hr essentials - Evans Faull HR

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HR ESSENTIALS

A PRACTICAL GUIDE TO WORKPLACE COMPLIANCE

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IN THIS GUIDE... Overview 1 National Employment Standards

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Modern Awards & Agreements

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Employment Contracts

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Employment Policies

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Managing Employee Performance

9-10

Employee Termination

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HR Health Check

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About Evans Faull

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HR ESSENTIALS

A Practical Guide To Workplace Compliance As an Australian employer, navigating the workplace relations system is not without its challenges. The Australian workplace relations system is one of the most complicated in the world, which is why it is crucial your business maintains and communicates both up to date and compliant HR systems and processes. Ignorance or misinterpretation of employment law is not a valid excuse in the eyes of regulatory authorities. Fundamentally, as an employer, it is your responsibility to be aware of and adhere to all relevant employment legislation governed by the Fair Work Act and National Employment Standards. Ensuring your business is compliant, your processes are sound, and your managers have the knowledge and confidence required to manage your employees is essential in the current workplace climate. In this guide, we will look at the essential compliance elements that Australian employers need to know and understand. We hope you find it a useful resource.

Amanda Evans Founder & Director Connect with Amanda

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NATIONAL EMPLOYMENT STANDARDS

What are they?

Is your business at risk?

The Fair Work Act provides employees with a safety net of minimum terms and conditions of employment through the National Employment Standards (NES). The NES covers every employee in Australia, regardless of industry or location.

It is imperative that you understand your obligations to your employees under the Fair Work Act. You may be familiar with the 10 employee entitlements under the NES, but are you confident with how they are implemented in your business? For example, how would you respond to an employee’s request for flexible working arrangements?

The 10 minimum entitlements of the NES are: 1. Maximum standard weekly hours (38 hours for full-time employees, plus ‘reasonable’ additional hours). 2. A right to request flexible working arrangements. 3. Parental leave and adoption leave (12 months unpaid, with a right to request an additional 12 months).

Current penalties for single breaches of the Fair Work Act are $12,600 for an individual and $63,000 for a corporation.

Actions for you…

4. Annual leave (4 weeks per year for full-time employees).

• Ensure you give all new employees a copy of the Fair Work Information Statement. Get a copy here.

5. Personal leave (10 days paid for full-time employees) and compassionate leave (2 days paid each permissible occasion).

• Make sure you understand the NES and how it applies to your business. For more information on the NES click here.

6. Unpaid community service leave for activities dealing with certain emergencies or natural disasters (and jury service leave that is paid).

• Review your Employment Policies and Employment Contracts to ensure compliance with the requirements of the Fair Work Act & NES.

7. Long service leave. 8. Public holidays and the entitlement to be paid for ordinary hours on those days (employees also have the right not to work on public holidays). 9. Notice of termination and redundancy pay. 10. Employers must provide new employees with a copy of the Fair Work Information Statement.

*Title*

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The provisions set down in the NES are mandatory. You don’t have any discretion to ignore, exclude or provide anything less than these entitlements.

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MODERN AWARDS & AGREEMENTS

What are Modern Awards?

Is your business at risk?

In addition to the NES, you need to know what Modern Award(s) covers your employees. Modern Awards set out minimum pay and conditions for your employees.

• Do you know the Modern Award(s) that your employees are covered by?

Most employees are covered by an Award, except for some managers, highly paid employees or if there is an Enterprise Agreement in place. In these cases, the NES and Minimum Wage will form the minimum entitlements for these employees. Understanding what Modern Award covers your employees is just as important as understanding your obligations under the NES. It is common to have more than one Award covering different groups of employees based on their role in your business. Penalties for breaching the provisions of an Award are the same as the NES - $12,600 for individuals and $63,000 for corporations.

What are Enterprise Agreements? If you are looking for more flexibility in how you engage your employees, you can negotiate an Enterprise Agreement. Enterprise Agreements need to be voted on and approved by your employees (and approved by the Fair Work Commission). An Enterprise Agreement sets out the terms and conditions between an employee and their employer, above those in the NES, and the entitlements set out in the relevant Award. An Enterprise Agreement must ensure that all employees are better off overall than what they would be under the Award.

• Are you familiar with any Enterprise Agreement that applies to your business? • Are you confident that the provisions in the relevant Award and/or Agreement are being implemented correctly in your business? • Are your employees being paid correctly, including minimum wages, and other penalties and allowances that may apply? If you are uncertain about any of these questions, you could be at risk of breaching minimum employee entitlements, which can attract significant penalties.

