People Smartz Blog

It is becoming more and more apparent, that no matter how small your business is, you can not avoid your obligations in regards to meeting your employer obligations.

Many thanks to our great friends at Brands Law for this great example of the line of thinking to which our courts are dealing with breaches of the Fair Work Act:

"Back in April 2011, in a case involving underpayment of penalty rates to employees, Magistrate Hawkins said there was a need to "send a message to the community at large and small employers particularly, that the correct entitlements for employees must be paid and that steps must be taken by employers (of all sizes) to ascertain and comply with minimum entitlements (as opposed to ignoring those obligations).

"Compliance should not be seen as the bastion of the large employers with human resources staff and advisory consultants (accountants, consultants, lawyers) behind them"."

In a speech in May 2011, the Fair Work Ombudsman made a point that it "was not sufficient for companies to turn a blind eye and hope that they are meeting their obligations".  He particularly made the point that companies need to make sure that they are resourcing their obligations appropriately.

With this type of language coming from our courts and the Ombudsman, it is very evident and important that all businesses, regardless of size have in place a system for ensuring compliance with their awards, the Fair Work Act and the National Employment Standards.

Our experience with small to medium sized businesses has shown that business people are finding it more and more difficult to manage these obligations.  As we have said in our blog posts before - the system itself is not built for small business.

Unfortunately, it appears that the message from our courts is that small businesses need to manage their obligations similarly to the way they would be handled in big business.  However, small businesses do not have the human resources staff etc to do that!

Understanding your obligations can be difficult and managing them can be time consuming. The place to start is to ensure you are compliant now!

Why not book one of our People and Business Reviews where we can help you identify the actions you can take to ensure you are meeting your obligations.

Book your review today!

For the last two years, we have released many blogs posts on the unfair dismissal laws contained in the Fair Work Act.

Earlier this month, Fair Work Australia released its latest quarterly report.  It contains some interesting numbers in regards to unfair dismissal claims and the Fair Dismissal Code for Small Business

With unfair dismissals, the tribunal received 3219 unfair dismissal applications in the quarter. The overwhelming majority of these (2564), were settled at or before conciliation. The tribunal made decisions on only 64 dismissal claims in the quarter, finding 24 were unfair and 40 fair.  Only 18 claims resulted in a decision awarding compensation to the ex-employee.

Employees are now much more aware of their rights under the act and claims are on the rise.  Many of our clients are reporting that claims made against them have been frivolous and they have settled "just to make it go away".  The numbers released this month certainly seem to uphold what they are telling us!  

From the numbers presented by Fair Work Australia, The Fair Dismissal Code for Small Business is not working!  While 609 applications related to a small business employee, only two were rejected because the dismissal was consistent with the code. 
We believe this is a worry - if followed, the code is designed to protect a small business from unfair dismissal claims.  At People Smartz, our experience is telling us that, if they know about the code at all, most businesses are finding it difficult to understand - after all, it is basically a corporate process that they need to follow!

We believe that small businesses are generally finding it difficult to work with these laws and over time the issues they present are compounding.  The latest set of numbers from Fair Work Australia seem to indicate this is correct!

Given the current state of Australia's workplace laws, small businesses need to ensure they have the systems in place to protect them against unfair dismissal claims.  This includes having appropriate systems in place to manage poor performance and terminate staff.  

At People Smartz, we are experienced in assisting our clients to put such systems in place.  For many years, we have had in place a review process for small business called a "People and Business Review".  This is designed to review what is in place in your business and assist you to identify the changes you need to make to protect your business.  Why not book yours today?

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A recent case before Fair Work Australia has emphasied the importance of employers having a fair and published process in regards to handling disciplinary problems with staff.

The case (Michelle de Leon v Spice Temple Pty Ltd [2010] FWA 3497, revolved around the "abrupt and quite unprofessional" manner with which an employee had dealt with a high profile customer.

As a result of a complaint from the customer, the employee was dismissed from her position.

The Deputy President of FWA was very critical of the employer because:

• the decision to dismiss the employee was made prior to meeting with her to discuss the issue.  In the words of the Deputy President, she was effectively "ambushed" by the allegation and was given no opportunity to respond to the allegation.
• she was not given the opportunity to have a support person present at the meeting (the employer did suggest that the staff members immediate supervisor was present to support her but this was not accepted).
• she was not given any written warning about her conduct nor was she given a letter of dismissal stating the reasons for the dismissal.

The unions last week began a push to enable casual employees to transfer to permanent employment.

