What is HR Compliance?
Australia has a complicated set of interconnected employment relations rules that come from common law, industrial practices, and legislation created by federal, state, and territory laws. Comprehending it all is a difficult task and unfortunately, some organisations fail at their due diligence and elect to ignore following the rules. While this is understandable on one level it may be unlawful and can result in legal action that may cost your business thousands of dollars in fees and damages. So, what is HR compliance and what does HR compliance mean for SMEs?
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What is HR Compliance?
A textbook definition would define HR compliance as organisations hiring practices, workplace rules, treatment of employees, and a variety of other industry specific employment laws and regulations.. While accurate that definition fails to provide much specificity. So, what is legal compliance in HR in practical terms?
National Employment Standards & Awards
The National Employment Standards are set of requirements that businesses must provide to their employees at a minimum. These minimum standards are set out in the Fair Work Act Chapter 2, Part 2.2.
Businesses need to ensure they are meeting criteria prescribed by the NES as well as modern awards and any other industrial instruments. There are many terms and conditions business owners are obligated to follow including, but not limited to: minimum pay, working hours, penalty rates, leave allowances, breaks, public holidays, and termination of employment.
Accurately classifying an employee as per their award and their job role and requirements is important as well. Misclassification can result in underpayment and loss of rewards and entitlements that businesses are legally required to provide. Ignorance of what employees are entitled to is not a viable legal excuse, so organisations need to classify their employees properly.
Answering ‘What does HR compliance mean?’ is plain in this case. Contracts need to be written in straightforward English that detail the terms and conditions of employment. Contracts need to include specific information on:
- work hours
- post-employment conditions
Defining what constitutes intellectual property and how confidential information will be protected is also essential. Finally, it benefits all parties to include a job description and workplace policies of the business.
Workplace protocols and policies need to be clear and easy to understand. As with contracts above, well thought out and explicit policies benefit everyone, furthermore they help shield the business from financial dangers.
Communicating expectations and the consequences of not following the rules is essential. Employees also need easy access to all workplace policies. With new hires, take the time to thoroughly explain all the workplace protocols. All employees should acknowledge their understanding of the rules in writing. Regularly train your team and review policies to ensure they are up to date and pertinent.
Understanding what is legal compliance in HR in terms of being an employee vs. being an independent contractor is a cause of confusion for many businesses. Currently, it is common practice to rely on independent contractors to perform specific work over a short period of time. This provides a business with greater flexibility and adaptability, but it can lead to employees being miscategorised which can result in large penalties to the business. There are many guidelines you can follow to determine the difference but a simple rule to follow is that employees work in and are a part of your business. An independent contractor owns and operates their own business.
It is important to note that recently there have been fair work cases where organisations have dismissed an independent contractor after they had worked with the organisation for a number of years. Due to the nature of the work they performed for the organisation and how the organisation managed the independent contractor was deemed by the Fair Work Commission to be an employee in court. As such, the organisation was then ordered to provide them with such entitlements such as leave accruals and notice of termination.
Managing Performance & Dismissal
Documentation and following due process are important in handling poor performance. Before dismissing an employee, the employee must be provided reasonable consultation from the employer in order to determine the reasons for the poor performance and ample opportunity to improve. It is essential that each step of the process needs to be recorded, otherwise, a dismissal may be found to be unfair or unlawful.
Employers must provide the employee appropriate and well-timed notices in writing and ample (yet reasonable) time to strengthen their performance. Employees should also be free to bring along a support person to all disciplinary-based meetings. Finally, every part of the process needs to be documented; this includes detailing why the employee’s performance is poor and creating a performance improvement plan for improving their work.
Looking for Help Managing Your HR?
We hope this has helped provide some insight to the question of ‘What is HR compliance?’ and assists you in understanding the complexities involved in the issue. Bramwell Partners are experts in HR support, helping to make sure your business is following all the correct rules and regulations. Learn more about how we can help you by calling 07 3630 5695 or get in touch with us online.