In Australia there are industry & occupation modern awards.

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Source: Fair Work Commission

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MODERN AWARDS & AGREEMENTS

Actions for you…

Case Study

1. Locate, read and make sure you understand the Modern Award(s) that cover your business. Find your Award(s) here. 2. Undertake a review to ensure you know what classification within the Award applies to different roles in your business.

Recently, in the highly publicised case of Made Establishment,

3. Review all your employee’s pay and conditions against the relevant Award (and respective classifications) or Agreement, to ensure every person is being paid correctly. Find your Pay Guides here.

Celebrity Chef George Calombaris’ business was required to

4. Make a copy of the relevant Award and/or Agreement accessible to all your employees.

employee.

back pay $2.6million to 162 employees due to underpayment of wages. The back pay equated to an average of $16,000 per

The error was attributed to poor processes and incorrect allocation of classifications against the relevant award.

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Having to back pay underpayments is a costly process. However, in many cases the Fair Work Ombudsman has imposed further penalties against businesses in breach of minimum pays rates.

The minimum provisions contained in the Modern Award for your industry are mandatory. You cannot ignore, exclude or pay anything less than these entitlements.

These include fines, enforceable undertakings, regular audits with the business responsible for costs, reporting requirements as well as explicit media releases.

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EMPLOYMENT CONTRACTS

What are they?

Is your business at risk?

An Employment Contract is an agreement between your business and an individual employee, outlining the terms of their employment. The contract cannot contain any terms which are less than the NES and cannot provide a wage that is less than the minimum wage. In developing an Employment Contract, it is imperative that you ensure it does not breach any of the terms of the relevant Modern Award.

• Do you have legally compliant Employment Contract templates for your different employee types?

An employment contract should be a formal, printed document – ideally signed upon an employee’s commencement. As there are many types of employment, not all contracts can be created from a single template. Permanent employees will likely need different contract terms to that of a casual employee, who in turn would have employment conditions different to an employee on a fixed-term engagement.

• Do you have signed Employment Contracts on file for all your employees? • Do you fully understand the terms in your current contracts and are you confident they meet the minimum standards of the NES and the applicable Modern Award? • Are you confident that your employees are engaged under the correct type of employment and that their contract reflects this? • Do you engage independent contractors, and are you aware of the risks involved with these types of engagements? If you are uncertain about any of these questions, you could be at risk of breaching minimum entitlements, or of “sham contracting”, which can attract significant penalties and may require back paying entitlements.

Why do you need them? It is imperative that all employees have legally compliant, enforceable and comprehensive Employment Contracts. This will ensure employees are aware of their entitlements and obligations and your business will have some protection and certainty. In addition to meeting compliance and regulatory requirements, Employment Contracts should be easy to understand and easy to administer.

$4.8m

in penalties were handed down to businesses for non-compliance in 2016-2017. Source: Fair Work Ombudsman

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EMPLOYMENT CONTRACTS

Actions for you… 1. Ensure you have legally compliant Employment Contract templates that reflect the minimum entitlements set out in the NES and any relevant Award. In some cases, you will be required to state the Award and the employee’s classification under the Award.

Case Study In a February 2018 case, the Federal Court ruled that regardless

2. Ensure you have documented (and signed) contracts for all of your employees, stored in their HR file.

of a contract or payslip stating an employee as a casual worker,

3. Ensure you are engaging your employees under the correct type of employment. If a casual worker has been with the business for a while and works a regular pattern, they may be considered a permanent or part-time employee.

hours a week plus overtime for the last 15 years.

4. Ensure you understand the risks involved with engaging Independent Contractors and be confident you are not at risk of ‘sham contracting’.

regardless of having received annual leave loading as part of

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they were, in fact, a permanent employee as they worked 38

The court ruled that the worker was entitled to receive accrued annual leave paid out at their rate of pay at termination, their hourly rate. The business was ordered to back pay all of these entitlements at the rate that the employee was on when they left the business.

An Employment Contract can be verbal or written, however, verbal agreements put businesses at risk if the type of employment comes into dispute at a later date.

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EMPLOYMENT POLICIES

What are they?

Is your business at risk?

Comprehensive and up to date Employment Policies set expectations of operational activity and minimise the legal risks to your business. Ensuring that policies are properly understood by all employees is as important as having them. In order to be meaningful, your policies should be regularly reviewed and written in simple, concise language, while fully complying with the requirements of the Fair Work Act.

