Staffing your business...This guide covers the key elements in staffing your business. It highlights what it actually costs to hire someone and summarises the options you have when

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Staffing your business

A guide for business operators in South Australia

http://www.statedevelopment.sa.gov.au/smallbusiness

Staffing your business Page 2 of 32

Table of Contents

01 Overview ....................................................................................................... 3

02 What is the legal definition of employment? .............................................. 4

03 Hiring an employee: what will it cost you? ................................................. 5

04 What type of employee will best suit your needs ...................................... 6

05 Employee or independent contractor? ....................................................... 9

06 Your role as an employer ........................................................................... 12

07 Hiring Employees ....................................................................................... 13

08 Employment contracts and remuneration – An overview ....................... 18

09 New Employee at work ............................................................................... 22

10 Terminating an employee’s services ........................................................ 25

11 Delegating effectively................................................................................. 27

12 Summary ..................................................................................................... 28

13 Contacts ...................................................................................................... 29

14 Notes ........................................................................................................... 31


01 Overview Apart from your vision, drive, energy and managerial talents as a business owner, productive employees are perhaps your most valuable asset. But finding and keeping the right staff can be a major challenge, so before you take on your first employee make sure you do your homework to cover all the legal aspects and help you achieve your goal of increasing your productivity and profitability. This guide covers the key elements in staffing your business. It highlights what it actually costs to hire someone and summarises the options you have when facing this decision, also covering matters to be considered when deciding whether a person is an employee or an independent contractor, as the wrong categorisation can expose employers to expensive litigation. Your role as an employer is examined with particular reference to the hiring and firing functions. The guide also provides an overview of employment contracts and remuneration and offers practical tips on how to delegate effectively - delegation is an important part of the staffing function and can be a real problem where a business owner may be concerned about losing control. Laws change frequently, and as an employer, it is important that you understand and keep abreast of employment-related legislation in order to meet your obligations towards your employees. You are therefore strongly advised to seek professional advice by consulting a legal advisor and a recruitment consultant. Readers are advised:

• The purpose of this guide is to provide general introductory information.

• The guide does not purport to contain all the information that would be relevant to any particular business opportunity.

• The guide is provided to interested persons on the basis that they will be responsible for making their own assessment of that opportunity with the assistance of the information provided.

• All figures contained in the guide should be regarded as estimates only based on general samples and may be subject to error.

• The information in the guide should not be relied upon in substitution for professional advice and individual investigation.

• Persons interested in pursuing any particular business opportunity are strongly advised to fully inform themselves by taking professional advice as to the extent of their rights and obligations—particularly in relation to any proposed investment.

• The guide is provided subject to the terms of the formal disclaimer, which appears on the last page.


02 What is the legal definition of employment? A work arrangement is classed as employment if you offer someone work on a full-time, part-time or casual basis and:

• Pay them a salary, wages or some kind of remuneration.

• Tell them the hours and conditions of work.

• Give them instructions on how the work is to be done and in what order. Arrangements that try to get around the obligation of an employer (such as a cash-in-hand situation) could get you into serious disputes through the Industrial Courts or under Workers Compensation legislation. If the legal processes of either decide that there was a legitimate employer/employee relationship then the penalties and legal costs could ruin your business.


03 Hiring an employee: what will it cost you? Before you employ someone, it is important that you do your sums—what costs will be involved?; what productivity gains will there be?; what will the effects be on your bottom line?. The cost of taking on an employee is not just their wages. You also need to take into account on-costs in the form of superannuation, workers’ compensation insurance, annual leave, long service leave and leave loadings. These can add 25 to 30 per cent to wage costs. You should also factor in the cost of protective clothing, tools, plant and equipment and their work station, as well as the time you will be required to spend in supervising the employee. WORKING OUT WHAT TAKING ON AN EMPLOYEE WILL MEAN IN MONEY TERMS:

• It can cost about $5,000 in recruiting, downtime and training of a base-grade employee.

• Will the employee be able to contribute immediately or will there be hidden costs?

• Will the projected long-term gain repay the investment in the person? Case studies show that trained employees tend to stay with the original employer longer, minimising turnover costs.

• How much of your own productive time will be spent on supervising the new employee?

• Are you able to take advantage of government subsidies to offset the costs of training by taking on someone who is long-term unemployed, over 50 or with any other subsidy arrangements?

• Will the person you require be taken on as an apprentice or a trainee and what will that mean in terms of training commitments and training subsidies?

• What cash reserves do you estimate as necessary to meet the wages and on-costs until the employee is fully productive in your business?

• Are you aware of all the operating on-costs which are added to wage costs, such as employer funded superannuation, workers’ compensation insurance and leave loadings?

• Does taking on an employee mean that you will have to upgrade your premises to meet Work Health and Safety (WHS) regulations and codes?

• What costs will you have to meet to provide accommodation for an employee, such as work stations, ramps, plant and machinery, motor vehicle, tools and manuals?


