5 HR hotspots that can legally get you in trouble
Charles Power, Partner and Workplace Relations Specialist from Holding Redlich, explains the sticking points when it comes to employment law and how to avoid legal exposure.

Being an employment lawyer I fully appreciate that I can have a fairly gloomy view of the potential trouble employers can get into when hiring and firing staff. The vast majority of employment relationships are built on trust and confidence and are mutually rewarding for all parties. However, time and time again common issues come up, which can be avoided with the right practice or provision.

Worthless restraints

Post-employment restraint clauses are not worth the paper they’re written on if they cannot be justified and go beyond what is reasonable. Common problems in restraint drafting include clauses that seek to prevent ex-employees approaching your clients, regardless of whether they have any relationship with or knowledge of those clients, clauses that seek to prevent your ex-employees from working for competitors regardless of whether the work will actually cause harm to your business, and not taking into account gardening leave periods in setting the periods over which the restraint operates.

Sham contracting

Many people will offer their services on a contractor basis. However an ABN and an invoice doth not maketh an independent contractor alone. Courts and tribunals – and the Fair Work Ombudsman – make it clear that the test for contractor status is high. If you are paying an hourly rate for the exclusive services of an individual, you will have a difficult task in defending any later assertion (usually made when the contract relationship ends poorly) that the individual was engaged as an employee. A common way this issue surfaces is when the individual complains to the ATO that they did not receive compulsory superannuation.

Casual employment

Recent Fair Work Commission decisions have afforded award-covered casuals the right to request conversion to permanent employment after 12 months of regular casual engagements. The award provision obliges you to provide the casual during their first 12 months with a copy of the relevant casual conversion provision in the Award. In addition, the recent Federal Court ruling in Workpac v Skene has opened the door to regular casual claiming paid leave entitlements, including annual leave.

The Government has partially mitigated this risk by passing a regulation to prevent double-dipping. However it is important that casual contracts have clauses along the lines of: “In addition to your hourly rate, you will receive a casual loading of X, which is intended to compensate you for not being entitled to paid annual leave and personal leave.” and “This offer of casual employment does not involve any representation or expectation of continuing work or regular and systematic engagement as a casual. Moreover, you are not obliged to accept any work offered to you.”

Internships

You may have an intern program in which people attend your workplace and receive training or work experience. That’s OK if they are simply observing operations for their own benefit and acquiring learning experience, training or skills. However, if the ‘intern’ is undertaking productive activities that your employees in the workplace are performing for the benefit of your organisation, then the person is more likely to be considered an employee. For more detailed information, visit Fair Work Australia. The Fair Work Ombudsman is showing a keen interest in cracking down on illegitimate internships.

Bureaucratising the HR process

The rising number of general protections claims made to the Fair Work Commission recognise an increasing awareness of this avenue as a means to challenging employment terminations. Now, more than ever, is the time to implement procedures that enable proper records to be made of why HR decisions are taken and by whom. This means, for example, when an employee alleges that a performance management process is an unlawful response to a prior bullying complaint she or he has made about a manager, the organisation has clear evidence explaining why the decision to introduce the PIP had nothing to do with the employee’s complaints.

This post is intended to provide general information in relation to a legal topic from a qualified legal practitioner external to SEEK. It does not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.