The essential guide:

To HR compliance.
NES & Awards, Employment Contracts, Employment Policies,
Independent Contractors and Performance Management.

The essential guide: To HR compliance 1

Proactive
Compliance.
Recognise and resolve mistakes before they become
serious problems.
If you’re like most small business owners and managers, you probably
wear many hats. You’re the CEO, bean counter, marketing whiz, sales
guru, chief recruiter, lead developer, and more.
But if you’re growing fast, you’ll get to the point when you need expertise
in all these areas and this includes the human resources space.
All too often HR tasks are pushed to the bottom of the to-do list,
or worse, placed in the too-hard basket because it’s easy to get lost
in the complicated rules and processes. Yet to create a winning business
culture, you need to be proactive in the area of HR. And this means
being able to recognise and resolve HR mistakes before they become
serious problems.
Use this essential guide to tick HR compliance tasks off your to-do
list before they turn into costly legal claims.
The essential guide: To HR compliance
Contents.
01. National Employment Standards and Awards

04. Employment contracts

05. Workplace policies

08. Independent contractors

11. Performance management

The essential guide: To HR compliance

01.
National Employment
Standards and Awards

“Awards, together with the National Employment Standards (NES)

are an integral part of Australia’s employment landscape.”

Modern Awards provide minimum wages and conditions for employees

so it is critical for you to identify which particular award applies to your
employees. Even if you are paying above Award rates, you also need
to meet other provisions of the Award including providing the correct
entitlements in relation to leave, penalty rates and hours of work.

Correctly classifying employees is critical. To classify employees, look

for an industry award with relevant classifications, otherwise, reference
an “occupational award”. All too often, underpayments and breaches
of awards occur simply because employers have referenced the wrong
Award and/or are not aware of the entitlements attached to each Award.
It never hurts to get a professional opinion in this scenario, even if it’s
just while you are setting up shop. Better to spend some money getting
it right rather than lose a huge amount to compensate for getting it wrong.
The essential guide: To HR compliance 1
Case guidance.
Underpaid journalist wins
$128k compensation.
By inadvertently misclassifying an employee,
one company was found to have underpaid
a journalist throughout their entire employment
and was ordered to pay almost $128,000 in back
pay and interest.
The Federal Circuit Court found the journalist should
have been classified as a grade 4 employee and,
Complying with
until the last pay period in June 2010, should have
been paid according to the Journalists (Specialist
NES and Awards.
Publications) (State) Award (NSW) and the minimum
wage instrument under the Fair Work (Transitional
Provisions and Consequential Amendments) The only way of avoiding a huge back
Act 2009. pay claim is to know your full obligations
Further, from the first pay period after July 2010 up front.
until 11 January 2011, he should have been paid
according to the Journalists Published Media This means you need to have a thorough understanding
of the terms and conditions of each of the awards that apply
Award 2010. He should also have been given
to your business.
20 weeks’ redundancy pay and payment
in lieu of notice. The most efficient way of doing this is to use HR and payroll
software that is pre-configured to the rule set of the modern
As such, the journalist was entitled to $83,210 awards that apply to your business. Keeping accurate time and
as compensation for unpaid wages, redundancy wage records is also essential. They not only ensure that your
pay and pay in lieu of notice, as well as $44,693 employees continue to be paid at the correct rates but also
in interest. satisfy any parties that any potential errors were made in good
faith.

The essential guide: To HR compliance 2

NES vs Awards.

Terms NES Awards

• Annual Leave • Coverage

• Personal & compassionate leave • Breaks
• Community service Leave • Classifications
Non-negotiable • Long service leave • Consultations
• Public holidays • Payment of wages
• Termination of employment • Annual leave
• Reasonable additional hours • Termination of employment

• Hours of work
• Allowances
Negotiable • Overtime & penalty rates
• Annual leave loading

The essential guide: To HR compliance 3

02.
Employment
Contracts

While employment contracts can be verbal, you’ll get into all sorts of trouble
if you don’t record an employee’s terms and conditions when you hire them.
Employment contracts written in plain English help you minimise costly
and time-consuming disputes by providing certainty about the legal rights
and obligations of both you and your staff.
Your legally compliant employment contracts need to include details
of the employee’s award (if applicable), work hours, leave entitlements,
and remuneration. An employment contract also should set out information
on termination of employment, the protection of confidential information
and intellectual property, as well as post-employment restraints.
It’s also best practice to include a list of the duties and a job description
along with your workplace policies. New employees should sign off
on workplace policies as part of their onboarding process.
The essential guide: To HR compliance 4
03.
Workplace
policies

Every business needs to have clear and easy to understand workplace

policies and procedures in place. They protect your business from a range
of situations, whether it’s social media, inappropriate computer use,
discrimination or harassment.
Policies are key to developing your business through your people
and protecting it against financial risks.
A policy is only effective if properly communicated and uniformly enforced
to all employees. This means you need to explain the policy and provide
training if necessary to ensure your employees understand how to comply
with the policy and the consequences if they breach it. Make sure employees
sign off on a document acknowledging that they are aware of the policy
and understand it completely. Should you wish to terminate an employee’s
employment for breach of workplace policy, it’s essential that you can show
that the employee was aware of the policy and that it was both lawful
and reasonable.
The essential guide: To HR compliance 5
Policy
checklist.
1. Clearly explain the conduct expected of employees, and the consequences of breaching policies.

