This post is one in a series designed to help SME businesses benchmark their business and create a best practice business improvement plan across all of their business processes. You can find the links to the full series here.
What every business owner needs to know about employment contracts and HR policies.
The Australian employment relations system is complex and becoming increasingly more so. Companies that fail to maintain compliance with current employment legislation and best practice risk:
- Financial penalties and increasing legal costs. Under the Fair Work Act 2009 (“the Act”) the current maximum penalties for each breach of the Act are $54,000 for a corporation and $10,800 for an individual. Add to this the legal costs of defending a claim, and the financial impact on a company mounts up.
- Increasing administrative and time burden. Following particular procedures and practice may seem time consuming and a distraction from core business, however, failing to observe these procedures and practices may result in increased administrative burden in the long term through, for example, time lost in managing an unfair dismissal application, increased time spent with WorkCover following a workplace injury, or increased time defending claims of discrimination due to lack of Equal Employment Opportunity training.
It is essential that you have compliant and up to date employment contracts in place. These contracts while meeting these legal obligations, also serve to protect your business. For example, protecting your IP and maintaining confidentiality.
Even casual employees should be provided with an employment contract that confirms their casual role with your organisation.
In addition to legally compliant employment contracts, it is critical for every company to have clear, current and well-understood Employment Policies. Such policies will assist to establish behavioural standards, specify operational requirements, minimise possible legal liabilities and celebrate your company’s benefits. It is vital that, once created, these policies remain ‘living’ documents that are applied consistently & equally and are regularly updated.
A recent case saw an employee awarded $130,000 for injury caused by on-going sexual harassment. The company in this case was found to be liable for the harassment for a number of reasons, including the failure to have an Equal Opportunity policy that complied with recommended standards.
How does your business measure up?
Here’s a checklist to help you determine how well your employment contracts and HR policies stack up against best practice.
- All employees in our organisation have received and signed employment contracts.
- Our contracts – both permanent and casual – have been reviewed and updated to ensure they are compliant with the Fair Work Act.
- We provide contracts to our permanent and casual employees.
- We file all signed contracts securely and safely.
- We have legally compliant and up to date HR policies in place
- We review and update our HR policies on a regular basis
- All employees are provided with or have access to the HR policies
- We educate the team regularly on HR policies to ensure there is a clear understanding of these across the whole business
- We research and benchmark ourselves against other businesses in the market place and explore opportunities to introduce best practice HR policies
- We conduct equal employment opportunity training at least annually for the whole team, including Senior Management.
- Employees acknowledge and sign that they have received, read and understand our HR policies