The plan proposed by the unions would require employers to make casual employees permanent after 12 months.  There was also some discussion in the plan about governments “favoring’ companies with majority permanent workforces in the awarding of contracts. The unions believe such an approach is necessary to tackle “precarious employment”.

Business groups were not happy (as you would expect) claiming that such moves would drive companies “to the wall”.  They called the approach a “misguided view of the jobs sector” and said “it doesn’t relate to the modern-day Australian economy, which is dominated by the services sector”.

We gave had such rules before.  In 2004/5, rules where “regular and systematic” casual employees were allowed to request part time employment were introduced.  We had a similar “hue and cry” then!

From my experience, very few casual employees wanted to take up the opportunity.  Australian workers generally understand the difference between casual and permanent employment and are often loath to let go of the 20-25% loading for casual employment. 

Casual employment is designed to allow an employer to handle the peaks and troughs of their business.  Casual employment contains no guarantees and no expectations of employment beyond the end of the current shift.  In its purest form, it is “call and come to work”.  Because there are no guarantees or expectations of future work, a loading is paid to compensate for the lack of annual leave, sick leave etc etc.

But the needs of the business often necessitate rostering casuals for work, sometimes weeks in advance.  Overtime, this leads to businesses adopting rostering systems which virtually “guarantee” work to a casual.  Basically, the employment becomes “regular and systematic”.  When work becomes regular and systematic, the question needs to be asked – are they really casuals?

This is the point behind the unions push.  If a person is employed as a casual but doing regular shifts and systematic work then they should receive the entitlements of permanent employees because in practice, that is what they are.

Whether you agree or don’t agree with the unions, there are many advantages to creating a permanent workforce in your business.  A guarantee of employment encourages commitment and develops “ownership” in the role.  Accountability is easier to assign to someone whose employment is guaranteed and your ability to develop consistent behaviors’ is improved.

Many businesses I deal with argue that putting on permanent staff “takes away the flexibility” from their business.  For some businesses this may be true, and for them, I would not recommend such a measure providing the employment they were offering was not “regular and systematic”.

Another argument I often hear is that it is too expensive to have permanent employees.  Well, the fact is that in the long run it is probably cheaper!  While you need to accrue leave etc, you will not be paying the 20-25% loading and your productivity will most probably improve.  The reality is that it often has nothing to do with “cost” but more to do with “ease” – it is easier to pay everything out with a 20-25% loading than have to “accrue”.

The ease of “getting rid” of casual employees is also stated as a reason for keeping people as casuals.  However, the reality is that if they are regular and systematic in their employment, the unfair dismissal rules will most probably apply – the end result being that this argument is flawed in its execution!

For any workforce, permanent or casual, I recommend you sit down and work out the number of hours being worked in your business.  Is there a constant number of hours worked in each week?  This is the first step in working out whether you can (or should) put permanent employees in place.  If you can, casual employees can then be used to handle the peaks and troughs – not for the constant hours.

If you must have casuals in your business, then think seriously about how you work with them.  Do you roster them in a regular and systematic way?  Do you need to do this?  Can you do it any other way?  In other words – do some workforce planning!

Would you like to know more about how you can improve the use of people in your business?  At People Smartz, we assist businesses in planning for the most efficient and effective use of their workforce.  We work with you to ensure that you are using your most important resource in a manner which leads to success for you, your business and your team.   Call us today!   

Recently, the Parliamentary Secretary for School Education and Workplace Relations said that the number of unfair dismissal claims under the Fair Work Act had increased.

She said the number of claims in the 12 months to June this year was 10,751.  This is significantly up from 2008-2009 where a total of 7,994 claims were made.

If you like talking in terms of percentages, this is a 35% increase in claims.

Significantly, she also said that “83% of claims” were resolved through conciliation.  She used this as evidence that the new system was “working”. 

I am seeing clients weekly who are becoming more concerned about the effects of the new laws and the ease of making an unfair dismissal claim. For them, the figure of “83% of claims” is evidence that the system is “not working”.

They are hearing stories of businesses paying “go away” money to make these claims go away – regardless of the validity of the claim.

Now, there has to be some protection for employees against unfair dismissal – I don’t think anyone will argue with me on that. Laws of the type we have now work better in the corporate environment, and largely that is where their designed for use (I will not argue whether they “work” in the corporate environment – that is another issue).  In smaller businesses however, a different set of circumstances are at work.

First, SME’s normally do not have access to HR Teams or the systems in place to manage problem situations.  Normally they are handled from gut instinct or based on a small amount of experience.   Often that experience is under previous industrial relations regimes and not necessarily relevant to the current circumstances.