2. Ensure all employees have easy access to your workplace policies.

3. Regularly audit workplace policies to keep them up to date with relevant laws and other policies
and procedures in your company.

4. As part of your onboarding program, ensure all new hires review and acknowledge their awareness
and understanding of your workplace policies.

5. Clearly explain the conduct expected of employees, and the consequences of breaching policies.

The essential guide: To HR compliance 6

Case guidance.
Ineffective zero-tolerance
alcohol policy.
A machine operator at a poultry farm who was
dismissed for turning up to her job drunk won
her unfair dismissal claim.
However, while the employer argued there was
a “zero-tolerance” alcohol policy in the workplace,
the Commission found there was insufficient
evidence to show that the worker was bound
by it. As the employer did not have evidence
to show the worker had read and accepted the
policy, the employer could not rely on the policy
to justify the termination.
As a result, the employer was ordered to pay
the worker $7,000 in compensation
plus superannuation.
This case highlights why you need to be clear
on what your policies expect of staff and that
staff are made aware of the policies.

The essential guide: To HR compliance 7

04.
Independent
Contractors

These days many small businesses need to rely on contractors to quickly

adapt to changing business conditions.
Engaging independent contractors can provide greater flexibility to meet
short term changes and increased demand for specific skills.
However, while contractors run their own business and provide services
to your business, you can’t classify a worker as a contractor simply because
they have an ABN and they offer specialist skills. Furthermore, having
a worker sign an agreement that states they are not an employee does
not necessarily make it so.
If you misclassify an employee as a contractor, they can claim for unpaid
leave entitlements, superannuation, and unfair dismissal. You may also
be charged with sham contracting which brings penalties of up to $51,000
per breach (with potential personal liability for directors and managers).

The essential guide: To HR compliance 8

Independent Contractors vs Employee Checklist.

Indicator Employee Independent Contractor

Degree of control over how work is performed Performs work, under the direction and control Has a high level of control in how the work is done.
of their employer, on an ongoing basis.

Hours of work Generally works standard or set hours. (Note: a casual Under agreement, decides what hours to work
employee’s hours may vary from week to week). to complete the specific task.

Expectation of work Usually has an ongoing expectation of work (Note: Usually engaged for a specific task.
some employees may be engaged for a specific task
or specific period).

Risk Bears no financial risk (this is the responsibility Bears the risk for making a profit or loss on each task.
of their employer). Usually bears responsibility and liability for poor work
or injury sustained while performing the task. As such,
contractors generally have their own insurance policy.

The essential guide: To HR compliance 9

Independent Contractors vs Employee Checklist cont.

Indicator Employee Independent Contractor

Superannuation Entitled to have superannuation contributions Pays their own superannuation. (Note: in some
paid into a nominated superannuation fund circumstances independent contractors may
by their employer. be entitled to be paid superannuation contributions).

Tools and equipment Tools and equipment are generally provided Uses their own tools and equipment. (Note:
by the employer, or a tool allowance is provided. alternative arrangements may be made within
a contract for services).

Tax Has income tax deducted by their employer. Pays their own tax and GST to the Australian
Taxation Office.

Method of payment Paid regularly. (For example, Has obtained an ABN and submits an invoice
weekly/fortnightly/monthly). for work completed or is paid at the end of the
contract or project.

Leave Entitled to receive paid leave. (For example, annual Does not receive paid leave.
leave, personal/carers’ leave, long service leave)
or receive a loading in lieu of leave entitlements
in the case of casual employees.

The essential guide: To HR compliance 10

05.
Performance
management

Even where you have a valid reason to dismiss an employee, it’s critically
important to follow due process. In performance management, it’s typically
not the facts that matter, but the process. Procedural fairness is fundamental
to how the Fair Work Commission makes decisions regarding unfair
dismissal cases. If you fail to show you have applied procedural fairness
before dismissing an employee, or your performance management process
is flawed, it will usually result in a finding that the dismissal was unfair.
So, when you’re handling cases of unsatisfactory performance, you must
investigate the matter thoroughly and maintain records accordingly.

The essential guide: To HR compliance 11

A quick guide
to procedural
fairness.

1. 2. 3. 4. 5.
Asking the employee Providing appropriate Giving the employee Allowing the employee Documenting
if there is a reason and timely warnings adequate time to bring along a the process.
for their poor in writing. to respond and support person to
performance. improve their meetings.
performance.

The essential guide: To HR compliance 12

Case guidance.
Lack of procedural fairness
The employment of an executive manager at an IT integration company was terminated
because of the ongoing poor financial performance of a branch under his management.
The company had spoken to the employee on a number of occasions regarding the poor
financial performance of the branch. However, at no time did the employer warn him that
his employment was at risk.
The employee subsequently made a successful claim for unfair dismissal on the basis that
the employer did not warn him that his poor performance put his continued employment at risk,
and he was not given an opportunity to improve his performance.
The Commission agreed. It determined that while there was a valid reason for the termination
and the employee was notified of the reason on three separate occasions, the termination
was harsh, unjust or unreasonable because:
• The employee had not been given an opportunity to respond to the proposed termination.
• The employee had not been warned that his continued employment would be in jeopardy.

The essential guide: To HR compliance 13