HR FOR SMALL BUSINESS
EMPLOYMENT CONTRACTS
HR ONBOARDING & TRAINING
BENEFITS OF HR SOFTWARE
HR RESOURCE TEMPLATES
HR Basics for Small
Business Owners
Navigate the complete guide or use the links below to jump
to a specific section.
Key HR Requirements Small Businesses Need to be Aware of
National Employment Standards
Understanding Modern Awards
Implementing Policies & Procedures
Types of employee contracts
Casual & Part-Time
Permanent Employees
Casual VS Permanent Employment
Independent Contractors
Mistakes Small Businesses Make When Paying Employees
Why HR is Necessary for Small Businesses
Key HR Requirements Small Businesses Need to be Aware of
Why Employee Contracts Are Important
Types of employee contracts
Casual & Part-Time
Permanent Employees
Casual VS Permanent Employment
Independent Contractors
Mistakes Small Businesses Make When Paying Employees
What is the Fair Work Act?
National Employment Standards
Understanding Modern Awards
Implementing Policies & Procedures
Never underestimate the power of good HR for your small business! In this guide, we will help you to avoid the headaches and confusion when it comes to navigating the functions of HR; from hiring to reviewing performance, and maintaining compliance with workplace policies.
Section 1
HR for Small Business
There are several HR basics that every small business should be taking care of.
For example:
- Are you aware of all the employment laws and obligations affecting your business?
- Are your employees being given proper training?
- Are you taking measures in creating a safe, inclusive workplace for your staff?
If not, don’t worry. We will discuss the importance of HR for small businesses in the following paragraphs so you can be confident managing your HR functions including the key HR requirements every small business owner needs to be aware of.
Why HR is Necessary for Small Businesses
Think HR is just for large companies? Think again!
A good HR function is needed no matter your business’s size, resources and responsibilities. It’s understandable if, as a small business owner, you think having fewer than 25 employees means that a HR function isn’t as important. True, larger companies have a larger team to manage a larger workload and need a large HR department to maintain this. However, having fewer resources as a small business does not hinder your need for effective HR policies and practices.
Small businesses need HR to grow their business. With more than a third of small businesses competing in the open market, it is becoming harder and harder to stand out from the competition. In order to remain competitive while facilitating growth, businesses should focus on balancing sales and marketing campaigns with a strong HR function.
Working together, HR enables you to find the best practices and policies for your business. It also helps to ensure that your business is up to date and aware of all the local, state and federal laws that govern your workplace.
Like most small business owners, you are likely overwhelmed by having to handle all business activities yourself. Creating or outsourcing a HR team will alleviate this pressure and let you focus on what’s important. Your HR team will help handle all HR issues, including:
- Navigating workplace legislature and compliance
- Development of workplace policy and procedures
- Hiring and retaining new employees
- Employee training and development
- Managing employee pay and benefits
- Handling performance reviews
- Navigating workplace legislature and compliance
- Development of workplace policy and procedures
- Hiring and retaining new employees
- Employee training and development
- Managing employee pay and benefits
- Handling performance reviews
Key HR Requirements Small Businesses Need to be Aware of
If you’re unsure where to start, here are the key HR requirements for small businesses:
You’ll need to ensure your business regularly updates, reviews and implements workplace policies. These include Workplace Health & Safety policies to keep your staff safe at work, along with code of conduct policies, internet and email policy, drug and alcohol policy and anti-discrimination & harassment policies.
Missing or overlooking changes to workplace compliance and legislation can result in big fines and stressful legal ramifications. Small businesses need to keep up-to-date with state and industry requirements such as WorkCover and The Privacy Act along with things like awards, penalty rates and business accreditation.
Introduced in 2009, The Fair Work Act is one of the primary pieces of legislation in Australia that governs employers and employees and helps them to understand their rights and responsibilities. The National Employment Standard (NES) are 11 minimum employment entitlements for employees in Australia. These landscapes of laws are forever changing, so it’s important to check up on them and stay up-to-date with things such as awards rates – particularly if you are in the hospitality or trades industry.
Employee record-keeping and payroll
Small businesses need to think about getting their payroll systems set up to make it easy to calculate employee tax and superannuation and to meet compliance. This is even more important since the introduction of Single Touch Payroll.
HR Compliance & Legislation
for Small Business
HR compliance is the implementation of human resources policies and procedures that comply with laws and regulations. Businesses must maintain HR compliance to avoid penalties, fees or legal action.