Do you have legally compliant Employment Policies, aligned to the Fair Work Act?

Often businesses do not regularly update their policies, and as a result, they fail to comply with the relevant legislation. If your policies are not compliant with the Fair Work Act, and as a result, the process you follow to deal with employee matters is not compliant, you could face penalties of up to $63,000 for a company and $12,600 for an individual. Businesses must be consistent in their application of policies to ensure that management expectations are transparent and that all employees are treated fairly and equitably.

Why do you need them?

Failure to have and effectively implement workplace policies may have serious consequences for your business, including WorkCover issues, claims of discrimination & harassment and unfair dismissal proceedings. The Fair Work Commission has highlighted the importance of clearly defined workplace policies. This extends to the responsibility of your business to educate employees on these policies and apply them equally and consistently across your entire workplace, beyond having them saved on a shared drive.

Australian companies can face penalties of up to if they do not comply with the Fair Work Act & NES.

$63,000

• They protect your business and give certainty to your employees. • They support the values and desired workplace culture of your business. • They work in conjunction with and operationalise Employment Contracts and other workplace legislation. • They ensure equity and consistency in decision-making. • They provide clear steps to be followed in the event of a policy breach.

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EMPLOYMENT POLICIES

Actions for you…

Case Study

1. Review and update your Employment Policies to ensure compliance with the requirements of the Fair Work Act. 2. Ensure your policies are written in clear language for all employees to understand.

An organisation which dismissed an employee for sexual

3. Provide a copy of your policies to new employees upon commencement and have them accessible in a shared drive or communal team area.

harassment was subsequently ordered to re-employ the sacked

4. Review and update policies annually.

company had a policy of zero tolerance to sexual harassment

5. Ensure you educate all your employee on your policies and have them formally acknowledge they have read and comply with them.

employee as they had failed to follow their own policy. The but failed to exercise the provision when the policy was breached.

6. Formally communicate any new policies or policy updates to all employees.

The Commission hearing revealed that the company had

7. As a minimum, to meet your compliance obligations, have the following policies in place:

breached its own policy when it issued the employee numerous

• EEO, Diversity & Inclusion

• Fitness For Work

• Termination

• Social Media

• Grievance & Complaints

• Technology & Communications

• Performance Management

• Flexible Working Arrangements

• Work Health & Safety

• Abandonment of Employment

• Drug & Alcohol

• Leave

unofficial warnings instead.

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Simply having Employment Policies in place is no longer sufficient to hold employees accountable, you must actively educate all employees on your policies.

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MANAGING EMPLOYEE PERFORMANCE

What is performance management?

Is your business at risk?

Managing employee performance is a broad process which includes managing under-performance, counselling and disciplining employees.

If you fail to correctly follow a robust performance management process, the consequences for your business could include:

You expect your employees to perform their roles to the best of their ability and behave in a manner consistent with the expectations of the business. Inevitably there will be occasions where employees do not meet the required standards, and as such you must know how to respond accordingly.

• Ongoing under-performance or inappropriate behaviour by employees.

The poor performance of an individual can have significant impacts on the productivity and success of your whole business and as such must be addressed swiftly and effectively.

When do you performance manage an employee? Conducting performance management is confronting for both employers and employees and is certainly not an activity either party enjoys. However, you are obliged to address issues with employees in a timely manner so that the employee is aware they are not meeting expectations and has an opportunity to improve. Performance management may be required when:

• Interpersonal conflicts and the development of a toxic culture. • Potential safety risks and workplace accidents. • A culture where principles of fairness and equity are not valued. • Claims for unfair dismissal including fines, payouts and/ or reinstatements. • Public backlash and loss of revenue or client base.

70%

of multinational companies are in the process of undertaking more regular conversations about employee performance and development. Source: Harvard Business Publishing

• An employee is under-performing in their job responsibilities. • An employee displays inappropriate or unacceptable workplace behaviour. • There is a breach of company policies or procedures.

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MANAGING EMPLOYEE PERFORMANCE

Actions for you… 1. Make sure you have a detailed Performance Management policy in place. 2. Ensure you have a performance management procedure (step-by-step guide) for your Managers to follow. 3. Provide training for your Managers to equip them with the skills & knowledge required to manage and resolve employee issues. 4. Develop File Note templates (for recording discussions & counselling sessions). 5. Develop Warning Letter templates.

Case Study In the case of Welsby vs Artis Group, the employee made a claim for unfair dismissal when he was terminated for poor performance and behaviour. Although the commission accepted that there was a valid reason for the termination and that the employee was notified about this valid reason a number of times, the employer had not formally warned the employee that an outcome of the situation may be termination.