Second - Without having the systems in place, the business owner and the employee are often directly affected by the complexity of the new laws.  The majority of small business owners I have spoken to have never heard of the “Fair Dismissal Code for Small Businesses” and have very little idea about the steps they need to take to protect their business – and themselves.

I regularly receive calls from businesses that are having problems with employees.  Because they do not have formal processes in place, they are concerned that their actions may result in a complaint or claim against them.  The regularity of these calls is increasing.  Another example of this is the increasing number of businesses approaching People Smartz to request assistance with putting in place systems to protect their business – this has increased by 22% since this time last year!

For the first time ever, we are also receiving calls from employees – asking how they go about making a claim!  Over the last month, we have received 12 such calls with another 5 queries through our website. All except one have revolved around perceived unfair treatment in the workplace or underpaid entitlements.

While this is good for our business, the fact is that small to medium sized businesses need education, a concentration on developing fair and equitable systems and assistance with developing productive and efficient workforces.  They do not need increased complexity, aggressive regulation and regulatory systems that encourage claims regardless of their validity. 

However, this is the regime that we have.  The Work Choices legislation has resulted in a polarization of the debate about the industrial relations system and we are unlikely to see a constructive debate about the system for awhile yet.  As a result, businesses need to work to develop the needed systems and infrastructure to ensure they are compliant.

People Smartz is ready to assist small to medium sized businesses to ensure they are compliant and protected.  We offer a number of services designed to review and inform businesses of the areas of risk in regards to the new legislation.  Why not start by booking your Human Resources Review of Your Business today!

 

 

 

Over the last two months, we have seen a huge increase in businesses requesting we conduct our free compliance check on their business.

The reason for this is the implementation of the new Modern Awards and the National Employment Standards.  We are now seeing the effect of these new awards and standards on business and the additional burdens they involve.

Our experience with these reviews has enabled us to identify the 5 most common things we are seeing that businesses need to change because of the new laws.

Here they are (in no particular order):

1.  Expectations of 40 hour working week - a 40 hour working week is not in accordance with the National Employment Standards.  These standards set the maximum number of hours at 38 hours.  Now there are ways businesses can continue to use a 40 hour working week providing their employees are better off overall.  But these need to be agreed in writing through either individual flexibility agreements or a collective agreement.
2.  Ordinary working hours not in accordance with the new Modern Award - the new awards may include a change to the hours used to define ordinary working hours.  This means that from 1 July 2010, overtime or penalties may kick in at new times when compared to other agreements. These are subject to transition arrangements, but businesses need to be aware of the potential of extra cost here.  Once again these may be changed by individual flexibility agreements etc.
3.  Businesses still utilising State Awards - All Australian States (except W.A) have referred their powers for industrial relations to the Federal Government.  This means that, except for state government employees, the vast majority of employers previously on a state award are now covered by new modern award.  Businesses need to be aware and compliant with the appropriate award.
4.  Lack of awareness of National Employment Standards - the National Employment Standards lay down the minimum standards of employment for all employees.  By not being aware of the changes between the standards and their current practices, employers run the risk of being in breach of the standards.  A couple of the most common things we are seeing are an unawareness of new work flexibility requirements and the altered termination and redundancy requirements.
5.  Thinking they can ignore the changes - this is just not a smart business move, but a number of businesses are electing this option.  I recommend if you are considering this, you visit the Fair Work Ombudsman website and read the press releases concerning the breaches they have identified and taken action against.

Should you be concerned about your business, or you want to check to made sure your doing things right -  book yourself in for one of our compliance reviews today!

Happy New Year!

Listening to the news last night here in Brisbane, the reports were on many new laws/changes being introduced in the new year.  Bus Fares were going up, politicians were going to be paid more etc.

But there was not one mention of some of the most wide spread changes to the working lives of Australians.  Effective today, Australia's new system of modern awards and the National Employment Standards (NES) will now govern the way businesses employ and manage their staff.

Over the past 6-8 months, I (and many others) have been seeking to raise awareness of these changes and urging businesses to prepare.

Today, the time for preparation is over - from today it is time to act......

If you haven't already identified your new award, it is time to do it.

If you haven't looked at the New Employment Standards (NES), it is time to do it.

If you haven't already identified the changes to your employment practices that will need to be made, it is time to do it.

If you haven't already put in place policies and procedures to protect your business, it is time to do it.

If you haven't already ensured your employment agreements are consistent with the new laws, awards and standards, it is time to do it.

If you haven't got appropriate processes in place to mitigate risk in areas such as harassment, discrimination, Health and Safety etc, it is time to do it.

