Human Resources has an incredible opportunity to build growth and people capability in organisations right now. However, there is also an opportunity to build HR compliance frameworks which might take some capital investment of time and money up front but will give board members, owners, directors and human resources (HR) the ability to sleep at night knowing they have taken a number of steps to reduce their liability and risk.
Tip 1 – Wage and Audit review
In a previous article we wrote about several companies and their directors who were held responsible for underpayment of wages:
- Chatime
- Woolworths
- MasterChef judge – George Calombaris
- Priority Matters
- Metro Petroleum
- Easttrac Pty Ltd And Klemtrac Pty Ltd
So how can you prevent this?
Misclassification of modern awards can cause significant problems in HR and payroll systems. Getting this incorrect (even inadvertently) in an automated system causes exponential problems. As such, getting the classification correct especially in a business which may have multiple different workers involved is integral.
Rates of pay especially when it comes to overtime, loadings, shift allowances and other allowances also needs to be correct again getting this wrong will cause a cascade of problems. Underpayment of wages is one problem but so are penalties against individuals and the company. A Court or Tribunal may impose pecuniary penalties of up to $13,320.00 for an individual person or $66,000.00 for a company involved in a breach.
For further information have a read of 3 Tips For Minimising Risk In Underpayment Of Wages.
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Tip 2 – Update your employment contracts
Written employment contracts should be an essential part of any HR compliance for business. However, updating the terms of the contracts is not a usual course of action. Undertaking a regular review prevents problems around inadvertent breaches of industrial instruments such as modern awards and enterprise agreements.
In the article Why You Can’t Afford To Take Your Eye Off The Ball When It Comes To Old Contracts the Queensland Reds paid a hefty price for having an old and insufficient contract in place. This cost the organisation $150,000 for a coach who worked for a total of 6 weeks. A review does not need to be overly difficult but getting it right requires an employment lawyer to carefully draft specific clauses that cause contention including but not limited to:
- Restraint of trade
- Non-competition
- Intellectual Property
- Bonuses
- Confidential Information
- Warranties
- Off set clauses
- Annualised Salary
- Casual employment
- Time and effort
- Inventions
- Salary
- Location of work
- Position description
- Key performance indicators
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Tip 3 – Policies and Procedures (are organic documents)
Workplace policies are statements of principles and practices that guide how your staff manages your organisation, handles operational problems and complies with legislation and codes of practice.
Policies ensure consistency in management, efficiency in decision-making and most importantly allow you to deal with underperformance and misconduct quickly and easily to maintain your business’ reputation.
Workplace policies are organic documents that set out:
- Expected standards, behaviour and conduct
- Conditions of employment
- Statements of purpose
- “Common Sense”
- Unique and “unspoken rules” of the company
Workplace policies are the only employment documents that you can unilaterally change. You as an employer have the power to choose whether you implement a policy or not, change a policy or not.
But with many employers unaware of the power they hold, workplace policies are often the most underutilised documents in the workplace.
1. Code Of Conduct
A Code of Conduct outlines the high standard of behaviour that is expected in the workplace. A Code of Conduct can cover an employee’s behaviour and their responsibilities towards their employer and company property. It can also cover language, standards of dress, dealing with grievances and maintaining other employment.
2. Workplace Health And Safety
Regardless of the work environment your business operates in, your staff face health and safety risks. A workplace health and safety policy addresses these risks and ensures best practices are employed in the workplace for everyone’s safety and wellbeing. Having a Workplace Health and Safety policy that outlines safety procedures and the responsibilities and obligations of staff can avoid tragedy, minimise damage, and allow you to take necessary disciplinary action and prevent liability.
3. Disciplinary Procedures
A disciplinary policy outlines the process you will take as an employer in issuing a warning or terminating employment. It should also outline the behaviours that may lead to warnings or an employee being dismissed without warning. Having a clear disciplinary procedure that includes regular evaluations and write-ups of misconduct or under performance can help you to keep staff accountable and guard against an unfair dismissal claim if a situation results in termination.
4. Use Of Company Property
Over the course of employment, an employee can have access to a significant amount of company property from computers, phones and laptops through to customer records and intellectual property. For this reason, it is important to document the expectations you have of employees and their requirements when handling and using company property. This should also outline the consequences of damaging, losing or stealing company property.
5. Interactions With Customers
In many cases, your employees will be the first touchpoint a customer has with your business, and the impression they make can be the difference between gaining and losing a sale. A policy covering the way you expect employees to treat customers, handle complaints and follow procedures not only safeguards your reputation but also helps you maintain a consistently high level of service and address any behavioural breaches swiftly.
