If you’re ready to take the next step in expanding your business by hiring an employee, congratulations! This article runs through the legal basics for bringing on a new employee.
It is important to keep in mind that employment law is highly regulated in Australia, and you need to take special care when bringing someone on as an employee. You don’t want to get penalised or be required to backpay your employee for a legal oversight.
In this blog post, we’ll explore the essential legal considerations every Australian business owner should be aware of when hiring their first employee.
This article is part of two-part collaboration between Chromatic Accounting and Tax and The Legal Shop, bringing you both an accounting and legal perspective in hiring your first employee: check out their sister article here!
Initial Key Considerations
It is important to consider these questions when you think about bringing on your first employee:
- What is your budget for hiring the employee?
- What level of experience should they have?
- Will they be a full-time employee, part-time or casual employee? What about hiring them as contractor? Always seek legal advice before bringing someone on as a ‘contractor’ or regular casual employee, as there is a risk of misclassification which could result in serious liability for you.
- Do any modern awards apply to this employee? A modern award sets out the minimum employment standards for particular industries. If no modern award applies, the Fair Work Act 2009 (Cth) (Fair Work Act) sets out minimum entitlements.
A great starting point is to try conducting your own research into what modern awards might apply to your business, especially determining what minimum wage applies, then from this work backwards to vary the level of experience, working hours/days and market salary, to ensure that it falls within your budget.
Don’t forget to check with your accountant to ensure that you comply with all of your taxation and superannuation requirements and factor these into your budget as well! This article has some excellent tips to consider from an accounting perspective.
What happens if an employee isn’t the right fit?
Hiring an employee on a full-time or part-time basis comes with many obligations, but the most overlooked is: what if they aren’t the right fit?
Australian law has many avenues to protect employees, including unfair dismissal, general protections and anti-discrimination laws. The application of these rights may depend on the size of your business and how long the employee has been hired for – generally, the longer, the more challenging it is to terminate the employment.
The process for terminating an employee in a manner that does not put your business at risk of liability is quite involved. This is why it is so important to hire carefully!
Here are some practical tips to consider:
- Never terminate an employee without first getting legal advice. Serious consequences could apply such as unfair dismissal or adverse action claims.
- Implement a probation period for new hires, usually 3 to 6 months. Note that minimum standards still apply, including notice periods.
- Plan out your employee performance management strategy. For example, schedule regular meetings you’re your employee to measure performance. If there is any issue with performance, have a record in writing and work with the employee to resolve performance issues.
Employment Contracts
Most business owners have seen an employment contract before, and it is one of the first and and most important legal steps when hiring your first employee. An employment contract outlines the terms and conditions of employment, including the employee’s role, responsibilities, working hours, remuneration, and termination conditions.
This contract is legally required under the Fair Work Act, and it should be provided to the employee within the first few days of their employment. The Fair Work website also includes some prescribed documents you must give new employees at the start of their employment.
The biggest mistake I see is businesses trying to cut corners with their employment contract by trying to cobble it together themselves from online templates. Employment law is highly regulated and it is a highly disputed area.
You must ensure that your employment contract complies with all applicable awards, agreements, and minimum employment standards set by the Fair Work Commission. This is crucial for avoiding disputes and legal complications down the road. This is why it is so important to get legal advice and have your employment contract drafted by an experienced lawyer.
Employment Policies
An Employee Code of Conduct can be an important document to set the tone and culture of your business and allow you to point to a particular policy or standard of behaviour should you need to terminate employment based on one of the standards set out in the Code of Conduct.
Depending on the nature of the work, you may wish to implement employment policies such as an Employee Benefits Policy, Laptop and Equipment Policy, Work from Home Policy and Internet and Social Media Policy.
Though these documents are not mandatory, they can be crucial to protect you from liability later down the track and they also foster and encourage a work culture that reflects your values. Having a lawyer draft these policies, tailored to you is highly recommended.
Work Health and Safety
Creating a safe and healthy work environment is not only a moral responsibility but also a legal one. The Work Health and Safety Act 2011 (Cth) (WHS Act) places a duty of care on employers to provide a safe workplace for their employees. This includes:
- Conducting regular risk assessments and addressing hazards.
- Providing necessary training and safety equipment.
- Promoting a culture of safety within the workplace.
It’s essential to keep accurate records of all WHS activities and ensure your employees are aware of their rights and responsibilities regarding workplace safety. Failure to meet WHS obligations can result in substantial fines and legal actions.
You will want to speak toan insurance broker for any insurance requirements for hiring an employee. There are mandatory WorkCover Insurance requirements you should be aware of.
Key takeaways
- Do your own research! Consider practicalities of hiring an employee and implement regular, documented performance management and review from the start.
- Seek legal and accounting advice and services as employment law is highly regulated, both legally and financially.
- Have proper contracts and policies in place.
- Consider health and safety, and any insurance requirements.
Remember, staying compliant with these laws not only protects your business but also helps create a positive and secure working environment for your new employee.
We offer cost-effective, fixed fee employment packages for businesses. Book in a free consultation or contact us today.
