15 Employment regulations you’re probably breaking
And how to fix it.
Did you know, there are Australian employment laws you must meet. Your employees sure do. It’s time you did too.
Otherwise, you risk heavy penalties, potential fines. You can lose your business you’ve worked hard to build. Worse, if one of your employees dies while working for you, you can go to jail.
Scary, I know, right? Let me relieve your stress and worry. By teaching you the Australian employment law essentials. And how to navigate your way around them. You will learn what you need to know to keep both you and your employees safe from risk. And meet the employment law essentials you must have.
There are 15 employment rules and regulations. Every manager and business owner must know. They are:
National Minimum wage and national employment standards
Provision of two information statements the fair work information statement (FWIS). And the casual employment information statement (CEIS)
- Modern Award
- Terms and Conditions of employment
- Provision of payslips
- Keeping accurate records
- Company policies and procedures
- Provide a safe workplace
- Workers compensation insurance
- Procedural fairness
- Managing performance
- Privacy and personnel files
- Provide rosters 7 days in advance
- Sham contracting
- Unfair dismissal
1. National minimum wage
National minimum wage and the national employment standards
The national minimum wage. And the national employment standards. Are both essential to know when employing people in Australia. You must know what they are. Your business must meet these requirements when employing people.
For most employees, the minimum wage is according to the relevant Modern Award. Every year the minimum wage goes up. So, on 01st of July each year the minimum wage will increase. It’s essential that you check what the rate is. According to the Modern Award of relevance to your employee and their role. It’s not on the industry you work in. It’s your industry and the employee’s role.
You can stay up to date by registering with the Fair Work Ombudsman. Then you’ll get up dates sent to your email. Otherwise, you can check in each year to find the new rate.
Consequences of not meeting this law:
Fair Work Ombudsman v Simon John Hickey
Date: 24 September 2021
Nature of Proceedings: Non-compliance with a Fair Work Commission order and underpayments
Penalty: $30,000
Decision: Fair Work Ombudsman v Hickey (No 2) [2021] FedCFamC2G 80 (24 September 2021)
How to fix it
Get familiar with what the current minimum wage is. By clicking the link national minimum wage. As you will see, it’s updated every year. So, you need to check every July 01. I recommend registering with Fair Work Ombudsman to receive updates.
The same as above for the National Employment Standards. Make sure you’re familiar with them. There are 11 you need to know and meet.
- Maximum weekly hours of 38.
- The right for your employees to requests flexible working arrangements.
- Your right to offer. And your employees right to request. To convert from casual to permanent employment. Offers and requests to convert from casual to permanent employment.
- Know your employees parental leave rights and the related entitlements. Parental leave and related entitlements
- Provide your employees with the correct annual leave.
- Your employees have various types of leave they’re entitled to. Make sure you know them and respond to any leave requests within a reasonable time. if it will not impact your business and they have enough leave available grant the leave. Make sure they will have enough left to cover any shut down period such as Christmas. The leave types are annual, Personal/carer’s leave, compassionate leave. And unpaid family and domestic violence leave. As well as community service leave, long service and so on. Keep a record of any leave taken. And record leave accrued.
- Community Service Leave Community service leave
- Long Service Leave Long service leave
- Know your employees’ entitlements in relation to public holidays. Check according to your state or territory.
- Understand your employees’ entitlements to Notice of termination and redundancy pay.
- You must provide a copy of the Fair Work Information Statement. And the Casual Employment Information Statement.
- Provision of two information statements
2. Provision of two information statements.
You must provide every employee a copy of the Fair Work Information Statement. As soon as they start employment with you. Employers of casual staff. You must also provide a copy of the Casual Employment Information Statement.
Consequence of not meeting this law
You can receive a fine of $66,600 plus each time you fail to provide an information statement to an employee.
There have been decisions by the Federal Court of Australia. About a failure to provide a copy of the Fair Work Information Statement. Large fines such as in this case. Building Industry Inspectorate v Foxville Projects Group Pty Ltd. [2015] FCA 492 (21 May 2015.
How to fix it
Get familiar with your obligations as an employer. You must provide a copy of the Fair Work Information Statement. And the Casual Information Statement when you have casual employees. Attach links to your employment agreements. Or include the links in your email offering employment. So, you have a record that you’ve provided them.
3. Modern Award
Modern Award each employee comes under
It’s important that you know which minimum award relates to your employees. You must pay your employees according to their relevant Modern Award.