04 What type of employee will best suit your needs So the numbers are looking promising. You now need to think about the type of employee that will best meet your requirements. Remember to think of the long-term outcomes you want. For example, are you overlooking the potential value of an older person in trying to work out a cheap solution? Below is an action checklist to get you started: CHECKPOINT YOUR RESPONSE

Do you need someone for a one-off short-term project or in an ongoing capacity?

Would it be viable to get the job done using an outside contractor?

What specific tasks do you require the person to perform?

Does the person need to have specific formal qualifications to undertake the task? (e.g.: motor mechanic, accountant etc.).

How many hours per week do you anticipate needing someone?

Should you take on an apprentice or trainee?

How much can your business afford to pay?


04 What type of employee will best suit your needs A range of employment options are available, including full-time, part-time, casual, fixed term, apprentice or trainee and sub-contractor. You can weigh up the advantages and disadvantages of each using the following table as a guide. CHECKPOINT Employment option Advantages Disadvantages

Full-time employees

• Commit to a certain number of hours per week. • Become highly skilled and familiar with business routines. • Provide reliable back-up for you. • Develop loyalty to your business.

• Costs. • Potential difficulties over their dismissal.

Part-time employees

• Commit to a set number of hours per week. • Cost less than full-time employees.

• Commitment to your business could be open to question. • You may need to work hard at developing their sense of belonging.

Casual employees

• Can cover short-term peaks in workload. • Offer you maximum flexibility. • Paid on basis of hourly or daily rate. • Generally not eligible for entitlements applicable to permanent employees.

• Wage loadings usually apply to compensate for loss of permanent entitlements. • Are likely to be the least committed of all employees.


04 What type of employee will best suit your needs CHECKPOINT…CONTINUED Employment option Advantages Disadvantages

Fixed-term employees

• Can be engaged for special project work. • Useful to cover employees who are on long service or maternity leave.

• Usually accrue entitlements on a pro-rata basis. • If employment is terminated before contract expires, employee may have right to sue you to recover wages for the balance of the term.

Apprentices and trainees

• Apprentices train to do the work of a tradesperson; trainees train to do the early stages of traditional trade occupations. • Grants and incentives are available to encourage you to take up these options.

• Long-term commitment usually required on your part to take up an apprentice. • Traineeships may be for only 12 month terms.

Sub-contractors

• Can meet a specific need in your business. • Useful option where special expertise is required. • Eliminates overheads associated with direct employment.

• Strictly defined by law to prevent employers avoiding legal responsibilities to their employees. • Consequences of getting the contractual arrangements wrong can be serious.


05 Employee or independent contractor? A number of matters should be considered when deciding whether a person is an employee or an independent contractor. It is not uncommon for some employers to categorise people who were formerly employees as independent contractors in the belief it leads to certain savings —e.g. in payroll tax and other statutory entitlements, which apply to employees but not to independent contractors. You should be aware that the courts (industrial and civil) can go behind any written document purporting to set up an independent contractor agreement to discover the facts. The wrong categorisation of persons as independent contractors can expose employers to expensive litigation, where the status of a person’s ‘employment’ is challenged, and lead to significant penalties. CRITERIA FOR MAKING AN ASSESSMENT How is the work performed? Employee: An employee is normally engaged to do work on a continuing basis and at the direction of the employer. Independent Contractor: The contract or agreement will require the performance of the work or specific jobs. Where is the work performed? Employee: The work is normally performed at one of the places of business of the company or wherever the company otherwise directs. Independent Contractor: The work is normally performed at a place identified in the contract or agreement or as otherwise agreed by the parties. Who provides the plant, equipment and material? Employee: Plant and equipment is normally provided by the employer, although an employee may provide certain hand tools. An employer usually provides materials necessary for the performance of work by the employee. It would not be usual for an employee to incur significant expenditure on materials, plant or equipment without reimbursement by the employer. Independent Contractor: The contract or agreement will specify who is required to provide the plant and equipment but it is usual for the independent contractor to supply the necessary equipment to enable him/her to carry out the work. The contract may be for the supply of labour only or both labour and materials. Who provides the floor space, power, telephone, etc.? Employee: These are not normally provided by the employee. An employee may, in some circumstances, provide a telephone facility for contact after normal working hours, but in this case the employer may reimburse some or all of the costs. Independent Contractor: The contractor is responsible, in most cases, for the supply of floor space, the cost of power and telephone services and other like matters.


