Hiring 101

HIRING 101 WHAT YOU NEED TO KNOW AS AN EMPLOYER

Information on...

Classification of your workers

3

Entitlements for permanent and casual

WHAT YOU'LL FIND INSIDE

employees

4

The Modern Award System

6

Getting your employment contracts up to scratch

Hiring the employee

7

8

STEP ONE: CLASSIFYING YOUR WORKERS Whether you're making your first or hundredth hire, it's really important to work out what type of worker they are, to avoid all of the nasty legal issues that can pop up in the future. The primary question to ask yourself is therefore:

Is the worker an employee or a contractor? If you would like to engage them as a contractor, check the below table to make sure they actually are a contractor. The Courts won't care what you agree to, and instead will look at the factors below. Don't worry, not all of the factors have to be there, just make sure that most of them are on the side of the table you want.

Otherwise, we recommend you change the relationship to make sure that they are.

Criteria

Type of engagement

Employee

Contractor

Perform work, under the direction and

Work to achieve a specific result, and

control of the business, normally ongoing

decide how to carry out the work

Ability to delegate

Must carry out the work personally

Able to delegate / subcontract the work

Risk

Bear no financial risk

Has their own insurance

Hours

Hours set by business

Decides own hours to complete the work

Tax

Income tax deducted by business

Administer their own tax

Pay

Paid regularly (weekly, monthly etc.)

Submits their own invoice (with ABN)

STEP TWO: I HAVE TO GIVE THEM WHAT??

If you're taking on an employee rather than a contractor, the contract is not the only thing you need to consider.

For example, the

National Employment Standards (NES) provide 10 minimum terms and conditions which are

minimum entitlements that you can't get out of providing employees. We have set out a few entitlements below.

MAX WORKING HOURS/WEEK

FAIR WORK INFORMATION STATEMENT

For full-time employees, the maximum

All employees must be provided the Fair

working hours are 38 hours per week

Work Information Statement once they start.

NOTICE + REDUNDANCY PAY

REQUEST FOR FLEXIBLE WORKING ARRANGEMENTS

If you terminate someone's employment, or make their position redundant, there are minimum notice and redundancy pay requirements set out in the NES. The specific amount changes depending on how long they have worked for you, so check the NES before each big employment decision.

Where a permanent employee has parental / carer's responsibilities, or is 55 or older, they are entitled to request altered hours, patterns or locations of work. You must genuinely consider the request and only reject it on reasonable business grounds.

STEP TWO CONT: LEAVE ENTITLEMENTS Leave is one of the major components of the NES and is available to all permanent employees, and in some circumstances, casual employees. Several different types of leave exist, and we have set out the main ones below.

PARENTAL LEAVE

PERSONAL/CARER'S LEAVE

Employees that have worked for over

Permanent employees have 10 days of

12 months are entitled to 12 months of

paid personal/carer's leave per year. This

unpaid parental leave, and may

leave is cumulative, but is not paid out

request a further 12 months on top.

when they depart the company.

ANNUAL LEAVE

LONG SERVICE LEAVE

Permanent employees are entitled to

LSL is calculated differently in each State

20 days of annual leave, based on their

and Territory, and is dependent on the

ordinary hours of work. Annual leave is

number of hours an employee has worked.

cumulative year on year, and

Regardless, most schemes kick in after 7

recognises the need for employees to

years of continuous employment.

take a break from work to avoid burn out!

If you're looking to find which Award fits your business or employee, the Fair Work website has a handy tool at:

https://www.fairwork.gov.au/ awards-and-agreements/

awards/find-my-award/

STEP THREE: THE MODERN AWARD SYSTEM Introduced in 2010, the Modern Award System create additional minimum terms and

conditions of employment for many common industries. As of 2018, there are 122 Modern Awards in existence, ranging from IT to the wine industry. Below we answer some key questions surrounding the Modern Award System.

