People Smartz Blog

In October 2009, I wrote a blog article regarding the increasing risk businesses were putting themselves under when utilising independent contractors in their business.

This article was titled Independent Contractors - Benefit or Risk to Your Business? and you can read it again by clicking on the link - I strongly recommend you do.

An independent contractor is someone who is self-employed and contracts his or her services to clients - most often other businesses.

Unfortunately, over the years a number of employers have used this as an avenue to avoid their obligations to their employees in respect to things like accruals, superannuation and other entitlements.  These type of arrangements are called "Sham Contracts".

There has been a very strong push against Sham Contracting by the Fair Work Ombudsman over the last 12 months.  In particular, these investigations have revolved around three industries - cleaning, hair and beauty and call centres.

These audits found that 23% of businesses had "mis-classified" employees as independent contractors.  In other words - nearly a quarter of those companies audited were mis-classifying employees as independent contractors.

A recent experience of company I know is an example of how these laws can effect a business:

About this time last year, I met with a gentleman who had started a commercial cleaning company. Based on common practice in the industry, he had engaged a good number of independent contractors to service his growing client base.

Now, he had developed a business model designed around several main "objectives" including high cleaning standards, good quality cleaning products and a highly organised workforce.

The problem was that these "objectives" also defined the relationship he had with his "independent contractors".

Over the past 12 months, he has worked hard to grow his business.  During this time, he had also worked, with the aid of a specialist company, to set up his independent contractor arrangements and bring them within the requirements of the legislation.

During that period he has also been audited by the Fair Work Ombudsman and successfully negotiated their investigation.  

However, he was advised several weeks ago by the company assisting him that they could not continue to assist him (I should point out for very legitimate reasons with no fault on him or his company).

The result was that he could not continue to run his company on the model he had developed - utilising independent contractors.

He was faced with a choice - continue to operate with independent contractors and face potential issues with the law or move his team to an employment arrangement - given his experience with the Fair Work Ombudsman, he decided to abide by the law.

Unfortunately, when he spoke to his independent contractors, they were not willing to move to an employment relationship. 

This left him with only one option - to wind back his business to the point where the work could be handled by himself and his partner.

So the end result - a good number of people are now out of work, a number of businesses are now looking for a new cleaning company and a once thriving, growing business is now "diminishing" in size and operations.

This story highlights how the wrong employment structure can affect your business.  It was never the intention of the Fair Work Ombudsman's activities to create this situation - this is the result of having the wrong structure operating in the first place.

My recommendations from October 2010 still have a strong meaning now and I recommend you consider them in your business: 

"I strongly recommend to my clients before entering into independent contractors arrangements that they closely review the relationship they are forming.  While the benefits of utilising independent contractors are significant, if not structured properly, they also introduce an element of risk to the business."

People Smartz is able to assist businesses with the process of employing independent contractors.  If you have, or are considering, independent contractors in your business - contact us today.

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Yes it nearing the end of the year.  We are entering party season - a great time to unwind, rub shoulders with workmates etc.  This can be a fun time!

But end of year parties have a very serious side as many of these antics lead to "regrets" after.

Recent research in Australia found that 70% of people believed that hitting the booze led to a more "personal" feeling amongst staff.  Nearly a quarter of females interviewed admitted that their boss had made a pass at them at an office party. 

Such behaviours can present many problems for businesses, particularly if the "antics" involved lead to a complaint from a member of staff regarding the behaviour of another.

It would be easy to say "no office party" or "its too risky", but sometimes the advantages of holding the party far outweigh the negatives.  The decision to have or not have one is one for the business alone. 

I would recommend a level headed approach to this years Xmas party - making sure the party is well planned and your staff are aware of the required behaviours before hand.  This way you can have the fun while managing the risk!

To help you plan for your businesses party, download our Christmas Checklist today.

Recent research has identified the challenges businesses are facing in managing people in 2011.

This is quite a list!  

• Uncertainty in times of change impacts on confidence of employers and clarity of their strategic direction.

• Fatigue of key employees and additional workload due to shrinking workplaces leads to disengaged workers or management turnover.

• Labour is on average the largest cost to business. The statistics show that it is escalating due to employee expectations for pay increases, the growing anxiety of individual debt and increased competition between employers for talent.

• Over 50% of employees will be looking for new jobs in the next year.

• Employers are ramping up employee numbers but not planning on wage increases.

• Small business is struggling with the fact that they cannot attract quality applicants.

• It is estimated that it can cost more than $48,000 to replace an average employee on $45,000 a year.

• The Red Tape Commission estimates 75% of businesses struggle with paperwork and compliance.

• According to the published National Accountant, 65% of employees have experienced harassment.

• Changes in legislation causes confusion and mistrust. Businesses are at risk externally and it cannot be ignored. Changes in the health and safety and parental leave in Australia are major changes in compliance.

• Internationally, labour laws are becoming more stringent and complex, adding a cost and compliance burden that did not exist before.

• The aging workforce, generational shift, technology adaptation and social media impact are issues that will take hold in the coming year.

If you identify with any of these and are wondering how you can meet the challenge - then give People Smartz a call!  Contact Us

Fair Work Australia has published their decision varying the General Retail Award 2010 to allow casual school aged workers to work shifts shorter than 3 hours.

The award has been varied as follows:

Clause 13.4 is varied by the addition of the following words at the end of the clause:

“provided that the minimum engagement period for an employee will be one hour and 30 minutes if all of the following circumstances apply:

(a) the employee is a full time secondary school student; and

(b) the employee is engaged to work between the hours of 3.00 pm and 6.30 pm on a day which they are required to attend school; and

(c) the employee agrees to work, and a parent or guardian of the employee agrees to allow the employee to work, a shorter period than three hours; and

(d) employment for a longer period than the period of the engagement is not possible either because of the operational requirements of the employer or the unavailability of the employee.

