5 Common HR Mistakes Small Businesses Make

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Below are 5 common Human Resources mistakes that can trip up a small business. Avoiding these mistakes can reduce the risk of disputes, being fined with hefty penalties or even being sued.

1. Poor recruitment practices

Even potential employees have access to workplace rights under the Fair Work Act and can sue for adverse action. In these instances businesses carry the burden of proof, not the applicant. It’s also a lot easier to employ someone than to terminate them so put in the effort upfront and make sure you have a robust recruitment process. Understanding employee rights and anti-discrimination laws is the first step in minimising these risks. Developing a Job Description, preparing interview questions, conducting reference checks and making it clear what the expectations are and how you will measure success is also good practice and helps to ensure that you employ the right people.

2. Not getting the status of your employees right

Do you need casual, permanent part-time, full-time, fixed term or fixed project employment arrangements or perhaps a Contractor? This too needs to be well understood from the beginning because there are pro’s and con’s associated with all of these. For example, there is no point hiring a casual if you intend on giving them regular, systematic and ongoing employment for more than 12 months. Alternatively, paying someone as a Contractor with an ABN when they are deemed to be an employee can also result in fines and penalties. Refer to the relevant Award requirements in the first instance and understand your options.

3. Not understanding Award obligations or entitlements

In addition to the National Employment Standards there are currently 122 different Awards that cover most industries and occupations. It is necessary to understand which Award applies to your employees from the get go so you don’t end up having to pay expensive ‘back pay’ to your staff for not paying the correct wages, penalty rates or allowances.

4. Poor record keeping

Like the Australian Taxation Office, the Fair Work Ombudsman can issues fines and penalties to Companies for not keeping accurate employment records. For example you need to issue payslips to your employees and keep time and wage records for at least 7 years.

5. Lack of consultation and cooperation

The first step to achieving a harmonious workplace is to develop mutual respect through consultation, communication and collaboration. This not only helps to minimise mistakes and disputes but there are also legal requirements to consult with your employees about workplace change, health and safety. An important tip is to keep records of consultation especially when it involves proposed changes to an employee’s work arrangements, a company restructure, changes to rosters, termination of employment, workplace health and safety matters etc.

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