05 Employee or independent contractor? Who controls the manner in which the work is to be performed? Employee: An employer will normally direct, or have a right to direct, the manner in which the work is to be performed; and the employee is obliged to obey the reasonable directions of the employer. Independent Contractor: An independent contractor normally has freedom in the way the work is performed subject to the requirements in the contract, agreement or specifications. Does the contract or agreement relate to a specified period within which a job is being performed or is it of continuing duration? Employee: Work is normally performed on a continuous basis unless a fixed term contract is agreed upon, or if the employment is sporadic. It is to be done at times convenient to the employer. Independent Contractor: The contract or agreement would specify the work to be performed and the time within which it is to be completed. What about leave of absence from work? Employee: This is normally at the discretion of the employer but will be subject also to the employee’s entitlement under an award, statute or enterprise agreement. Independent Contractor: Leave of absence does not apply to independent contractors. Are there any payment entitlements over and above those relating to the work performed? Employee: An employee may be entitled to payment for leave and holidays as prescribed by provisions of the relevant award, statute or by an enterprise agreement or contract of service, if one exists. Superannuation payments may apply. Independent Contractor: An independent contractor is not entitled to payment for leave or holidays. Who has the responsibility for losses caused by poor workmanship or negligence? Employee: These are the responsibility of the employer. The employee may be disciplined for poor workmanship or negligence at the discretion of the employer because the employee has a fundamental obligation to exercise due skill and care. Independent Contractor: An independent contractor is responsible and has to bear any financial loss for poor workmanship or negligence. He/she is responsible for the reasonable performance of the work specified in the agreement. Other matters to consider:

• Is there a written contract/agreement?

• Are the terms of the agreement supported by the facts?

• Does the contract require work to be performed by a specified person?


05 Employee or independent contractor?

• Who is responsible for scheduling the work?

• Is the relationship a continuing one or does it exist to achieve a specific result?

• How is payment to be calculated?

• Are invoices required to be submitted by the person performing the work?

• How can the contract or agreement be terminated?

• What remedy is available if the person performing the services fails to carry out the work in a satisfactory manner?

• Is workers’ compensation insurance provided by the independent contractor?

• Is the person performing the work, in his/her activities, part and parcel of the employer’s business or merely an accessory to it?

• Does the person performing the work have the right to refuse the performance of a particular task or job?

• Has the person performing the work the opportunity to profit from sound management in performance of the work?

If it is determined by using the aforementioned criteria, that the person is an independent contractor, it is advisable to have that arrangement in a written contract/agreement. That agreement should incorporate at least the following matters:

• The independent contractor will supply the necessary equipment, tools and materials, where appropriate, to enable performance of the work under a work program jointly agreed between the Parties to the agreement.

• The business will pay the independent contractor the amount agreed for the work performed by the independent contractor, and payment will be made upon completion of the work or by appropriate progress payments as the case may be. The independent contractor will be responsible for payment of all government taxes.

• The independent contractor is to start and complete the work at times agreed.

• The independent contractor is to take out independently the necessary insurance cover (which may include work and sickness, health or disability insurance) in respect of himself/herself and any employee.

• The independent contractor is to keep books, receipts and records where expenditure is out-laid for the work to be performed. Evidence must be produced to the company before the independent contractor is reimbursed for such expenditure.

Further information and templates are available at the Fair Work Commission (FWC) website: www.fwc.gov.au (Tel: 1300 799 675).

http://www.fwc.gov.au/


06 Your role as an employer Managing employees is a key area of risk for any business due to the extensive number of regulations which must be satisfied. It is an area where you need to seek professional advice from your industry association, chamber of commerce or legal adviser. As an employer, your responsibilities include the need to:

• Determine whether an award, industrial agreement or enterprise agreement applies to your employees and to pay in accordance with their provisions.

• Contribute to your employees’ superannuation at a prescribed minimum rate.

• Have workers’ compensation insurance in place.

• Maintain time and wages records for each employee.

• Meet taxation obligations relating to group tax, payroll tax and fringe benefits tax.

• Take steps to prevent discrimination against employees on a range of grounds.

• Maintain the workplace in a safe and healthy condition.

• Terminate employment where it becomes necessary, in a manner that is fair and complies with legislation.


07 Hiring Employees Your goal is to hire employees who will be productive and add value to your business. Below is a summary of the key steps required to achieve this goal. CHECKPOINT Steps How to do it

1. Prepare a job description / person specification

Define the job responsibilities. List the duties, tasks and activities to be performed. Wherever possible, make them measurable. Determine the level of competency required. Identify the essential (minimum) as well as the desired personnel requirements - define the skills (technical, personal and customer service) required to perform the job, including any special physical characteristics - if you are unsure whether a person may have the strength or health to perform the work comfortably and safely you have the right to ask for a medical check - this could be important in protecting you from any claims under workers’ compensation - colour blindness, medication, hearing, eyesight and hidden problems such as heart and spinal conditions might be critical if the work involves lifting and carrying, operating machinery, driving or climbing. Checking these could save the person from workplace injury and you from legal problems later. If in doubt seek advice with: SafeWork SA (website: www.safework.sa.gov.au / Tel: 1300 365 255)

2. Advertise the position

Prepare a list of selection criteria. This is a list of the key criterion which applicants must address in their formal application. The same criterion will be used to determine the best applicant for the job. Research the wages and conditions of employment applicable. Compile your job advertisement, taking care to avoid any suggestion of discrimination. Consider discussing your employment needs with your local employment agency where you can get informed advice on selection procedures and any wage subsidies you might be eligible to receive to assist in staff training. Arrange placement of advertisement in media suited to the type of job and your budget. Options include newspapers, your website, employment agencies, community bulletin boards, trade and professional journals etc.