As we have stated in a previous blog post (Common Sense at Last! After School Work Back on the Agenda for Teenagers), we believe that this decision is a win for common sense by Fair Work Australia.  It is a pity that it has taken so long, and a needless appeal to make it happen!

To download the determination, download the Determination from Fair Work Australia

Today I was almost involved in an accident in my car.

I was driving along the road, the last of three cars travelling along a suburban street.  Up ahead was a side street with one car waiting to turn out and another waiting to turn into it.

Unexpectantly, the first of the two cars ahead of me suddenly stopped to let these two cars exit and enter the side street.

Taken by surprise, both I and the driver of the second car braked hard.  Unfortunately, the second car was unable to stop in time and drove straight into the rear of the first car, which then crashed into both the cars turning.  Luckily, I was travelling far enough behind to avoid being physically involved and my car was undamaged - something I can not say for the other 4 cars involved.  

More importantly, no one was injured in the accident.

Now what has this got to do with a blog about business you might ask?

Well, it teaches us a lesson in why it is important to manage expectations in your business - when you don't, the unexpected happens!

We have road laws that control how traffic behaves, signs that indicate who is required to give way or stop, speed limits and many other things that are provided to ensure we are safe and consistent on the road.  Today's accident occurred (in my opinion), because someone decided that they would do the "unexpected".

Simply, he stopped to allow traffic that legally did not have the right of way to turn.  As he stated after, he thought he was "doing the right thing" and that "they could be waiting for ages".  

The problem was that this was not a behaviour those travelling behind were expecting - we were expecting him to follow the rules.  He hadn't even thought that others would be expecting him to do something different!

Now we have said before in this blog that the number one thing we see when asked to assist businesses with issues that develop with people is that there is an inconsistent approach to expectation management.  

When expectations aren't clear or not understood, then problems occur.  In the case of the car accident, the expectations were clear, but the understanding was not - the driver did not understand the need to stick to rules, he did not understand the effect that his actions may have (I am sure he does now!)

So there is a lesson to be learnt from today's event - how you deliver and ensure understanding of your and your businesses expectations is important in ensuring your business remains on track - without any "accidents".

This is were tools such as position descriptions, employment agreements, codes of conduct, processes and procedures become very important.  They lay out the basic "expectations" of the business in regards to behaviours, customer and peer interaction, business development etc.  If these are clear and easily understood, you are a long way along the track to ensuring a smooth running business.

In line with this is ensuring that you have strong systems to communicate formally and informally with your team.  This includes performance management systems and the way you pass on important information.  Regardless of the size of the business, these systems in themselves can be designed to improve both individual and business performance.

Equally important is the demonstrated behaviour of owners and managers of your business. By ensuring your own actions are line with these expectations, you are providing an example to your team.

If you would like to improve the performance of your team, first look to how you manage your expectations - For many years, we at People Smartz, have been assisting in ensuring that businesses run smoothly through the strong development of these expectation management tools and behaviours. Call us today to assist you!

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The HR Coach Research Institute has released its latest quarterly index.

The latest information coming out of the business sector indicates a significant drop in business confidence and a unique situation developing in terms of a two speed economy.  

The following summary is provided courtesy of the Institute:

"Alarmingly, this data was compiled before any firm Carbon Tax plan was released by the federal government, thus does not account for the affects of the proposed tax. In light of this, confidence and sentiment in the business sector will most probably not improve in the coming quarter.

Furthermore, job advertisements fell, as did job creation in the past quarter.

The multi-speed economy in Australia is presenting the business sector with the unique situation that has the economy growing whilst at the same time making business owners retreat into survival mode. As a result long term planning and strategy are suffering.

Interestingly employee satisfaction levels within the business sector are higher than those of business owner's satisfaction with their own business. This could exacerbate already strained relationships."

You can download a copy of this latest research from our website - HR Quarterly Index

On Monday, Fair Work Australia finally laid down a decision that should have not been required in the first place.

Nearly a year and a half ago, a number of teenagers lost their after school jobs because of a clause within the General Retail Award which basically said a casual could not work for less than a 3 hour period.

For these teenagers, this effectively ruled out going to work after school as the time between school finishing and the retail outlet they worked in closing was less than 3 hours.

Now having restrictions on the minimum hours that can be worked is understandable.  In fact, to a certain extent, I support them.  However, when you are restricting the ability of teenagers to learn important work habits, then the law needs to be modified.  

Arguments from unions etc that easing this restriction would lead to "job losses" and "lower wages" did not really argue the primary point - that by enforcing this rule we were interfering with what is basically a vital learning area for our younger generations.  To suggest that allowing teenagers to work out of school hours was going to cost adults jobs just goes against the fact that most of those adults started exactly where these teenagers are now - with after school work!  Where did these adults learn the work habits that brought them to employment in later life if not in jobs such as these?

While it took 16 months and 3 rounds of arbitration to get there, this is a decision that should be congratulated. Despite the unions and government supporting the maintenance of the 3 hour limit, the tribunal has decided that provided a certain set of circumstances exist, a school aged person can work for less than a 3 hour period.

Under the new arrangements, school age persons can work a minimum of a 90-minute shift.  This will apply only if the employee is a full-time student; that the hours worked are between 3pm and 6.30pm on a school day; and the employee and their parent or guardian agrees on the shorter period. The shorter period is also allowed only if employment for a longer period is not possible because of the operational requirements of the employer or the unavailability of the student.

These arrangements are simple commonsense.  It is a pity it took so long to arrive at this decision!