Hot on the heels of announcing our partnership with Workforce Guardian, I sat down with Managing Director, David Bates to learn more about the world of employment relations in Australia.
Turns out there’s a lot to learn! Important stuff, and scary if you get it wrong.
Every business owner in Australia needs to understand their risks and obligations under the Fair Work Act. This short video from a recognised expert is mandatory viewing.
In the Loop: with Workforce Guardian
Horror stories from the frontline of employment relations
Michael Overell (MO): Today we’re joined by David Bates, managing director of Workforce Guardian, which is Australia’s leading online employment relations service. David’s also an employment relations specialist and advises SME’s on ER issues, including representing them in front of Fair Work Australia. His company, Workforce Guardian, provides the tools and information SME’s need to ensure they’re fully compliant with the Fair Work Act in Australia.
David, thanks for joining us.
David Bates (DB): My pleasure Michael, thanks for having me.
MO: So there have been quite a few changes in employment relations law in Australia over the last few years, can you give us a quick summary of the biggest ones?
DB: Yeah, it’s a challenge to give a quick summary because the laws have changed so dramatically. We used to have legislation called Work Choices, which most employers will be familiar with; that was completely replaced by a new series of laws called the Fair Work laws, covered by the Fair Work Act in 2009. And that has substantially re-regulated the labour market for employers, which means that there is a raft of new legislation that small business employers, primarily, need to be aware of: everything from modern awards, ten national employment standards, all of these are new and employers really do have a responsibility to get on top of it.
MO: What are some of the biggest blind-spots you see, of some of the companies you work with?
DB: The main blind-spot that we see is, first of all, a lack of awareness that the laws have even changed. That’s the first challenge, is making sure that people understand that the laws that they used to apply simply no longer exist, so they do need to be up to speed with that.
And then once they’ve got their head around the Fair Work laws, the biggest challenge then is things like the ten national employment standards, which must be provided to all employees regardless of their income, so there is a lot of compliance issues that go directly with that.
And then of course modern award coverage; we do have 122 of these new modern awards that replaced thousands of old state and federal awards, and what a lot of employers do is they pay a lot of attention to the act or the national employment standards, but they forget that they also need to look at these modern awards as well, because those terms and conditions apply as well as the national employment standards. So a real blind-spot is realising that both of these things work hand-in-hand, and you have to be compliant with both, because if you aren’t, there are quite severe penalties that employers face.
MO: And I guess you see companies who may just not even be aware that anything’s happened in this space?
DB: Look, every day we’re going out there and we’re speaking to potential clients or existing clients and we’re explaining to them that there is this compliance risk, and quite often you’ll ask the question, “What are the ten national employment standards?” And it’s not surprising to have employers say, “I don’t know what the national employment standards are, so how can I tell you what the ten of them actually are one by one?”
So it’s a real struggle when you’re running a business, to try and be on top of all of these legal changes, as well as running your business profitably, managing your staff, making sure that everything’s okay. This is just another layer of compliance burden really, and we are there to try and make sure that employers are on top of that and are fully compliant.
MO: Now you also represent companies in front of Fair Work Australia, or being investigated by the Fair Work Ombudsman…
DB: That’s correct.
MO: Can you share any horror stories that might provide some lessons for other SME’s who aren’t aware of some of these changes?
DB: Look I think what a lot of business owners aren’t aware of, is the fact that Fair Work inspectors have a legal right to enter your premises at any time that your business is open. So they have an unfettered right of entry into your business, they can interview you and your employees, they can take samples from the workplace, and they can obviously inspect your employment records.
Now, if your records are up-to-date and everything’s kosher then there’s no problem. The real issue is employers, for example, who haven’t yet come to terms with the new laws: their records aren’t up-to-date or they have given out incorrect information or incorrect contracts of employment. And the horror story is when those records are then reviewed, and the penalties can be backdated to when the breach has occurred.
Employers are legally responsible for maintaining, for example employment records, for up to seven years, so there are a whole range of risks and the real horror story is the longer time goes on, the bigger those penalties could be, because more time has accumulated of non-compliance.
MO: So there’s potentially up to seven years of penalty, backdated?
DB: Yeah, in effect, I mean they can go back up to seven years and look at your records, and they are looking to see that you have been compliant at all times, both with Work Choices (the old legislation), as well as the Fair Work Act as well.
MO: What sort of magnitude of penalties are we talking about, are these kind of pocket change for companies or is it going to really hurt them?
DB: It’s really going to hurt them, and especially if it’s small businesses. There is some attention paid to how damaging a penalty will be on a business, I don’t think anyone’s in the business of sending businesses bankrupt, for example. But that said, in reality, small business owners are the last ones to get paid; they pay their staff, they make sure that their employees get 4 weeks of annual leave, they’re doing all the right things by these employees, and at the end of the day, quite often they’re the last ones to pay themselves, the last ones to take a holiday. So any penalty that gets imposed can be really emotionally and financially devastating on a business.
And the penalties vary, from on the spot penalties of $330 to, if the matter progresses all the way through to the tribunal, you’re looking at penalties of up to $33,000 for some breaches. So it’s incredibly serious and the issues around not complying are really so important that you shouldn’t just let it continue, you need to address them at some point.
MO: Are there any types of companies or industries that are particularly at risk, or that really need to be careful of these risks more than others?
DB: We get asked that a lot, “I’m in this particular industry or that occupation, we’re okay aren’t we?” And the truth is that there is no-one really that is exempt or has an advantage in the Fair Work system. If you look at some of the recent cases that have gone through Fair Work Australia, or investigations that have been conducted by the Fair Work Ombudsman, what you see are some of the largest companies in Australia being penalised or having underpaid employees – some of the best known brands that you’ll see out there: Cotton On, Hungry Jacks, etc.
So these are big companies with big HR departments, and they haven’t managed necessarily to always get it right, so for small businesses you can imagine what the compliance burden is like there as well, where they don’t have access even to those resources. So I don’t think anyone’s exempt from it, I think everyone’s in quite a lot of danger if they aren’t specifically addressing the issues of compliance with the Fair Work laws.
MO: Okay so last one for you: If there was one piece of ER advice that you would like every company in Australia to follow, what would it be?
DB: It would be to document everything. Quite often, especially in small businesses, employers have these informal chats with their employees, maybe about a performance issue or a conduct issue, and because they have these informal conversations they think that the matter will be addressed and that it will all be okay.
The reality is, if you’re not documenting the conversations you have, even if they’re in just a dot-point email to yourself that you can keep on record, there is a real risk that at some point in the future if a claim was to come up, you’ll have nothing to refer back to. So my number one piece of advice is document everything that you’re doing in your workplace, and keep on top of your employee relations files and management. Don’t let it get away from you.
MO: Great, David, thanks for your time, thanks for your expertise.
DB: My pleasure. No worries, thank you.