http://www.safework.sa.gov.au/


07 Hiring Employees CHECKPOINT…CONTINUED Steps How to do it


If you want to advertise through the press or internet, consider that you should be as precise as you can about the description of the work to be performed and put in details of the duties, qualifications and work experience required. Also include how you want the applicants to present themselves to you. Do you want them to phone or email for an interview, call in person or write an application? Do you require references? Are you willing to send them out a job and person specification and how do they apply for this? What about the closing date? How will you limit the number of applications you want to screen?, and how many are you prepared to short-list for an interview? One advantage of using a recruitment agency is that the applicants are screened for you and you will only have a small number to choose from, saving you time and effort. If you are asking them to apply in writing it would be courteous to acknowledge the application and then to inform the unsuccessful applicants when the job is filled. If there are too many applicants for this, consider putting a brief thank you advertisement in the local paper or online to notify that the position is no longer open. This creates goodwill for your business. Work Experience - another way you might get good applicants is to take on students for work experience, but you must make sure that they are covered by workers’ compensation insurance and that you are not going against employment rules. There is a difference between work experience placements and try-outs which should be paid for by casual or other wage arrangements. If in doubt seek advice on the legalities of this with your legal adviser, or Business SA (website: www.business-sa.com / Tel: (08) 8300 0000) may be able to help you.

http://www.business-sa.com/




WHAT MUST NOT BE INCLUDED IN ADVERTISEMENTS It is against the law to discriminate against any person on the grounds of age, marital status, pregnancy, gender, physical ability, race or creed. Words for advertisements must be carefully chosen to avoid breaches of the law. Use the term ‘person’ instead of male or female and avoid using he or she where it might imply that only a person of that gender should apply. There are some exceptions to the general rulings and it is possible to target some positions for special groups on occasions. The Equal Opportunity Commission (EOC) (website: www.eoc.sa.gov.au / Tel: (08) 8207 1977) is able to advise you on the wording if you are unsure of your grounds for specially selecting one type of person over another. If you want a junior person and will be paying junior rates then the advertisement must say this. Also visit the EOC website to download the Equal Opportunity at Work – Handbook for Employers in SA: http://www.eoc.sa.gov.au/sites/eoc.sa.gov.au/files/attachments/booklet_equal_opportunity_at_work.pdf

3. Prepare to interview job applicants

Prepare a shortlist—keep in mind your selection criteria. Choose a suitable venue for the interviews that offers privacy. Prepare a series of questions you intend to ask—relate to job description and selection criteria. There are different questioning techniques which can be used and a basic knowledge of these can help you work out the best method of getting the information you want: A closed question is one that will only get you a ‘Yes’ or ‘No’ answer. Use open questions like “Can you tell me about your experience as a retail assistant?” rather than “Have you ever worked in a retail store?” The first question will get you much more information about the ability of the applicant. You can also ask some very direct questions about how the person enjoys work, or even what they least enjoy and in what areas they would like further training. An interest in learning more about the job can provide you with a clue about the motivation to do the work.

http://www.eoc.sa.gov.au/

http://www.eoc.sa.gov.au/sites/eoc.sa.gov.au/files/attachments/booklet_equal_opportunity_at_work.pdf






3. Prepare to interview job applicants

Some very useful skills can be gained through community work or involvement with sporting and leisure organisations, so remember to ask about these. If the person has been involved in an activity that might give them good team skills and some leadership ability then you will get a better view of their potential ability and commitment to the job. Schedule the interviews—allocate sufficient time to each applicant including time for them to ask you questions about the job (it is their opportunity to find out if they would like to work for you) and inform applicants of anything they need to bring to the interview.

4. Conduct interviews

Introduce yourself and any other interview panel members - always introduce yourself by your full name and the way that you would like to be called on the job. If good manners and good personal presentation matter in the work, then watch how the applicant greets you and whether they treat your questions with courtesy. Of course, they may be nervous, particularly if this is their first job interview, so a smile and a friendly greeting will help them feel more comfortable. Pose broad questions at the start to help applicants relax and feel comfortable with you. Ask your series of questions. Let the applicants do most of the talking. Outline the terms and conditions of employment you are offering, including rates of pay, working hours, any special working conditions etc. You may give them some notes which they can take away – this reduces the risk of misunderstandings later. If you are offering training or expecting the new employee to undertake it, then this should be talked about in the interview. It is especially important if you are encouraging new employees to take on training in their own time, or willing to assist them with this in some way, such as time off for study.



4. Conduct interviews

Training is important – it improves long-term productivity. Case studies show that training reduces staff turnover and leads to better work performance. Your staff will appreciate the investment you make in them. Although it takes up time, think of the consequences for your business if your employee is not trained and does not work to their best ability. Training doesn’t cost — it pays. For further information visit the WorkReady website www.skills.sa.gov.au/for-employers-business (Tel: 1800 506 266). Industry training advisory bodies have been set up to advise you on where you can get training materials produced for your industry at a reasonable cost. If you are taking on an apprentice or a trainee then you are legally obliged to train the employee. These obligations should be explained to you when you take out the Contract of Training through Traineeship and Apprenticeship Services: website: www.skills.sa.gov.au/apprenticeships-traineeships (Tel: 1800 673 097). Ask for referees to be nominated. Give applicants the opportunity to ask questions. Close interview by indicating when the decision will be made.