Consequence of not meeting this law
Case: Fair Work Ombudsman v 63 Racecourse Rd Pty Ltd & Anor
Date: 12 August 2021
Nature of Proceedings: Underpayments, wages, and conditions. Failing to {follow} Award re individual flexibility arrangements (IFAs)
Penalty: $170,000
How to fix it
Know what Modern Awards are relevant for your employees. They may come under an industry, a role or skills set. In some instances, there is no set Modern Award, so use the find my award tool. If you’re not sure you can reach out to us to help. There is one more option, you can use the Miscellaneous Award. But make sure you’re using the right Modern Award for each employee.
4.Employment terms and conditions
Employment agreements or contracts of employment. They are not required by law but super important. It highlights both you and the employees’ roles and responsibilities. It sets the right foundation and clarifies the rules.
You don’t want to get stung later, by a person whose done work for you. If you’ve handed work to a person, you thought was a freelancer or independent contractor. Be sure your engagement protects you from them asking for their super later. You must make it clear in your terms and condition. What is the basis of your relationship? It’s the whole relationship that makes it clear.
Don’t rely on the ATO contractor vs employee tool. This can be of high importance on such matters of contractors and freelancers. So, you have a person work for you on an Adhoc basis. Do you pay them on completion of the work? Are they an individual or billing you through their business? These are some of the many factors in deciding whether they are independent or an employee.
On 9 February 2022, the High Court handed down decisions in relation to this matter. In CFMMEU v Personnel Contracting [2022]. This impacts ATO advice and guidance in relation to classifying workers.
The ATO contractor vs employee tool can be a helpful guide but at times is still unclear. The best way to protect your business. And be clear and fair to the person your business is passing work to, is to write clear terms in your agreement. These terms need to spell out what you are paying them for. And what they are liable for in relation to their tax and super. Does the rate you’re paying cover super and they’re liable for their own tax?
Read Lawpath’s article on Employment Contracts.
Terms and conditions of Employment agreement what are they:
These are the rules of engagement with your business. How you expect people to behave and work while representing your business. It’s like having a license to drive. Every driver needs to know the road rules first.
Risks of not having clear employment terms
Even if you don’t have a written employment agreement or contract. Once a person starts working for you, it’s deemed you have entered a contract of employment. You risk exposing your business to many risks without clear terms and conditions.
How to fix it
The terms and conditions are vital in disputes. This is critical to protect your business. Protection from a senior member of staff taking your confidential information. It’s important to protect your business with the right restraints clauses. This is a critical area to consult a specialist about. An employment lawyer or HR Consultant can provide you with this support.
You can always get a free template from various places. But remember, you get what you pay for. Have your terms and conditions looked at by a specialist. Make sure your templates are worth the time you put into it. See Lawpath’s article about Non-Compete Clause.
Read My Wage.org’s article on employment contracts. Use the Australian Government website business.gov.au to guide you on building an employment contract. But you will need them reviewed by either an employment lawyer or HR Consultant to check they’re legal.
My suggestions of Items you need to consider including:
- Pay and conditions
- Relevant award
- Minimum entitlements
- Hours of work
- Location of work
- Probation period
- Termination
- Performance and Misconduct
- Confidentiality
- Intellectual property
- Any other specific items they need to be aware of. These are to protect themselves and your business interests. Such as confidentiality, intellectual property, and restraint of trade clauses.
Crucial points to consider
Another important point for those who want to protect themselves from risks. Such as, severe financial burden in contracts. Comes from a recent Federal Court ruling. About the ATO checklist used to decide if a person was an employee or an independent contractor. If you’re like me, you would want to understand and know the details.
Read the case of CFMMEU v Personnel Contracting Pty Ltd. This case has led to a reconsidering of contractor vs employee.
The devil is in the detail of the whole relationship not only on the contractual terms. The problem is with modern ways of working. People are unclear on what makes up an employee/employer relationship. And what forms an independent contractor. Take the entire relationship into account.
It’s advisable to seek legal counsel from a reliable source. This is no longer a simple case of drawing up a contract with the terms, you would like, to protect your business. Defend yourself and your business. Not only now but in the future too. From any unpleasant experiences with the Law or Regulations. Seek wise council before allocating work to a third party. Also, make sure your agreements relate to the right state or territory. In which your business operates.
5. Provide payslips
You must provide payslips within 1 day of paying your employees. They need to include leave balance for annual and personal. As well as hourly rate, salary, tax and super.