6. Discrimination, Bullying And Sexual Harassment
All workers have a right to feel safe in the workplace. Discrimination, bullying and sexual harassment policies should clearly define what is classified as discrimination, bullying and sexual harassment and outline preventative measures, as well as clear processes for making and following through on a complaint.
7. Social Media
With significant time spent on social media and a growing trend to share everything openly even encouraged by organisations as a marketing tool, a social media policy that requires employees conduct themselves professionally when using the company social media accounts and their own social media accounts is essential.
Your social media policy should outline the restrictions on staff using social media at work, what is acceptable and unacceptable behaviour online and their requirements when managing the company’s social media accounts.
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Tip 4 – COVID-19 Policy – can prevent unfair dismissal and general protections claims
In the matter of Fesshatsyen v Mambourin Enterprises Ltd (2021) FWC 1244 (Mambourin Case) the company had brought in a new policy to prevent the spread of COVID-19 – a compulsory temperature check before entering the workplace.
The employee at the centre of the Mambourin Case did the following:
- Initially took the temperature check but because it read a very low (and therefore impossible reading)
- The second reading was 38.5 degrees which was higher than the policy mandated limit of 38 degrees
- Despite the reading the employee remained on site at the workplace
The policy required the employee if they received a reading higher than 38 degrees to:
- Immediately notify and disclose this to a designated person
- Immediately isolate
- Leave the work site
- Go home or to a medical centre
The employee did not.
The Employer undertook an investigation and were confident to dismiss the employee for failing to follow reasonable and lawful directions and comply with all reasonable instructions to protect their own and others health and safety.
The Employer was eventually able to successfully defend an unfair dismissal claim in large part because of the COVID-19 policy temperature check in place.
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Tip 5 – Review Sexual Harassment practices and procedures
New sexual harassment laws are on their way as the Federal Government implements the Respect@Work report handed down by the Australian Human Rights Commission.
There are a number of aspects to the report but the main couple of points for business are:
- Positive Obligation On Employers To Take Reasonable And Proportionate Measures To Eliminate Sexual Harassment
- Expansion Of The Definition Of Serious Misconduct Under The Fair Work Act
The practical effect will require an Employer to take positive steps to eliminate sexual harassment risks this may include:
- more specific sexual harassment training
- sexual harassment specific policies
- cultural lockdown on industries and areas where traditionally sexually inappropriate behavior has either been explicitly accepted or impliedly accepted (or even ignored)
- investigation obligations which may require more scrutiny and transparency
- steps taken to actively consider psychological and psychosocial risks
Tip 6 – Contractors – beware of sham contracting
If you engage contractors, we recommend asking yourself the following questions:
- How much control do I exercise over my contractors? – you may wish to consider whether you have made it clear to your contractors they are free to reject work.
- Do I allow my contractors to work for other businesses? – you may wish to ask your contractors if they are performing work for other businesses and make it clear that they are permitted to. If they do perform work for other businesses, you may wish to make a note of which business they work for.
- Do I require my contractors to provide their own tools and equipment? – contractors generally provide their own tools and equipment in addition to any applicable insurance.
- Do I allow my contractors to sub-contract? – contractors are generally allowed to delegate their services to another contractor.
- How am I paying my contractors? – contractors are generally paid on a task basis as opposed to being paid for their time (e.g. a cleaning contractor might be paid for each square metre they service as opposed to being paid by the hour).
Given the potential risks of misclassifying a worker as a contractor as opposed to an employee (such as underpayment of wages, non-payment of entitlements such as annual leave or breaches of sham contracting laws), it is important to consider whether your workers have been engaged correctly. Breaches of the sham contracting provisions of the Fair Work Act 2009 (Cth) may expose businesses to penalties of up to $12,600.00 per breach for key individuals (such as Directors or Managers) or $63,000.00 per breach for a company involved. Read more here Contractor Or Not A Contractor – Uber Delivers Clarification.
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HR Compliance may seem straight forward but the penalties and fines (as well as negative publicity) that goes with getting this wrong is too high a risk to pay. Capital costs are required. Yes expect to spend money to get these 6 opportunities underway but it will go a long way to putting the organisation in an good opportunity for growth.
NB Lawyers – Lawyers for Employers undertake and offer an obligation free consultation – we are happy to help.
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Written By
Director
NB Lawyers – Lawyers for Employers
Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars.