People Smartz Blog

This will be a short blog entry but probably the most important you will read!

Australia's new IR Laws come with a kick.  If you are non compliant you can be fined and forced to pay back pay, credit accruals, pay additional superannuation guarantee payments and additional pay roll tax - and that is only the start of the list!

Here are some examples of the ramifications if your business is found to be non-compliant:

• Non Compliance with Modern Award Conditions - a fine of $33,000 for a company for each breach plus the cost of back wages etc to the employee.
• Non Compliance with National Employment Standards - a fine of $33,000 for a company for each breach plus the cost of making up the breach to the employee.
• Avoidance of Employment Obligations (Sham Contracting) a fine of $33,000 for a company for each breach plus back taxes plus superannuation guarantee payments plus possible implications for payroll tax.
• Unfair Dismissal - back wages if found to be an unfair dismissal plus possible superannuation to the employee.  in addition, legal costs and lost opportunity costs in regards to time and effort to defend the claim.  Cost = many 000's of $$$.

The cost of being compliant is minimal compared to the costs of being caught out! 

Contact us today to arrange for a Free Compliance Assessment for your business.

Yesterday, while I was talking to a business collegue, she made a good comment - "why are business owners so willing to accept a risk when it is so easy to fix".

This comment got me thinking.  I am meeting with business owners everyday and I see them making such decisions.  For most it is simply a matter of whether they can afford to fix the problem or not - regardless of the level of risk.

The question for me is whether they are asking the right question.

Now we all know that the level of risk is a combination of the likelihood of something happening and the consequences if it does occur. 

It worries me that businesses often do not protect themselves against a risk until they actually get caught out by that risk.  When that happens the cost is often substantially more than than any risk control would have cost proactively.
 
This is particularly relevant with employment and workplace risk. Business owners can be reluctant to take measures to protect their business when it comes to their employees and their employment. 

I am yet to find an business owner who has not taken measures to protect their business against theft, fire, public liability etc.  Policies for these are in place and renewed annually.  When dealing with clients they ensure that their and their clients expectations are managed through appropriate agreements and procedures.  In short, in these areas, they manage their risk.

However, the number of business owners who do not manage the risks in employment should be a concern.  It is not unusual for me to come across businesses:

• Without employment agreements and other tools to manage expectations (such as position descriptions).
• Who are unaware of the appropriate award or agreement for use in their industry
• Without appropriate OH&S practices
• Without appropriate policies and procedures in regards to legislative requirements
• Who do not understand the unfair and unlawful dismissal laws
• Who do not understand the risk and cost of employee turnover.

This list could go on.  The truth of the matter is that the cost of a breach of any of the above would far out weigh the cost of implementing easy processes to alleviate them.

In that respect, the question should not be "can I afford them", it should be "can I afford not to have them controlled".

At People Smartz, we are currently offering a Free Compliance Review for businesses to enable them to assess their levels of risk. 

It is interesting the way businesses handle performance issues with employees. 

Some handle them promptly, professionally and in a way that encourages improvement.  Others handle them poorly, carry a big stick and get what they want through an aggressive approach.  Finally you have a group that do nothing at all - at least until the problem becomes so bad that it can't be ignored!

Avoiding conflict is human nature, generally managers and business owners don't want conflict within their business.  However, poor performance has effects on business performance, team morale and may result in conflict anyway.

It is important for Business Owners or Managers to undertake regular two way communication with employees.  Performance issues should be addressed as a matter of course, not as an exceptional circumstance.  If it is done correctly, then it can be seen as a learning event rather than a disciplinary issue.

My children have been taught at school that if they have a problem to do something about it - maybe this is a lesson we should all take on when it comes to performance issues.