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They ruled the dismissal unfair and awarded $7,670 in compensation. Effective Managers should consider the ‘why’ when assessing a decline in employee performance or behaviour. Open and honest communication may assist in getting to the cause rather than just addressing the symptom.

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EMPLOYEE TERMINATION

What is the process for termination an employee?

Is your business at risk?

You must have a valid reason for terminating an employee. Terminating (or firing) an employee can occur for a number of reasons, but is generally as a result of:

Your business is at risk of an unfair dismissal claim if you do not:

• Poor performance or behaviour.

• Provide feedback, counselling and training to the employee. • Give the employee the opportunity and time to improve. • Issue the employee with appropriate warnings, and explain the consequences of further inappropriate performance or behaviour.

• Breach of company procedures. • Gross misconduct. • Changes to the operational requirements of the business (redundancy).

In the event an employee is being terminated for behavioural or performance issues, you must follow the steps detailed in your Performance Management and Termination policies. To avoid unfair dismissal claims, it is essential that you follow a compliant performance management process.

• Conduct a termination meeting where the employee is given a final opportunity to provide an explanation for their performance or behaviour. • Take sufficient time to consider the employees’ response and make an informed decision accordingly (we suggest allowing at least 24 hours to consider their response). • Communicate the decision to terminate the employee (preferably in person). • Follow up with a termination letter including a summary of the events, the reason for termination and the final day of employment.

15,000

unfair dismissal applications are received by the Fair Work Commission each year.

• Follow the required notice period obligations as stated in the employee’s Employment Contract or the NES.

Source: The Australian Financial Review

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EMPLOYEE TERMINATION

Actions for you... 1. Develop a robust Termination policy to ensure any terminations follow a ‘due process’ that is not ‘harsh, unfair or unjust’.

Case Study

2. Understand the Fair Work Act requirements for termination. 3. Ensure your Managers are competent to make any termination decisions and understand the required process.

In the recent case, Sighn v Areocare Flight Support (2016), the

4. Seek advice before making any termination decisions.

found the company had failed to investigate the applicant’s

Fair Work Commission ruled in favour of the applicant as they response to the matter leading to termination. Fair Work also found that a 10 minute phone conversation after interviewing the employee was insufficient time to properly consider and weigh up all the facts obtained during the

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investigation. They ruled the dismissal unfair and awarded $8,000 in compensation. Even though there may be a valid reason for termination, unless ‘due process’ is followed, you could be at risk of penalties.

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HR HEALTH CHECK Free HR Health Check

Following your HR Health Check

We specialise in helping growing and medium businesses comply with their HR obligations. We offer a no-obligation, free HR Health Check to help get you on track.

We will provide you with a summary of the findings and recommendations, and an implementation plan to build a compliant HR foundation for your business.

Australia’s employment relations system is complex. It’s easy to miss a requirement or overlook an update while you are busy running your business - that’s where our free HR Health Check can help. We will find out what you have (and don’t have) in place, identify areas of risk, and make recommendations on how you can ensure workplace compliance while enhancing the capability of your team.

The HR Health Check covers: • Recruitment & Induction • Job Descriptions & KPIs

Your HR Health Check includes:

• Employee Pay & Entitlements

• 2-hour review & consultation

• Employment Contracts

• Review of your current HR systems, processes and documentation

• Employment Policies

• Identification of areas of risk and potential exposure

• Performance Appraisals

• Recommendations to ensure workplace compliance and achieve best practice

• Performance Management • Employee Exits

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ABOUT EVANS FAULL We are an experienced and dedicated team of HR, training and recruitment specialists who understand the unique people challenges that businesses face. We provide flexible and cost-effective HR solutions, tailored for your business, and delivered by caring experts who are committed to achieving positive outcomes.

We’re proud to have helped...

Our team, headed by Directors, Amanda Evans and Bill Faull, brings a broad range of knowledge and experience, gained from providing HR solutions to businesses across a diverse range of industries.

Amanda Evans

Bill Faull

Nicole Rennie

Founder & Director

Founder & Director

HR & Training Specialist

Michelle Price

Rebecca Hawkins

Libby Laird

HR Advisor

HR Advisor

Recruitment Advisor

Evans Faull HR Level 1, 1405 Malvern Rd, Malvern VIC 3144

Enquire about your free HR Health Check >

Ph: 03 9023 4736 [email protected]