Consequence of not meeting this law
Fair Work Ombudsman v My Salon Erina Pty Ltd [2021] FedCFamC2G 343 (10 December 2021)
Date: 13 December 2021
Nature of Proceedings: Non-compliance with a Compliance Notice, failure to provide payslips
Penalty: $80,000
Date: 10 December 2021
Penalty: $68,400
How to fix it
Use accounting software such as:
Or if you run a micro business and don’t have accounting software you can provide a manual payslip. You must make correct calculations. Spell out all the important points. Such as tax and superannuation. Include annual leave, personal/carer’s leave. And the applicable Modern Award.
6. Keep accurate records
Employers must keep accurate records on each employee for 7 years. Keep certain information needs for each employee.
Important to note:
Paying cash in hand. You must keep accurate records to be able to pay cash. It’s illegal to pay cash without a record of:
- the hours worked
- the hourly rate paid
- tax
- superannuation
- annual leave
- sick leave
- Consequence of not meeting this law
Case: Fair Work Ombudsman v Fu Kang GC Pty Ltd & Ors
Date: 1 December 2021
Nature of Proceedings: Wages and conditions. Failure to make and keep records. Failure to provide payslips. Providing false and misleading records, underpayments.
Penalty: $225,500
How to fix it
Use accounting software. Check the information is correct. Keep your employee files on a secure drive on your computer system. If there are any handwritten or printed files keep them in a secure filing cabinet. Make sure they’re available to access if requested by a Fair Work Ombudsman inspector. This is your evidence.
These files are private. So, you must keep them private and treat them with care. To follow privacy legislation.
7. Policies and procedures
Company policies and procedures (the rules)
You need to make people aware of them. Understand them and review them from time to time. You also need evidence that people are aware of them. And understand them. These are the rules of your business. They usually relate to the law and any regulations. They’re also social standards that we expect.
It’s important that you have them. But also, that people understand them. They’re monitored and revised or updated. And you provide training. It’s a good idea to test people’s understanding of them too.
Consequence of not meeting this law
Kate Mathews v Winslow Constructors (Vic) Pty Ltd [2015]. Resulted in a whopping $1.36m payout for economic loss. Pain and suffering for failing to act on sexual, bullying and harassment claim.
In Nationwide News Pty Ltd v Naidu & Anor; ISS Security Pty Ltd v Naidu & Anor (2007) 71 NSWLR 471. It was also a negligence case. Based on failure to provide a safe place of work. The New South Wales Court of Appeal upheld a damages payout of $1.9m including $200,000 in general damages.
Get a set of company policies to cover all the areas of liability. A code of conduct with details on each area is one option.
How to fix
There are at least 12 must have company policies. But having them doesn’t solve all your problems. You need to make sure everyone knows them, and you have evidence they do. These are the essential company policies you must have:
- Work Health and Safety
- Bullying and Harassment
- Anti-Discrimination
- Code of Conduct
- Code of Ethics
- Drug and Alcohol
- Leave
- Performance and Misconduct
- Grievance
- Internet and email
- Social Media
- Privacy
Another important thing you need to do. Check that your people and organisation are meeting these policies. Conduct regular audits. Provide training and refresher courses on your company policies. Keep evidence of the actions you’ve taken. Ensure your every employee knows your company policies.
8. Provide a safe workplace (WHS)
Employers must keep workers safe and minimise risks. It’s important for employers to ensure they provide a safe workplace. Minimise physical, mental, and emotional risks to your employees. It’s becoming more important for the owners to pay attention to any potential risks. Work Health and Safety. (Insurance = Workers’ compensation, professional indemnity, public liability). Incidents that have occurred.
Consequence of not meeting this law
Record penalty amounting to $2.8m in damages. Awarded to an employee. Who was performance managed after complaining about the CEO bullying her. See the Federal Court case for more details.
Swan v Monash Law Book Co-operative (2013) 235 IR 63. The Victorian Supreme Court awarded $600,000 damages. Including $300,000 in general damages. In a negligence action arising from workplace bullying. And a finding that the employer failed to provide a safe place of work.
WorkSafe Victoria prosecuted Harry Kim Pty Ltd. The employer was prosecuted resulting in criminal penalties. Fined $10,000 and ordered to pay costs of $10,308 for bullying an injured worker. The employer had breached its duty of care in providing a safe workplace. Including the prevention of bullying and harassment. It’s important to note this is a law under Work Health and Safety (WHS).