Regardless of how big or small your business is, HR compliance is mandatory and conducting regular compliance audits is necessary to mitigate risks. Unfortunately, it also requires a lot of diligence and effort on the part of the small business owner. That’s one of the reasons why HR compliance should be managed by an expert who is well-versed in changing compliance laws. This is where small businesses can benefit from outsourcing their HR. If you can’t afford a strong HR manager or internal team, then utilizing the service of an HR consultant can save you a lot of time, headaches and potential legal issues down the track.
In order to remain compliant, a small business needs to understand and implement the following:
- Fair Work Act: The legislation used to protect the rights of employers and employees
- National Employment Standards (NES): The 11 employment standards for employees in the workplace
- Modern Awards: The legal documents that outline minimum pay rates and conditions of employment
- Policies and procedures: The general guidelines set out to help employees tackle certain issues
- Fair Work Act: The legislation used to protect the rights of employers and employees
- National Employment Standards (NES): The 11 employment standards for employees in the workplace
- Modern Awards: The legal documents that outline minimum pay rates and conditions of employment
- Policies and procedures: The general guidelines set out to help employees tackle certain issues
What is The Fair Work Act?
Complying with The Fair Work Act is first and foremost when it comes to running any business. The legislation within the Fair Work Act provides the framework and regulations for protecting the rights of employees including workplace rights and payment obligations including minimum wages, payslips and record-keeping.
Introduced in 2009, The Fair Work Act is the main legislation that workplaces deal with in Australia. It governs employer/employee relationships and ensures that workers are getting their entitlements as outlined in the National Employment Standards (NES).
National Employment Standards
One of the key features of the Fair Work Act is the 11 minimum National Employment Standards (NES). The NES are the minimum standards of employment which cover the following:
38 hours, plus reasonable additional hours.
Paid leave for employees who have been with the same employer for a long time.
Allowing certain employees to ask to change their working arrangements.
Allowing up to 12 months of unpaid leave and the right to ask for up to 12 months of unpaid leave, including adoption-related leave.
4 weeks of paid leave per year, plus an additional week for some shift workers.
Unpaid leave for voluntary emergency activities and leave for jury service, with an entitlement to be paid for up to 10 days of jury service.
The right for casual employees to become permanent employees.
Paid day off on a public holiday (unpaid for casuals), except for where reasonably requested for work.
Up to 5 weeks notice of termination and up to 16 weeks redundancy pay, both based on length of service.
The first to be provided to all new employees and the latter to be given to casual employees.
10 days paid persona/carer’s leave, 2 days unpaid carer’s leave as required, 2 days compassionate leave as required and 5 days unpaid family and domestic violence leave (in a 12-month period).
If your small business fails to meet the NES and ignores your obligations under the Fair Work Act, you can incur high penalties. The maximum penalty that may be awarded from a Court for breaching NES standards can be as much as $630,000 for a company breach and $126,00 for a breach by an individual.
Understanding Modern Awards
Businesses have a legal obligation to comply with industry-specific legislation around payments, leave, and entitlements. There are approximately 121 modern awards in Australia, and businesses can be covered by more than one award. This makes it very difficult to navigate and stay on top of, particularly when these awards are constantly being reviewed and updated.
A Modern Award is a document that sets out the minimum terms and conditions of employment on top of the NES. Modern Awards came into effect in 2010 and help to provide entitlements including:
- Pay
- Hours of work
- Rosters
- Breaks
- Allowances
- Penalty rates
- Overtime
Modern Awards apply to all employees covered by the National Workplace Relations system. Some employers and employees will not be covered by an award or registered agreement. If this is so, they will be considered award and agreement free and the NES and National Minimum Wage will form the minimum terms and conditions of employment. You can find out which modern award applies to your employees by using this tool.
If you aren’t sure what award covers your business, this can cause problems for your workplace and lead to serious penalties. It’s important to understand what awards cover your business and employees as there are more than 100 industry or occupation awards that cover people who work in Australia. Employees can also be covered by more than one modern award. Keeping up with these awards and ongoing changes will save your business from having to fork out significant back-payments and substantial civic penalties that can pose a serious liability to your business.
Implementing Policies & Procedures
Workplace policies and procedures are great tools for ensuring that your business is conducting good workplace practices. Why is this important? Simply put, it sets the standard for you and your employees. A workplace that has detailed policies that outline the correct ways of working and interacting helps to keep you and your employees in line with your mission and vision.
Having a set of workplace policies can help foster a safer, more inclusive workplace for all. It can also help to improve employee productivity and efficiency across the board since employees are aware of and understand their individual rights while at work.
