Understanding your legal obligations to your employees

Are you bringing on employees into your business but don’t know where to start? Has it been a while since you hired an employee and are not sure what to do?

If you are unsure of your obligations then don’t worry you are not alone. The rules relating to bringing on employees is an area that regularly changes. With over 800,000 businesses in Australia that employ staff there are a lot of misconceptions about what the rules and responsibilities are for employers.

Understand your obligations
The rules that regulate your staff are set out in a number of different places. You need to have an understanding how they work together to understand these obligations. All employees are guaranteed a number of minimum standards for their employment. There are two sources of these standards, firstly the National Employment Standards and secondly there are over 120 awards that might apply to your employees. To even make it more complex different awards may apply to different employees within your business. If you are unsure you should consult with your lawyer or an employment consultant to figure out which are right for your employees.

You also need to consider other matters such as:

· Do you need to apply for or update your workcover insurance?

· What are your obligations to pay super and tax on behalf of the employee?

· Do they have any special needs that need to be accommodated in the business?
 

National Employment Standards (NES)

The NES covers 10 areas that you must cover for each of your employees, these include entitlements relating to:

· minimum standards for leave (there are 5 types of leave, annual leave, personal and carer’s leave, long service leave, parental leave and volunteer leave);

· how public holidays are dealt with;

· maximum hours of work;

· obligations on employers to consider flexible working arrangements;

· minimum notice periods if they are terminated; and

· the provision of an information sheet to each employee setting out these rights.

These standards as well as the obligations in a relevant award are minimum standards, if you provide conditions that are better than those standards then you can do that, it is your choice.


Classification of Employees
You also need to consider what the employment relationship will look like, is the employee a:

· full time employee;

· part time employee;

· casual employee;

· fixed term employee;

· daily or weekly employee; or

· contractor.

Employers are under different legal obligations to their employees depending on their classification. For example a full time employee has an expectation of work on a regular basis as well as entitlements to the full amount of leave set out in the NES. In contrast a part time employee is only entitled to a pro-rated expectation of work and amounts of leave. Casual, fixed term and daily or weekly employees are usually not entitled to any leave and have no guarantee of work but are paid a higher hourly rate as compensation. Contractors are contracted to the business so they have no entitlements or expectation of work but are paid at a higher rate as compensation including all of their tax and super.


Contract
Good contracts make great relationships and this is very true for employment agreements. You need to document the agreement (please don’t rely on a generic template) with your employees to make sure that both your and their rights and obligations are understood.
 

Jeremy Streten is a lawyer and the author of the amazon best seller “The Business Legal Lifecycle” (www.businesslegallifecycle.com) which is designed to help business owners understand what they are doing in their business from a legal perspective and give them a plan for the future. Jeremy can be contacted at lifecycle@jeremystreten.com

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