There has been an incident in which a crane contractor was sentenced in a workplace fatality.
How to fix it
It’s clear, employers are held to account for the health and safety of their employees. Including mental health. It’s not enough to have a WHS policy. You must act on it and provide a safe workplace. As with any policy and procedure, you need to check that it’s being met. You also need to monitor the workplace with regular checks. Make sure that people are up to date with how to meet your Work Health and Safety policy. And check that there’s nothing missing that poses a risk to your people’s safety. That includes how people interact and speak to each other at your workplace. Sexual Harassment, Bullying and Discrimination. These are all activities you need to watch and address.
9. Workers compensation insurance
Employers must have Workers Compensation Insurance. To help cover work related injuries or illness, unless exempt.
Consequence of not meeting this law
Elazac Pty Ltd v Shirreff [2011] VSCA 405. Resulted in a $1.26m penalty for a workplace injury. Despite argument that he was a contractor.
How to fix it
Get Workers Compensation Insurance unless your business is exempt. To see if your business is exempt. And how to get it, if you need it, click on this link Workers Compensation Insurance.
10. Procedural Fairness
Firing or disciplining an employee the wrong way. Can result in lost time. Heavy penalties and/or reinstatement. There is a procedure that must be followed. Make sure it’s not harsh or unreasonable. You must follow a fair procedure. Hence the name, procedural fairness.
This is one of the most important items to note. You must be able to prove you’re following a fair procedure.
Consequence of not meeting this law
The risk of not following procedural fairness. Is any action or conclusion you’ve reached may be overturned by a court. Read Mondaq article By Belinda Winter and Annie Smeaton. Three surprising unfair dismissal cases.
How to fix it
Become familiar with procedural fairness in your dealings with your employees. It means acting in a fair manner in decision making. And relates to fairness of the procedure by which a decision is made. The Fair Work Ombudsman provides help. You can take their short courses on managing performance. Another great tip is also on the Fair Work Ombudsman’s site on Managing Performance and Warnings. There is an excellent step by step process provided by the Fair Work Ombudsman.
11. Managing performance
Performance standards expectations (Performance Plans and Reviews PPR’s)
Performance Management is an especially critical area for businesses to pay attention to. All businesses need to be mindful and aware of their standards of work. If they wish to continue operating in Australia. We’re a demanding bunch. We expect exacting standards and like to pay a fair price for what we expect. Likewise, in business you need to set a standard of performance for your employees. But it all comes down to how you manage any underperformance. If you get this wrong, you could end up in court. And have your decisions overturned in court.
You must consult, discuss, be clear about the issue and how to resolve it. But you also must allow a person to respond. Note the response. Allow the person to put forward their point of view take, note of it. Do not ignore it. Keep evidence of their providing their point of view and how and why you responded to it in the way you did. A person’s right to respond is a fundamental of procedural fairness.
If you want to avoid a bullying and harassment or unfair dismissal. You must follow the right procedure. And if you want the decision you’ve made to be upheld by court. You need to follow a fair procedure. Even when it’s alleged that a person, has been inappropriate. You must follow a fair procedure. Or you risk having your decision overturned in court. See Law 9 above.
Consequence of not meeting this law. It’s vital to follow a fair procedure. Regardless of what a person may have done. If you don’t follow a fair procedure you could end up having your decision overturned by court. As you will read in the case of McCleverty v Australian Karting Assoc Ltd [2015] QSC 323.
How to fix it
We all know the stresses and pressures of work can reach boiling point. But whatever you do it has to follow a fair procedure. Performance management is the same as Law 9 about procedural fairness. That’s regardless of what a person has or has not done. Procedural fairness, also known as Natural Justice. See the point above how to fix it. Make sure you’re following a fair procedure when conducting performance management. Follow the links to the Fair Work Ombudsman’s site on how to conduct managing employees.
- Follow a fair procedure such as the following:
- Arrange a meeting to discuss the issue or problem.
- State what the problem is.
- Let the person respond to what’s said.
- Listen without interruption.
- Take note of what’s said.
- Consider their response.
- Discuss what action/s to rectify the situation.
- Let them know how you can help.
- Set a date for action.
- Set a date to review.