5. Appoint successful applicant

Check with referees. Make choice of successful applicant by listing reasons for your selection on paper and matching against selection criteria. Notify all applicants. Issue letter of appointment covering the terms and conditions of employment – See next section: 08: Employment Contracts and remuneration – An Overview

http://www.skills.sa.gov.au/for-employers-business

http://www.skills.sa.gov.au/apprenticeships-traineeships


08 Employment contracts and remuneration – An overview Once you have decided to appoint a new staff member you need to consider the method by which employment is offered and how much your new employee will be paid before selecting a person for the job. Employees can be hired on a part-time or full-time basis, in a temporary, casual capacity or as “permanent” staff, or may instead be offered a fixed term employment contract. Temporary assignments are generally brief in duration and employment agencies are commonly used to find such staff. Casual employment (where an employee’s working hours may be erratic and continuing employment uncertain) may be the best solution where an employer doesn’t wish to commit to a permanent arrangement. A fixed term employment contract may be used where there is a job of a defined duration to be done, resources are limited, or where other factors make it desirable to agree on the duration of employment at its outset. Fixed, short-term employment contracts can be offered directly to an employee or through an employment agency. WHAT IS AN EMPLOYMENT CONTRACT? An employment contract is an agreement (usually written) between an employer and an employee that describes the terms and conditions of employment. An employment contract may be short or long, simple or complicated, and may be drawn up by a Legal Advisor. However, it must comply with legislation—e.g. awards, etc. A letter of offer of employment may have the force of a contract in that when it is accepted it will bind the employer and the employee to act in certain ways. WHAT ARE THE BENEFITS OF A CONTRACT? An employment contract can provide some benefits including:

• Greater certainty in the event of either party wishing to terminate employment.

• It can provide an employee with greater job security, in the event that there are changes in the leadership of the organisation.

• A fixed term contract can provide a focus to the employee to achieve outcomes in a defined timeframe.

• Written employment contracts can help employees understand what is expected of them by defining working hours, codes of behaviour, confidentiality issues and the like.

• Entitlements can be clearly set out by defining terms and conditions.

• An employment contract can restrain a former employee from using confidential information unfairly.


08 Employment contracts and remuneration – An overview DOES MY BUSINESS NEED EMPLOYMENT CONTRACTS? If you are not sure whether a written employment contract is the best arrangement for your business, consult a Legal Advisor or recruitment consultant. WHAT SHOULD A LETTER OF OFFER OF EMPLOYMENT CONTAIN? Offer of employment can be a contract where both parties sign and agree. Whether you decide to offer a detailed employment contract or not, it is a good idea as a minimum to provide a letter of appointment. This letter should contain:

• Job title.

• Brief description of the role or what is expected.

• Remuneration and details of the agreed salary. Commission only arrangements may be applicable to the kind of employment you are offering. Seek advice before working out the terms and conditions of this so that both you and prospective employees know and can agree in writing, to the arrangement, ensuring there is no room for misunderstanding.

• Hours of work. Reference to the appropriate award or agreement under which the person will be employed if applicable (you will need to be sure of your facts before you place an advertisement - check with your trade association, Business SA (website: www.business-sa.com / Tel: (08) 8300 0000), the Fair Work Commission (www.fwc.gov.au / Tel: 1300 799 675) or the Fair Work Ombudsman (website: www.fairwork.gov.au / Tel: 13 13 94) for more information

• Enterprise Bargaining - is a way of making industrial agreements where employees and employers agree to terms and conditions of employment that apply only to that particular enterprise or business. If the employment you are offering is not covered by an industrial award, or if you want to have special employment conditions built into the arrangements then you might wish to check the principles of Enterprise Bargaining with your trade or business association to give you some pointers. The Fair Work Ombudsman and Business SA can also help you here.

• Any special and additional conditions - if you want your employee to meet special conditions you should put these in writing and these must be signed before the employee is hired. Seek specialist advice when drafting these.

• If hiring an apprentice or trainee - you should find out as much as you can about the Contract of Training arrangements before you hire anyone. Traineeship and Apprenticeship Services: (website: www.skills.sa.gov.au/apprenticeships-traineeships / Tel: 1800 673 097).



http://www.fairwork.gov.au/



08 Employment contracts and remuneration – An overview

• Superannuation, annual leave, long service leave and sick leave entitlements.

• Any overtime requirements.

• The notice required in the event of termination by either party.

• Confidentiality clause.

• Start date.

• Probation period if applicable. HOW MUCH SHOULD I PAY MY NEW EMPLOYEE? Employers are often unsure how much to pay a new recruit. It may be that the role is a new one in the company, or the employer may be concerned about overpaying or underpaying relative to prevailing market rates. An Award or other industrial instrument provides the minimum wages for position classifications. Most employers understand the need to be competitive with remuneration. Paying too little makes it difficult to attract good staff. Paying too much erodes profitability. Here are some of the ways that you can determine an appropriate level of salary for a new staff member:

• Talk to other employers in your industry.