Some hints to you in regards to managing performance:

1. Ensure your employees are aware of your expectations.  This can be in the form of position descriptions, goals and targets, employment agreements or various other instruments.  Talking to them regularly is another way of letting them know your expectations.
2. Make sure your employees know the effects of failing to meet your expectations in regards to business performance.
3. Ensure your employees know what to expect if their performance fails to meet these expectations. Ensure you have aprocess of communication and counseling for such issues in place and that everyone is aware of it.
4. Make sure your process initially is designed to encourage improvement in performance in a educational manner (so that they learn from their mistakes)
5. If they continue to perform poorly, have a system in place to manage the issue through to a positive outcome but with the recognition that continued poor performance may result in termination of employment.
6. Finally - if it does come to the point where the situation is no longer tenable - have a strong process in place to terminate employment.

Systems to encourage positive outcomes are your best defence against poor performance.  It is much better to manage performance in a positive manner than manage poor performance in a negative one - for you and your employees.

People Smartz Coaches can assist you with performance issues or with putting in place the systems you need to encourage positive outcomes.

Contact People Smartz today.

A few blogs ago, I told you about the new unfair dismissal laws and how they affect small business.

The new legislation becomes law on Wednesday, 1 July.  With these laws comes a revamp of the Australian Industrial Relations Framework.  With Australia's political landscape this is not really new - it regularly changes with changes of government!

As already stated, the new laws change the unfair dismissal laws.  Other areas that are affected are:

• The expansion of Workchoice's 5 minimum standards of employment to a 10 minimum standards.  With the new modern awards, these will form the new Safety Net for employees from 1 January 2010
• A change to the definition of small business
• Increased Union Right of Entry into workplaces for investigation, discussions and OH&S matters
• Significant changes to the manner in which industrial relations is governed with the creation of Fair Work Australia - a one stop adviser, mediator and arbitrator of the new laws.
• The abolition of AWA's (no surprise there!)
• An "emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations"
• The introduction of an additional discrimination jurisdiction under the Fair Work Act.
• Redundancy and Termination changes including the setting of minimum redundancy payments and notice periods 
• Maternity and Paternity Leave

With these new laws it becomes more important than ever to ensure your workplace has procedures and policies in place to respond to employee complaints and lay down expectations in the event of a dispute or issue.  In addition, you employment agreements may now contain clauses that contradict the new laws.  I recommend strongly that you seek some assistance to ensure you are ready!

Should you need any further information on the new laws, contact People Smartz and we will be happy to assist.

It is now under two weeks until the new Industrial Relations Laws take effect.

Small Businesses are effected by these new laws - yet recent survey's have shown that only 5% of Australian businesses are prepared for the changes!

One significant change to the laws are those concerning unfair dismissal.

The dismissal of an employee, for whatever reason, is an unpleasant thing.  Regardless of the reason, the dismissed employee is likely to feel hard done by and aggrieved.  It would be a very unusual employee who accepts a dismissal without some sort of hard feeling!

Many small business owners I speak to believe that because they have less than 15 employees they are not effected by the unfair dismissal provisions of the new law.  While this is technically right - it does not mean that small business can not be subject to a claim for unfair dismissal.

Under the new laws, small business must follow the "Fair Dismissal Code for Small Business" when dismissing an employee to protect themselves against a claim for unfair dismissal.  This does not stop an ex-employee from making a claim, but if you have followed the code then you may be protected from the ramifications.

So, the fact is that, as a small business, you can still be the subject of a unfair dismissal claim.  With the associated pain of handling the claim and the unpleasantness it causes, you need to do what you can to protect yourself.

Amongst other things, It is important to ensure you have good performance management systems in place.  If you have dismissed an employee for performance reasons, you need to be able to prove that you have counseled the employee and given them an opportunity to improve.  If you have not done this - then an unfair dismissal claim could be proved and your hip pocket is likely to take a hit!

There are many other things you can do and many other affects that you may not be aware of.  At People Smartz, we offer small businesses in the Brisbane and Coffs Harbour areas the opportunity to have a free risk assessment of their business.  In that assessment, you will learn about some of the other affects the laws will have on your business - and what you can do about it!

If you live outside Brisbane or Coffs Harbour, contact us anyway.  We will pass on your contact details to other members of the HR Coach Network.

To book your assessment - click below:

Free Risk Assessment of Your Staff Systems