Modern Awards set out the minimum terms and

WHAT IF I HAVE AN ENTERPRISE AGREEMENT?

conditions of employees in particular industries /

If you have an Enterprise Agreement (aka EBA), then

professions. This includes minimum pay rates, breaks,

you must follow this agreement instead of a Modern

allowances, and penalties. NB: These are in addition

Award. The only time you need to care about a

to the minimum entitlements under the NES, so you

Modern Award is to make sure that the EBA pay rates

have to look at both!

match (or are greater than) the applicable minimum

WHO'S COVERED BY AN AWARD?

pay rate under the applicable Award. For example, if

WHAT ARE MODERN AWARDS?

your EBA says Susan should earn $20 an hour, but the

Modern Awards are industry-specific, so different

Modern Award says $25 an hour, you have to pay her

employees may be covered by different awards

$25 an hour.

within your business. Spend time on this issue. Get it wrong, and you could wind up in Court!

Think that your business might need a helping hand when it comes to navigating Modern Awards?

Take our free Health Check at

employment.lawsquared.co/healthcheck

STEP FOUR: WHAT GOES IN AN EMPLOYMENT CONTRACT?

If you're looking for help or guidance on drafting your employment contracts, click

here to book a

consultation with one of our lawyers.

So you now know what type of worker you want (independent contractor vs. employee), what they are entitled to (i.e. the NES, whether a Modern Award or EBA applies etc.), and this whole process hasn't put you off hiring someone else and running off to a nice island. Great job! Now put your hard work into action by representing this information in a contract. Below are some key points you should discuss in the contract.

WHICH MODERN AWARD / EBA APPLIES (IF ANY)

CONFIDENTIAL INFORMATION & INTELLECTUAL PROPERTY

If a Modern Award or EBA applies, specifically

Want your employee to treat your confidential

refer to it in the contract and state that it covers

information & intellectual property in a particular

their employment (and the applicable

way, include specific clauses in the contract.

classification. Otherwise, you can be held to have

SALARY

misrepresented their entitlements.

ARE THEY PERMANENT PART-TIME, FULLTIME OR CASUAL? This is pivotal to specifically include as it drastically changes their entitlements and the

It sounds like a no-brainer, but be super clear in the contract what their remuneration is, when it is paid, whether it includes/excludes superannuation etc.

RESTRAINTS

business' obligations. In summary, a casual

Worried about an employee leaving and setting up on

contract should not look the same as a

their own? Get a lawyer to draft a restraint for you,

permanent contract.

as they can be enforceable if drafted correctly.

STEP FIVE: HIRING THE EMPLOYEE So you've confirmed that you're bringing on a new employee, checked the NES and the Award (where applicable) against your written up employment contract, and ready to bring your new employee into the fold - that's great to hear! But what do you need to do to get everything ready for them to begin? Luckily, we've created a key checklist below for you to consult to ensure that your new hire fits seamlessly into your business.

1. ISSUE THEM THE CONTRACT

4. PROVIDE THE FWIS

Make sure to provide your new employee

The Fair Work Information Statement (FWIS) gives new

with a copy of the contract to sign, so that

employees further information about their rights under the

they are aware of their rights and

law. It;s mandatory to provide this before they begin work,

responsibilities prior to signing.

otherwise as soon as practicable after beginning. If you don't provide this to your new hires, significant penalties

2. FILE THE CONTRACT Once both parties have signed, it's important to provide the new employee with a copy (for their own reference) and to file your copy away to consult in the future.

may apply.

5. ONBOARDING To give your new employee their best start, you should begin by familiarising them with the procedures and culture of the business, as well as get them gradually adjusted to the social and

3. GATHER INFORMATION In order to pay the new employee's salary, PAYG tax and super, you'll need to get them to provide the relevant details - such as bank account, USI and fund name, and their TFN.

performance aspects of their position. Further training and development (T+D) post the onboarding process is also important to upskill your workforce.