• Ask an expert (industry association, remuneration adviser).

• Read newspaper employment advertisements (although salary isn’t always given).

• Ask the new employee about their expectations. OTHER CONSIDERATIONS Generally any employee must be paid at least the minimum award rates, therefore an employment contract cannot be used as a way of paying someone a lower rate—even if both of you agree to it at the time. The Australian Taxation Office (ATO) (website: www.ato.gov.au / Tel: 13 28 66) may consider someone an employee for tax purposes (and possibly superannuation) if 80% or more of their income comes from one source. WHAT ABOUT AWARD OR JUNIOR RATES? You can seek information regarding Award rates and coverage, as well as the application of junior rates, from the Fair Work Commission website: www.fwc.gov.au (Tel: 1300 799 675).

http://www.ato.gov.au/



08 Employment contracts and remuneration – An overview HOW DO I ATTRACT AND KEEP A VALUABLE STAFF MEMBER? Attracting staff:

• Provide information on your organisation.

• Highlight the benefits of employment with your organisation in advertisements and interviews.

• Word advertisements carefully to attract prospective employees.

• Provide training opportunities and a career path.

• Offer attractive salary packages.

• Consider incentives, or commissions.

• Highlight beneficial terms and conditions.

• Offer flexibility. Keeping valuable staff:

• Regularly appraise performance and provide feedback.

• Reward with praise, not just money.

• Define their job roles clearly.

• Provide new challenges.

• Regularly review salary.

• Listen to their aspirations and ideas.

• Provide ongoing training.

• Offer promotion or provide internal transfer opportunities.

• Perhaps offer a profit share. Further information and templates are available from the Fair Work Commission website.


09 New Employee at work Your new employee is about to arrive for their first day on the job and you need to know both your and their rights and obligations to make the arrangement work smoothly. If your employee is to start as an apprentice or trainee for a declared vocation then you will have to sign the relevant training documentation before they start. WHAT DO YOU DO FIRST? Putting the person at ease comes first. Whether this is their first or latest job, they will still have things to work through with you to make for a good relationship. Ideally, you will have a formal induction program and use this—if not, there are some essential things to cover before they can get down to work. After you have introduced them and shown them around you need to get some formal paperwork completed. Have you shown them the location of such essentials as toilets and emergency exits? Have you advised them of arrangements for lunch and other breaks? PAPERWORK FOR NEW EMPLOYEES If they do not have a Tax File Number (TFN) then you should give them the appropriate form together with the Tax Declaration form. These may be obtained from the Australian Taxation Office (ATO) (website: www.ato.gov.au / Tel: 13 28 66). You must provide each employee with a time book or time card which is filled in daily and signed off, so that you and the employee can verify the amount of wages due, and so that you can calculate the amount of tax to be deducted. For businesses in the National Workplace System, a Fact sheet from the Fair Work Commission website (www.fwc.gov.au / Tel: 1300 799 675) will explain your obligations to all employee records and payslips. It will also help if you keep a general record of the employee in a confidential file to help you locate details like contact telephone numbers and record any personal information your employee might provide in the course of employment. WHAT ARRANGEMENTS SHOULD YOU MAKE FOR TAXATION AND OTHER PAYMENTS WITHHELD? The ATO will help you with all enquiries and send out the necessary forms and information on deductions, tax credits, income statements and reports required. WHAT PAYROLL SYSTEMS SHOULD BE IN PLACE? Award information is available through the Fair Work Ombudsman (website: www.fairwork.gov.au / Tel: 13 13 94). You should find out in advance the correct award rate for the job and qualifications of the employee. You set the same pay day each week or fortnight as in the Award and give your employee a pay envelope or payslip that records the gross and net pay and details of all deductions made within one working day of pay day. If the employee is a member of a union you may be requested to make deductions for this. Ask the relevant union for their advice.





09 New Employee at work You should ensure that all absences are properly accounted for in the records, leave loading and overtime are calculated and any other pay information is documented. Good stationers can supply you with ready printed materials and can show you accounting systems to help you maintain good payroll records. Computer software is available. The Fair Work Ombudsman has online templates available for payslips and all-time records. WHAT ARE YOUR OTHER OBLIGATIONS? You must insure your employee against industrial accidents and injury through the South Australian Return to Work Scheme (website: www.rtwsa.com / Tel: 13 18 55). You should contact ReturnToWorkSA for information as to your obligations and they will send you relevant information and forms on request. You should do this as soon as the employee starts, or before if possible. WHAT MUST YOU DO ABOUT THE SUPERANNUATION GUARANTEE? You are required to make payments to an approved superannuation fund at the legislated rate. The ATO has a Superannuation Helpline (Tel: 13 10 20) for enquiries about Superannuation Guarantee or visit the web site at www.ato.gov.au/super HOW DO PERFORMANCE APPRAISALS WORK? If you and your employee are to make the business work well, and work towards a worthwhile working relationship, then you should consider making regular performance appraisals part of your routine. Ideally, these should be done every six months and set out in a form so that both you and the employee can both make comment about how they evaluate their work performance, your expectations and any requests for further training that might be required. In a way, this is conducted much like a job interview, but this time the employee also has the opportunity to make comments about the things that make their job satisfying or difficult. Both you and your employee should see this as an opportunity to share suggestions about improving work processes, customer relations, identify training needs and talk about their future career opportunities. It can also provide you with a chance to praise the employee formally for good work done and to give constructive criticism that can assist him or her to improve skills and performance in areas where they need help. WHAT MAKES A GOOD MANAGER? Managing a business means that you need to take as much care over your investment in people as you do over your money investment or your customers. A good manager models the kind of work performance, manners, customer service and courtesy that they expect of their employees. Courtesy, fairness, consistency and managers who give good, well thought out reasons for saying yes or no, will gain respect.

