Employment Hero

3 Compliance Issues Small Business Owners Need To Be On Top Of

There’s a seemingly endless line of day-to-day HR compliance issues that every successful business owner needs to master. It makes it feel like running a business calls on your innate juggling skills. It’s easy to underestimate the time that people management issues and HR challenges and compliance issues take up.

Panic over! Here at Employment Hero, we’ve put together three of the biggest HR compliance issues that need your full attention right now as a small business owner.

Compliance Issues #1:  Underpayment of wages

The first and possibly one of the biggest compliance issues we want to cover is underpayment of wages. Payroll scandals have been all over the Australian media in the last few years, so if it’s something big companies like 7-Eleven, Shagri-La Hotel and the Super Retail Group have fallen short on – there’s no time like the present to make sure you’re doing things right.

These days, underpayment claims are rarely out of the headlines. More often than not, it’s a simple matter of a business failing to apply correct modern award conditions or misclassifying an employee. But all too often these seemingly minor oversights become expensive problems with significant back pay claims. Such matters can do all sorts of reputational damage to your employer brand.

Even if you’re paying above award rates, you still have to meet other provisions of the award including the correct entitlements for leave, penalty rates and hours of work. Not surprisingly this is a massive pitfall for many employers who think they’re doing the right thing.

Your best defence in any matter related to employee pay and entitlements is to know at the outset what your obligations are. It’s also important to know that some awards contain unusual clauses that are not at all obvious to the unwary.

Of course, it’s so important to stay on top of all changes to pay rates which also impact the value of leave loading and penalty rates, along with superannuation calculations. On July 1, a new national minimum wage of $18.29 per hour or $694.90 per week came into effect. And in line with these changes, the base rates of pay in modern awards also increased by 3.3%.

However, if you are approached by an employee claiming they have been underpaid, it is important to take the time to understand why they think they are underpaid, and how much they believe has been underpaid. Make sure you investigate the matter thoroughly and provide them with an update on your findings.

If you find there is a genuine matter, it’s important to remedy the underpayment as quickly as possible.  calculate the repayment amount and

Using a modern payroll system will remove much of the guess work for you by automating most payroll decision-making processes with multiple and integrated rule sets. This includes overtime rules, conditional pay rates, allowances and penalty rates, auto pay increases and leave templates.

What can you do about underpayment of wages?

Audit your employee classifications and award payments and entitlements, now. If you find there are anomalies, make sure you make it your priority to get them sorted.

Make sure your business is keeping accurate time and wage records to ensure that the employee continues to be paid enough to avoid underpayment. Good records go a long way to satisfying any parties involved in a dispute that any errors were made in good faith.

Compliance Issues #2: New 457 visa program

Another HR compliance issue that can be a thing of nightmares is the new 457 visa program.

The shake-up of the 457 visa scheme has the potential to make it more difficult for all employers to overcome talent shortages in this country. It will certainly be more difficult for all employers to attract international talent without the lure of permanent residency.

As we discussed back in May, the move to abolish 457 visas in favour of visas under the Temporary Skill Shortage (TSS) scheme will come into effect in March 2018.

The new scheme will be split into two streams: The Short-Term TSS (which is up to two years), and the Medium-Term TSS (for up to four years). Both come with more stringent testing and English language requirements.

Already fewer occupations are eligible for a visa.  A new skills list was introduced in July which excludes 216 occupations that were formerly on the list.

In addition, from March next year, you’ll be expected to pay a contribution to the Skilling Australians Fund for any workers you have on a TSS visa.

Under this new tax, as a small business owner, you’ll have to pay $1200 for every year you employ a temporary visa worker. You’ll also have to make a one-off payment of $3000 for each employee you go on to sponsor for a permanent skilled visa.

Larger businesses (with turnover of more than $10 million) will have to pay $1800 per worker a year, along with a one-off payment $5000 to sponsor for a permanent skilled visa.

What can you do about the new visa program?

With the removal of a permanent residency pathway via the 457 visa from March next year, as an employer, you will need to review your approach to recruiting overseas talent. As recruitment can be highly time-consuming, it’s important to spend the time up front to define how to attract the best people.


Compliance Issues #3: Casual Conversion

Last but certainly not lease, is the compliance issues that lie around casual conversions.

You may recall that in July, we reported on the landmark decision made by the full bench of the Fair Work Commission to allow casual employees to convert to full- or part-time employment.

Of course, the concept of casual to permanent conversion is not new, but this decision proposes to insert it into 85 modern awards that currently do not have one. It also requires employers to provide all casual employees with a copy of the casual conversion clause within 12 months of their initial engagement.

However, while the topic of casual conversion received a lot of media coverage at the time of the decision, as we move into late August, we’re still waiting on the specifics and when it all kicks in. That said, it is highly likely that a casual conversion clause will be enforced later this year.

What can you do about casual conversion?

As an employer, you should be mindful of this decision and start thinking about what you need to do when the final model conversion clause comes into effect.

As a good place to start, consider the mechanisms you will need to put in place to properly address your employees’ requests for conversion.

You’ll also need to think about your recruitment strategies and that they take into account the potential for conversion from casual to full-time or part-time. You also need to think about how you address this topic in your onboarding procedures.

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