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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:

  1. the duty to obey orders – they must be lawful and reasonable;

  2. 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;

  3. the duty to indemnify – an employer may be entitled to an indemnity from the employee for expenses occurring out of their negligence;

  4. the duty to provide faithful service – this is a duty of loyalty, or the duty of fidelity or good faith;

  5. 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;

  6. 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;

  7. 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.