http://www.rtwsa.com/

https://www.ato.gov.au/super/


09 New Employee at work Managers will have more time to manage and expand the business if they train the employees well. To help you become a better manager and trainer there are several organisations that offer short courses that you might find interesting and your local Business Advisory Centre can offer you advice on this. To find your nearest centre visit the Getting advice section of the Department of State Development Small Business website: www.statedevelopment.sa.gov.au/smallbusiness

http://www.dmitre.sa.gov.au/small_business/getting_advice/who_can_help_me/starting_and_operating_your_business



10 Terminating an employee’s services If you are an employer, it is likely that you will be faced with terminating an employee’s services at some stage. This could be due to a downturn in business, the result of restructuring, poor performance from the employee over a sustained period or gross misconduct. You can only terminate an employee if there is a valid reason based on the employee’s capacity to do the job, the employee’s conduct or behaviour, or the operational requirements of your business. The termination must not be seen to be harsh, unjust or unreasonable. Dismissal is a major decision and it is recommended that you obtain professional advice from your solicitor or employer association before you act. What you do to sign off an employee depends upon the circumstances under which the employment is terminated and any legal contracts that might be involved. If it is a dismissal you must have given the employee the required warnings in the correct form. There are some circumstances where you might feel an instant dismissal is warranted on safety, ethical or other grounds. For advice on this before you approach the employee you should ask: SafeWorkSA (website: www.safework.sa.gov.au / Tel: 1300 365 255) Business SA (website: www.business-sa.com / Tel: (08) 8300 0000). You may have the right to suspend the employee from work pending an investigation of the matter if a serious breach has occurred. The conditions of termination will be advised to you, and pay in lieu of notice, plus any holiday or other pay accrued, may be required. If you have to make an employee redundant for any reason you should ask for advice on the manner and length of notice required and any obligations for special payments that this might incur. If you have an employee who is due to retire or who resigns, then you and the employee should seek advice about the notice required, any special pay that might be due and forms for transfer or rollover of superannuation funding. If you want to cancel indentures (Contracts of Training) then you should apply to the Traineeship and Apprenticeship Services (website: www.skills.sa.gov.au/apprenticeships-traineeships / Tel: 1800 673 097) for detail of the procedure to be followed. Full statements of entitlements to leave and other benefits must be supplied together with a Separation Certificate for Centrelink (website: www.humanservices.gov.au/customer/forms/su001 ).




http://www.humanservices.gov.au/customer/forms/su001


10 Terminating an employee’s services Here are five practical tips to observe when faced with the termination of an employee:

• Join an employer body if your employees are covered by an award. You will be able to draw on its invaluable experience and advice in the interpretation of awards and the handling of disputes.

• Give warnings and undertake counselling with employees before dismissing them. An individual may not be aware of their shortcomings and should be advised that immediate remedial action is required.

• You should always diarise these warnings and counselling sessions to protect yourself from the possibility of wrongful dismissal proceedings at a later date.

• Avoid dismissing people for reasons other than work performance or redundancy. Where other reasons apply, you must have evidence such as witnesses.

• Document! Document! Document! The more evidence you have that all required steps in the dismissal have been followed, the safer you are.

• Where dismissal occurs, communicate verbally and in writing with the employee, giving clear reasons for the termination and outlining the employee’s termination package.


11 Delegating effectively Delegation is the assignment of authority and responsibility to another person for carrying out certain activities. It is an important part of building a winning team but can be a problem in businesses where an owner may be afraid of losing control. Your business could have been built from scratch and it is natural that you take pride in the fact that you have performed all tasks of running the business yourself. But as the operation continues to grow, it will become necessary for you to delegate some tasks to concentrate on what’s really important. So, how do you delegate effectively? Here are some practical dos and don’ts: CHECKPOINT Do: Do Not: • Encourage the free flow of information within the business. • Do not hoard information.

• Focus on results. • Do not do all the talking.

• Keep lines of communication open. • Do not leave timeframes vague.

• Give a thorough briefing when handing over tasks.

• Do not allocate tasks without the necessary resource support.

• Delegate appropriate authority. • Do not delegate half a task.

