This article is the first of a four-part series on hiring, managing and terminating employees. There is a lot to know about hiring employees, which includes areas such as human resources, industrial relations law and payroll. All of these areas are interconnected.
Before you start hiring employees
Before you even begin hiring employees, you’re going to need to have an idea about the position you wish to fill as well as the successful candidate’s necessary background and experience. Ideally you should have a position description which outlines their duties, their position title, who they report to and any other key performance indicators that you wish to include. This will then allow you to work out what modern Award they would be covered by. The only time that Awards don’t apply is when your workplace has a registered agreement. You will know if this is the case.
Checking Award coverage
Modern Awards are legal documents that outline various conditions for employees as well as rates of pay. Awards offer additional benefits in addition to the minimum hourly rate or salary. This could include annual leave loading, (in the case of full time and part time employees), which is usually an additional 17.5% that gets paid to employees when they are on annual leave. Other conditions include a minimum number of hours you need to pay for a shift, (in the case of casuals), or a range of other allowances or even different hourly rates depending on the time of day worked.
In addition to establishing the correct modern Award, you will also need to determine which classification level applies. This information will help you determine the minimum salary that you need to pay. If a candidate has a great deal of experience, by law you may need to pay them more than you are willing to. It is crucial that you establish this up front rather than after you’ve hired them. Establishing the salary early on will allow you to include this in the job advertisement so that candidates can see whether the position that you are advertising offers a salary that is in the ballpark. It is frustrating for employees and employers alike if they’re going through the process of hiring employees only to find out that their expectations of salary are different.
Types of Awards
Awards fall into two categories. There are industry Awards and occupation Awards. There are currently 122 of these Awards covering roughly 80% of workers in Australia. Industry Awards may cover your entire organisation, irrespective of the job or occupation. Occupation-specific Awards cover a specific profession, or occupation. This could be an administrator for example. It is important to determine at the outset whether your business is covered by an industry Award before searching for an appropriate occupation Award.
It is also worth noting here that your business could be covered by more than one Award. I highly recommend that you ask someone other than your bookkeeper or accountant for the correct answer to this question. It is a highly specialised area. It is unlikely that they have the necessary training and expertise to provide the correct answer. They may however be able to direct you to the appropriate organisation to help you answer these questions. Fair Work Australia can help you if you’re stuck in the short term, but any business that is serious about its growth should consider having an industrial relations legal service available to them.
As soon as your new recruit commences, you’ll need to go through an induction process and also get them to complete a number of forms. Your bookkeeper will specifically ask for a tax file declaration form, superannuation standard choice form and employee personal details form. They may also ask you for an employment contract. Although there is no legal obligation to have an employment contract, be aware that without a contract there is no flexibility for you as the employer to pay above Award and not pay all of the extra entitlements such as leave loading, allowances etc. I urge you not to just download one from the internet. Each contract needs to be customised to the workplace as well as the employee. If it includes clauses that are invalid, then the contract may be worthless. Contracts can also cover clauses such as the following:
- Probationary periods
- Duties and responsibilities
- Employer policies and procedures
- Other employment whilst the employee is working for you
- Intellectual property
- Reimbursement of expenses incurred by the employee
- Employer property
- Employee conduct
- Workplace health and safety
- Non-solicitation and non-compete
I can’t stress this highly enough. Employment contracts are a really, really good idea when hiring employees.
Once your payroll administrator or bookkeeper has all of this information, they will be able to pay your new employee. If some of this information is missing, they will struggle to know how to structure the employee’s payroll details and run their first pay run. In addition to the employee’s personal details, they will need to know the Award and classification level as a minimum. If the employee falls into the 20% of workers that are not covered by an Award, then they will need to know that. An employment contract is a handy and highly important additional extra document.
In my next article we’ll look at managing employees, which is broken into two parts. Part 1 covers inductions and performance and part 2 covers investigations and counselling. The final article in the four-part series will cover terminations.