- Keep a record of your discussions and let the person know you will be putting a record on their employment file
- Check the Fair work ombudsman’s step by step guide on fixing workplace problems
12. Privacy Act
Privacy and Personnel files
Personnel files what you can store and what you must not. Privacy and the need to keep records of some information by employers. Learn more about what records employers need to keep by law.
This forms part of the Privacy Act 1988
Consequence of not meeting this law
Draft Privacy Legislation Amendment (Enhancing Online Privacy and Other Measures). Bill 2021 Under the draft bill. The maximum penalty of $2.1 million for serious or repeated breaches of privacy will increase. To not more than the greater of $10 million. Or three times the value of any benefit obtained through the misuse of information. Or 10 per cent of the entity’s annual Australian turnover.
How to fix it
Keep your employee files on a secure drive on your computer system. If there are any handwritten or printed files keep them in a secure filing cabinet. Make sure they’re available to access if requested by a Fair Work Ombudsman inspector. Only keep records on your employees that are necessary. And relevant to their employment. These files are private and need to remain private. To follow privacy legislation.
13. Provide a roster 7 days in advance
The Law states that a roster needs to be provided 7 days in advance. Any changes need to be discussed with the employee and they have a right to give their opinion about the change. In some instances, the worker can decline a change in roster. It depends on the Award and if they’re employed as a casual or permanent employee. Learn more about the rules relating to rosters.
Consequence of not meeting this law
There are a variety of consequence if an employer changes a roster. And doesn’t consult with the staff member. The obvious one is an employee may not turn up to a shift if they don’t know about it in time. As an employer you might be in breach of your contractual obligations. If you dismiss an employee for not working a shift or meeting your roster you could be up for an unfair dismissal.
How to fix it
Plan and make sure you provide your employees with their roster 7 days in advance. You can email it to them. Or text it or use a tool such as WhatsApp to provide the roster to each person. It’s in your business interest to make sure each person knows their roster. So, it’s also a clever idea to make sure whatever way you choose to inform them is one they have access to. And they know how to use it.
14. Sham Contracting
Be careful about employing someone with an ABN. Believing they’re a contractor. If they don’t run an independent business. And they don’t pay their own tax and Super. They’re an employee.
Items to consider:
- If you set the hours of work
- You provide the tools
- They’re paid for the time worked, a price per item or activity, a commission
- You direct the way they do the work
- They can’t pay someone else to do the work
- They’re not independent. They cannot operate independently. They work within and are considered part of your business
- They’re not running their own business
Consequence of not meeting this law
Penalties for sham contracting can be imposed by the courts. The largest penalty is $13,320 for individuals. And $66,600 for corporations, per contravention.
How to fix it
Check that your employment relationship is clear. Would it pass a court case? Are they an employee or an independent contractor? Relying on the ATO test of whether they are an employee, or a contractor is not enough. If in doubt, ask for help. Don’t get fooled into thinking that you can save money by hiring someone as a contractor. If they’re not an independent contractor with their own business. It could end up costing you a lot more later.
If they’re an employee, you need to pay their super and tax. If they’re an independent contractor with their own business. They take care of their won super and tax. If in doubt, check. Ask your accountant, employment lawyer, or HR Consultant. Always ask for a letter of advice to support your decision.
15. Unfair Dismissal
Be aware of unfair dismissal, even if you run a small business. There are issues around how you must manage your employees. Including dismissing them from your employment. Check the Fair Work Ombudsman’s website on unfair dismissal. Even if you have a small business there is a small business fair dismissal code you must be aware of.
Even if your business is a small business. With less than 15 employees there, your employees have rights. They can claim an unlawful termination. A breach of general protections is another claim. Make sure you’re aware of these. And don’t do it.
Consequence of not meeting this law
An employee can make a claim against your business. It can go to court. The majority are resolved in conciliation meetings. Approximately 70%. The majority are settled involving a monetary payment between $10,000 and $50,000. There have been some cases settled more than $100,00. This is to avoid going to court.
How to fix it
Make sure you’re aware of what rights are protected under general protections. Before you consider acting on an employee matter seek guidance. Speak with an employment lawyer or a skilled HR Consultant. Remember, if in doubt, don’t.
By reading this post you will know how to avoid breaking employment laws and regulations.
Australian Employment Law is complex, and you need to tread carefully. There are significant consequences for getting it wrong. The content of this article provides you with a resource you can go to for guidance. You can use it as a guide to check that you’re not breaking an employment law. If you found this helpful and want to learn more, book a Free 15-minute consultation. Click the button below.