• Establish firm and realistic deadlines. • Do not fail to point out pitfalls.

• Delegate the entire task to one person. • Do not seek the glory.

• Encourage questions to clarify the task. • Do not look for scapegoats.

• Give advice without interfering. • Do not impose controls as an afterthought.

• Make sure the person has all the resources necessary to perform the task.

• Build controls into the delegation process.

• Keep an eye on progress.

• Give the employee full credit for his or her accomplishments.

• Make delegation part of the planned growth of your business.


12 Summary

1 Before you employ someone, work out the total costs involved, relative to productivity gains, and the impact on your profits.

2 A number of options are available when you need staff, including employment on a full-time, part-time, casual or fixed-term basis, as well as apprentices, trainees and subcontractors.

3 Your responsibilities as an employer relate to minimum employment conditions and industrial awards, taxation and work health and safety.

4

Hiring the ‘right’ employees is best achieved if you follow a plan involving preparation of a job description, accessing appropriate recruitment sources, preparing for interviews, conducting interviews with applicants and making your choice based upon selection criteria and the best person for the job.

5 You can only terminate an employee if there is a valid reason based on the employee’s capacity to do the job, the employee’s conduct or behaviour or the operational requirements of your business.

6 As your business grows, it will become necessary for you to delegate some tasks to concentrate on what is important.

7 As managing employees is an area of risk for any business due to the extensive number of laws and regulations which must be observed, be prepared to seek professional advice.


13 Contacts Australian Taxation Office (ATO) www.ato.gov.au / Tel: 13 28 66 / Superannuation Helpline: Tel: 13 10 20 Provides taxation information and offers a Small Business Assistance Program for Australian businesses. Business Advisory Centres in metropolitan and regional South Australia Getting advice section of the Department of State development Small Business website: www.statedevelopment.sa.gov.au/smallbusiness Business SA www.business-sa.com / Tel: (08) 8300 0000 Provide hands-on assistance to identify workplace challenges and drive growth at every stage of the business lifecycle. Centrelink Business Online Services http://www.humanservices.gov.au/business/services/centrelink/centrelink-business-online-services/ Equal Opportunity Commission www.eoc.sa.gov.au / Tel: (08) 8207 1977 Information to help employers meet their legal obligations, prevent discrimination and harassment in their business, promote fairness at work and improve staff relations and customer satisfaction. Visit the website to download the Equal Opportunity at Work – Handbook for Employers in SA Fair Work Commission www.fwc.gov.au / Tel: 1300 799 675 An independent body whose functions include: minimum wages and employment conditions; enterprise bargaining; industrial action; dispute resolution; termination of employment; and other workplace matters. Fair Work Ombudsman www.fairwork.gov.au / Tel: 13 13 94 Search and manage applicable pay rates for your employees via the South Australian Wage Finder. SafeWork SA www.safework.sa.gov.au / Tel: 1300 365 255 Works with employers, employees, unions and industry representatives to ensure compliance and help business meet their occupational health, safety and welfare obligations.




http://www.humanservices.gov.au/business/services/centrelink/centrelink-business-online-services/

http://www.humanservices.gov.au/business/services/centrelink/centrelink-business-online-services/

http://www.eoc.sa.gov.au/





13 Contacts WorkReady www.skills.sa.gov.au/for-employers-business / Tel: 1800 506 266 Traineeship and Apprenticeship Services www.skills.sa.gov.au/apprenticeships-traineeships / Tel: 1800 673 097). ReturnToWorkSA www.rtwsa.com / Tel: 13 18 55 Formerly known as WorkCover SA, ReturnToWorkSA manages the South Australian Workers Return to Work Scheme, which provides protection to workers and employers in the event of workplace injury.

http://www.skills.sa.gov.au/for-employers-business


http://www.rtwsa.com/


14 Notes


Department of State Development GPO Box 320 Adelaide SA 5001 T: +61 8 8226 3821 E: [email protected] W: www.statedevelopment.sa.gov.au/smallbusiness DISCLAIMER The Government of South Australia gives no warranty and makes no representation, whether express or implied, as to the accuracy of information contained within this guide or the suitability of the information for any purpose. Any use of the information contained in this guide (whether authorised or not) is at the users’ sole risk and the Government of South Australia disclaims responsibility for any loss or damage incurred as a result of such use. The information is provided solely on the basis that users of the information will make their own assessment of the accuracy of the information and users are advised to verify all information contained within this document. Any information about the law in Australia or South Australia is provided as general information only and is not legal advice. This guide is a starting point only and is not a substitute for legal or professional advice. While the Department has attempted to ensure the information is accurate at the time of publishing, no responsibility will be accepted for any errors or omissions and the Government of South Australia will not be liable for any loss or damage incurred by any person as a consequence of any use, reference or reliance on this information. Any such use, reference or reliance shall be at the sole risk of that person who should seek their own legal and/or professional advice if required. COPYRIGHT Produced by the South Australian Government © July 2015

Staffing your business...This guide covers the key elements in staffing your business. It highlights what it actually costs to hire someone and summarises the options you have when

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