If you haven't got a engagement plan for the unions relevant to your business, it is time to do it.

If you haven't got a plan for "good faith bargaining" and consulting with your staff, it is time to do it.

If you haven't looked into how to introduce flexibility into your business through "individual flexibility agreements", it is time to do it.

Not a bad list is it?  And this is only the start! 

For more information, visit the members section of our website today!

Only 37 days to go until Modern Awards and the National Employment Standards take effect, use this time Now!

In 37 days, Modern Awards and the National Employment Standards will begin governing the working relationships of nearly all Australians.  Recent legislation passed by state parliaments will see the Federal System of awards covering all private businesses in Australia for the first time. This is a significant step forward in Australian Industrial Relations.  For the first time ever, we will be coming close to having a national system governing employment relationships.

At People Smartz we are working with many businesses getting ready for the changes.  For many, the changes are small, for others significant.  With the Fair Work Ombudsman releasing media statements daily regarding the investigation of small businesses for underpayments or breaches of the legislation, it certainly pays to ensure you are ready! (I invite you to visit the FWA website www.fwa.gov.au to see their press releases - some of the numbers are impressive!) 

As an example - one change that we often see with our clients relates to working hours.  There is exposure to real risk as some businesses have been working a 40 hour week, and the law puts in place a maximum 38 hour week. 

We therefore recommend you look carefully at your business now.  Some questions to ask yourself are: 

• How will the Modern Awards affect my business?
• Are my contracts (employment agreements) up to date and consistent with the new laws?
• Do my employment arrangements cover the 10 National Employment Standards
• Do I have position descriptions?  Do they fit in with the Modern Award?
• Do we have a strong performance management system in place?

On the People Smartz website we have available for download an information sheet on the new laws.  Our Forum area is also available for you to ask questions and seek advice for your business. 

In addition, we have a number of services, such as our Free Compliance Review which you can take advantage of to assess your business.

The important thing is not to leave this until 1 January - check your business now! 

Laws regarding the use of Independent Contractors have been around for quite a few years now.  These laws are designed to provide increased protection against employers who try and avoid their employment obligations by using what are called "Sham" agreements.

Independent contractors run their own business and should be free to negotiate their fees and working arrangements.  They may provide their services to any number of clients.

Employees have set minimum entitlements (payment of wages, annual leave, personal leave etc) and are subject to the control and direction of their employer.

A "sham" agreement occurs when an employer deliberately disguises an employment relationship as an independent contracting arrangement in order to avoid paying an employee his or her entitlements.  It is possible that an employer who makes arrangements in this way could be fined up to $33,000. 

Many businesses I work with enter into independent contractors agreements in order to "benefit" both the business and the person doing the work. There is no intention to deceive or avoid obligations - just an intention to "do the right thing by all" by improving the return to the "employee" and to save the company money.

Unfortunately, this could be opening up a minefield for the business and the independent contractor.  If the arrangement has been made with the intention of avoiding obligations on the businesses part, it can result in fines, back taxes and other costly penalties.  There can also be tax ramifications for the independent contractor.

When reviewing whether the working relationship is one of employment or independent contract, the Fair Work Ombudsman will look at the circumstances.  Things such as how the work is performed, who bears the commercial risk, whether the work is results based or not, who sets the hours of work, whether the individual has a right to delegate work and who provides the equipment used are some of the many factors which can be taken into account.

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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The Australian Industrial Relations Commission has been releasing over the last couple of months the new Modern Awards to cover employment within Australia from 1 January 2010 .

The process is continuing and by the time January 1 comes along, all employees under $108,000 per annum will be covered by one of the new modern awards.  This includes professional occupations who previously had not been covered by an award - some of them under a new "catch-all" award created for the purpose of ensuring they are covered.

While not all the awards have been released, a list of the one's released so far (with a copy available for download) is available from http://www.airc.gov.au/awardmod/fullbench/awards.htm

I would strongly recommend that you review this list and download the award applicable to your industry.  From 1 January 2010, when the awards become effective, you will be required to be complying with the award applicable to your business.  The time to start preparing is now not on 31 December!

The businesses I am working with on preparing for the new awards vary in the amount of work they need to do to prepare for the changes.  It really does depend on the individual business.....

If you want to know more, as well as a suggested list of activities you can undertake to help yourself prepare for the changes - visit out website by clicking below and downloading our information sheet.

Australia's New IR Laws - Information Sheet

If you have any questions about the changes, please feel free to contact us or post a question on our forum page!  Our forum is also hosting a discussion on what effects you believe the new laws are going to have on your business - why not give us your thoughts today!

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The People Smartz Forum