Obligations To Employees + Managing Them Efficiently
Written by: Gabrielle Andersen l Insight Team
For the fourth instalment of our Commercial Law Series, we are going to prepare you for hiring any employees in your business venture. From making sure your employment contract suits the circumstances of the employment, to ensuring that you are across your employer obligations – we have it all covered!
Types of Employees
The most common types of employees are:
- Casual;
- Part-time;
- Full-time;
- Fixed term or non-ongoing; and
- Apprentices and trainees.
A different type of employment agreement is required for each as there are variations in the rights and obligations relating to each category of employee.
Employment Agreement
An employment agreement is a contract provided by the employer to the employee setting out the terms and conditions of their employment. While many small business owners may not have employment agreements in place for their employees, employment agreements are an important business management tool. Employment agreements confirm important aspects of the employment, including the duties and expectations of the employer in relation to that role. They also make both the employee and employer aware of their obligations to one another. This can be particularly useful, not only if any issues arise during the course of the employment, but also to manage the employee and protect your workplace after the employment ends.
A well-prepared employment agreement should cover the following matters, which may change depending on whether the employment is casual or permanent:
- The basis of employment – i.e. casual, part-time, full-time, fixed term, as listed above.
- The details of both the employer and employee.
- Provide a clear outline of the position and its duties and the expectations as to employee conduct.
- Confirm the hours and days of work expected.
- State the remuneration, including whether there will be any remuneration reviews and how these will be conducted.
- Confirm the probation period and how any disciplinary action may be conducted.
- Cover the specific leave entitlements that relate to that particular type of employment.
- State how, when and why the employment can be terminated by either party.
- Some employment agreements will also stipulate the employee’s obligations as to confidentiality, and any intellectual property rights of the employer, and enforce post-employment restraints to prevent the employee from soliciting the employer’s clients or staff for their own or another competing business.
The National Employment Standards
The National Employment Standards are a set of minimum entitlements that every employee has in Australia. They operate alongside the National Minimum Wage and apply regardless of any employment contract, award or enterprise agreement that the employee may be working under.
The eleven National Employment Standards cover the following areas:
- Maximum weekly hours
- Requests for flexible working arrangements
- Offers and requests to convert from casual to permanent employment
- Parental leave and related entitlements
- Annual leave
- Personal/carer’s leave, compassionate leave and family domestic violence leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- The Fair Work Information Statement (the FWIS) and Casual Employment Information Statement (the CEIS)
Only some of the National Employment Standards apply to casual employees. These are:
- Offers and requests to convert from casual to permanent employment
- Paid or unpaid family and domestic violence leave
- Unpaid carer’s leave
- Unpaid compassionate leave
- Unpaid community service leave
- The Fair Work Information Statement (the FWIS) and Casual Employment Information Statement (the CEIS)
- The rights relating to flexible working arrangements and unpaid parental leave are only applicable to casual employees if they have been employed by their employer for at least 12 months on a regular and systematic basis and they expect that to continue.
It is important for both employers and employees to be familiar with each of the rules under these minimum entitlements. Access the National Employment Standards – Fair Work Ombudsman to ensure you’re meeting your obligations to employees.
Awards + Enterprise Agreements
Modern awards are industry or occupation-based industrial agreements that apply to anyone engaged in the particular work covered by that award. Awards have normally been negotiated to provide employees with additional entitlements in relation to pay, hours of work, rosters, breaks, allowances, penalty rates or overtime.
Awards are often very complex so if an award applies to your industry we recommend that you become very familiar with it in order to ensure you are adhering to your legal obligations to employees. The Fair Work Ombudsman has a Find My Award tool that can help you identify whether an award applies to your business: Find out which award covers you – Fair Work Ombudsman.
An enterprise agreement is a workplace agreement that operates within a specific business only and has been negotiated by that employer and a group of employees. The main difference between awards and enterprise agreements is that enterprise agreements will apply only to an individual business, whereas awards can cover an entire industry. An enterprise agreement will build on the entitlements set by a particular award, so for some employees, both an award and enterprise agreement apply to their employment.
Employers of large businesses often see the value in preparing their own enterprise agreement as being more administratively effective in cutting costs and time in having to navigate complex awards. It is important however to bear in mind that an enterprise agreement must first be approved by the Fair Work Commission, who will only do so if they determine the enterprise agreement puts the employee in a better position than they would have been if the award applied alone. This is known of as the “Better Off Overall Test”, which is a test used by the Fair Work Commission when reviewing an enterprise agreement in order to assess whether employees of that enterprise would be better off under the new agreement than they would have been under the award. If the Fair Work Commission approves an enterprise agreement it will replace any applicable award to act as the base terms and conditions of employment.
If an award or enterprise agreement applies it will operate in addition to the National Employment Standards and National Minimum Wage. As with employment agreements, they can never replace or reduce these minimum entitlements.
Managing Employees
The Fair Work Commission recommends that employers regularly check in with employees about performance, and as part of best practice, the employer should set clear goals and provide feedback and support to help an employee perform at their best.
An employment agreement can become particularly useful if you are having issues with an employee. It can provide a clear basis to refer back to and confirm both with yourself and the employee that they are meeting the roles, tasks and duties represented when they agreed to accept the position with your business. Matters confirmed in an employment agreement that often lead to issues with employees can include failing to attend work during the work hours, adhering to appropriate breaks and leave entitlements, behaving inappropriately when it comes to internal IT systems or matters requiring confidentiality and concerns about protecting your trade secrets and know-how, or performing the role and duties as described.
If you have an employee underperforming or performing poorly, you will be able to clearly show them that they aren’t meeting their obligations as set out in the employment agreement. If you don’t have an employment agreement it can be difficult to represent to an employee clearly the ways in which they are not meeting your expectations for the position. Employment agreements also importantly set out issues that will be dealt with as serious misconduct and provide clear provisions for terminating the employment if such misconduct occurs. A clear process for terminating employment can provide great comfort to an employer if such circumstances arise.
How Canny Insight Can Help With Expert Legal Advice
While most small business owners need employees, it can be difficult finding the time to understand the obligations you have as an employer. This is why a well-prepared employment agreement can be crucial in helping you manage your employees effectively, and ensuring you’re meeting the minimum National Employment Standards and your legal obligations.
Canny Insight can help in preparing well thought out employment agreements that are appropriate to your business. We can also provide specific employment law advice if you are having difficulty managing an underperforming employee or believe an issue of serious misconduct has arisen. We’re also here to advise and guide you through any disputes that may arise within the employment relationship or post-termination.
Get in touch with our team today so we can help you with your employment agreements whether they be new or old or everything in between.
