason relating to the employee’s capacity or conduct, and they must have been notified of this reason, as well as given an opportunity to respond. The employee may have been offered a support person present at discussions about the dismissal (if it was reasonable). It must also be considered whether the employee had had warning about their performance, if the business size or lack of HR management impacted on procedure, or any other matters that may be relevant.
There are a number of different claims an employee can make:
General protections claims – an employer must not take adverse action against an employee because that person has a workplace right, has exercised a workplace right or proposes to exercise that workplace right. Adverse action includes
dismissing or refusing to employ someone;
disadvantaging them in their employment e.g. demoting them, not providing legal entitlements.
A person can make a general protections claim where they can show a connection between the adverse action and the workplace right. The claim must be filed within 60 days of the event.
Bullying & harassment.
When a workplace investigation is required
No business owner wants to have a workplace investigation, but they are obliged to investigate complaints as part of their duty of care, which is a duty to ensure the health, safety and wellbeing of employees. Even when you’re busy running the business, never avoid the requirement to hold an investigation as it could become a far bigger issue further down the line. It may be appropriate to bring in a external investigator in some cases.
In addition, it’s worth noting that where Workplace Health & Safety is concerned, the employer’s is legally bound to cover any penalty, should an incident occur, and to compensate an injured employee.
The size and resources available to the organisation may be indicative of the types of lengths they are expected to go to, to investigate and manage conflict within their organisation. In general the larger the organisation the higher the expectancy that the organisation will have proper measures and a Human Resources department to manage employment issues as they arise. If you’re a micro business with a handful of staff, there may be more flexibility on how much investigation is expected of you, but it’s good practice to go over and above, if possible.
Policies are an important part of the workplace and should be something to consider as you grow and start hiring. All employees must have ready access to the workplace policies – keep them in a public file online and have a hard copy available in the office.
It’s also important that policies are a living document, and don’t just get filed away to gather dust. Mark a regular time in your calendar to review (or appoint an HR consultant or lawyer to do so) to ensure they are still relevant for your business.
Policy documents may seem like a lot of work, but it’s worth it. They provide protection for both employers and employees. If well drafted and implemented they are in integral part of modern workplace.
So, how do you go about implementing a policy? There’s a number of steps we recommend to ensure team buy-in and ultimate effectiveness:
Consultation – consulting with management and staff during both the development and the implementation of the policy. This can help to identify pros and cons and the practicalities of the policy specific to your business, their every day roles, and ensure they’re on board from the start;
Clearly define the obligations of the policy – be specific in the outcomes, who the policy applies to and obligations created by the policy. It’s important it’s not just viewed as something that’s a necessary evil, but something that will genuinely help them in their job and in establishing and preserving workplace culture;
Put the policy in writing and make sure all employees are aware of the policy;
Provide training for all employees to understand how the policy works in practice;
Policies should be reviewed and updated regularly so that they comply with changes to law and internal organisational change. If the policy is majorly altered, this needs to be communicated to staff and the changes explained.
Building a business can be challenging. There’s a lot to think about from winning over clients to developing a brand to hiring premises and equipment. Ultimately, your staff are your biggest asset, and the value of having a great team around you can’t be overestimated. But if you are employing people, and they are relying on you, you need to be sure you’re aware of all legal requirements relating to your position as an employer. Make sure you arm yourself with the facts to be prepared for the unexpected, and regularly consider your legal obligations as you grow.
This article is general in nature and should not be considered as legal advice. If you have an issue in your business you should seek legal advice specific to your particular circumstances.