Monday, 1 October 2012

Compliance Requirements for New Employees

Locating suitable staff during recruitment periods can be challenging. Once the hard work is done to find new staff, it’s then important to consider that they are correctly on boarded to ensure you meet your legal obligations under workplace laws.
This article examines the various compliance requirements that an employer must adhere to when they take on new employees during the recruitment period.

So, you have found a great candidate to work for your business, but what steps do you need to take to prepare for their arrival in your business? There are actions which you must take from a legal perspective and there are also a number of best practice measures that we recommend you implement from the start.

Pre-start date, the foundation for most offers of employment is a vacancy in the business. In order to place an advert for the vacancy it follows that a description of the position has been thought about and written out. It is recommended that these details be fleshed out into a job description. A job description is extremely useful for both the employer and the employee as it sets out the parameters of work that are expected of the employee. When it comes to recognising good performance or addressing poor performance, reference should made back to the content of the job description to ensure that an assessment of performance is fair and reasonable.

During recruitment, a candidate is unlikely to accept an offer of employment without being aware of the main terms and conditions. Much of the vital compliance focus relates to payment of wages or salary. When it comes to determining an hourly rate of pay or salary for an employee, you must first identify the status of the employee.

An employee can be engaged either as permanent full-time, permanent part-time or casual. There are distinct differences between a permanent employee and a casual employee, and it is vital that the correct status is allocated to the employee from the start.

A permanent employee is either a full-time or part-time employee. Full-time employees work 38 hours per week and accrue annual leave and sick & carer's leave (now known as personal leave). Part-time employees work less than 38 hours per week, have reasonably predictable hours of work, and also accrue annual leave and personal leave entitlements. A typical permanent part time employee would work say, 15 hours a week every week and generally on the same shift or day each week, such as 5 hours each on a Monday, Wednesday and Saturday every week. Permanent employees are entitled to receive notice of termination and redundancy payments, where applicable.

Casual employees, however, are effectively terminated at the end of each shift and can be rostered to work a variable and flexible shift pattern, varying for example, from 5 hours one week to 40 hours the next. The important difference between a casual employee and a permanent employee is that casual employees are not entitled to paid annual leave or personal leave. This means if they don’t turn up to their shift, they do not get paid. To compensate casual employees for their casual employment status, they are paid a casual loading, which generally means they get roughly 25% more than a permanent employee performing an equivalent role. Furthermore, a casual employee is not entitled to receive notice of termination of their employment.

It is important to get the classification of an employee correct during recruitment so that the appropriate rate of pay is allocated to the employee. This means for a casual employee that the appropriate loading is paid on their ordinary hourly rate and for a permanent employee that annual leave is calculated and accrued on all hours worked from the start of their employment.

The next step in determining your employee’s legal rate of pay is to establish whether the employee will fall within the company’s Collective Agreement, if it has one; whether they are covered by a Modern Award, or whether they are Award – free. Modern Awards are wide-ranging in their scope and they cover a vast number of occupations and industries. If you do not have a Collective Agreement, determining coverage can be a complicated process of evaluation. The instrument that covers the employee will determine the rate of pay that they are legally entitled to receive, and the consequences of getting this wrong can quickly result in a claim for underpayment of wages – a costly and time consuming exercise for any business.

Once the correct rate of pay or salary level has been ascertained this should be communicated to the employee together with the other terms and conditions relevant to the position. This can be communicated either verbally or in writing, however for the sake of clarity we would recommend that the details be conveyed in writing either during or just after the completion of the recruitment process.

Depending on the position that the employee is fulfilling a short letter of appointment may be sufficient to set out the main details of employment, or a more comprehensive contract of employment may be required.


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