Some examples of good HR policies include:
Anti-harassment and bullying policy
Employment classifications and benefits
Meal and break times/periods
Work, health and safety practices
Employee performance management and discipline
Download Free
HR Policy Templates
Small businesses have the opportunity to outsource HR to help better assist them with the implementation of important policies & procedures, creating a strong HR foundation for their business.
Employee Contracts
As a business owner, navigating employee contracts and agreements can appear complex and confusing. Legal entitlements can be difficult to understand and every employment contract is unique which can heighten the risk of misunderstanding or confusion.
Oftentimes, it will be the employer that drafts the contract of employment and provides it to their employee before employment commences. Simple mistakes can be easily made and therefore, it’s imperative that employee contracts are clearly written and outline the nature of employment, wage, legal entitlements and relevant awards.
Why Employee Contracts Are Important
Making sure that employee contracts are written and enforced correctly and legally will ensure you are meeting your legal obligations as an employer, saving you from any breaches and costly penalties. A well-documented employee contract also eliminates any confusion on the part of the employee, providing them with a sense of security and confidence within their role.
Employee contracts ensure businesses run smoothly and ethically. As a small business, there will come a point where you will need to recruit new hires as your business grows, so it pays to understand how to draft up a good employment contract.
An employee contract should clearly outline:
- The job role and responsibilities
- Employment type e.g. casual, part-time, full-time
- The schedule/length of the employment period
- Rate of pay and benefits
- Entitlements to Annual leave and Personal/Carers leave
- Confidentiality, privacy and responsibility statements
- Termination of employment
- The job role and responsibilities
- Employment type e.g. casual, part-time, full-time
- The schedule/length of the employment period
- Rate of pay and benefits
- Entitlements to Annual leave and Personal/Carers leave
- Confidentiality, privacy and responsibility statements
- Termination of employmentÂ
Types of Employment Contracts
There are different types of employee contracts depending on whether the role is full-time, part-time or casual:
Casual Employees
Casual employees accept a job knowing that there is no advance commitment to ongoing work. If a person works a casual role, their roster changes each week to suit their employer’s needs, and they can also refuse or swap shifts. Under the NES, casual employees are entitled to:
- Access a pathway that will allow them to become a permanent employee
- 2 days of unpaid carer’s leave and 2 days of unpaid compassionate leave per permissible occasion
- 5 days of unpaid family and domestic violence leave
- Unpaid community service leave
- Unpaid parental leave
Under awards and agreements, casual employees are also paid a casual loading (a higher pay rate for being a casual employee), or a specific pay rate for being a casual employee. Casuals don’t get paid days off, a notice of termination or redundancy pay.
Permanent and Part-Time Employees
Permanent employees work an average of 38+ hours a week. They
to paid leave including annual leave and sick and carer’s leave. They’re also usually entitled to a written notice or payment when their employment ends.
Part-time employees work less than 38 hours per week with regular hours each week. Part-time employees get the same minimum entitlements (such as sick leave and annual leave) as full-time employees, but on a pro-rata basis.
Casual Employment
Permanent Employment
Casual Employment      Permanent Employment
Casual employment does not generally have the same entitlements as those in permanent employment. Permanent employees are entitled to paid leave, are entitled to claim unfair dismissal, and expect ongoing work. Casual employees, on the other hand, don’t often have access to some of these entitlements. It is also important that employers are aware of changes to casual employee contracts, especially when these engagements begin to mirror permanent employment. It can be easily missed when a casual employee has their hours increased or contract extended, however, this can lead to entitlement disputes and casual employees being mislabelled as ‘casual’.
The biggest challenge for small business owners is understanding how to differentiate all three types of employment and staying on top of casual versus permanent entitlements. It can also prove difficult for employers to navigate the obligations that come with casual conversion. This is when a casual employee can request to be converted to a full-time or part-time employee. Small businesses do not have to proactively offer conversion to permanent employment, they just have to consider requests from casual employees to convert. Casual employees have a legal right to request conversion if they have been employed for 12 months and have had a regular pattern of hours during this time.
Independent Contractors
In addition to the employment of full-time, part-time and casual employees, many businesses engage independent contract workers to provide skills and services. An independent contractor is someone who provides services based on an agreed-upon contract provided by the employer. These workers work as required, often for the length of the contract term provided by the employer or agreed upon by both parties.
Independent contractors have different rights and obligations to employees. This is because they provide goods or services to an employer as opposed to being employed by that business. Because they aren’t employed by a business, independent contractors aren’t provided with some benefits such as paid leave. It is important that employers identify their employees from their independent contractors. Misrepresenting an employee as an independent contractor is considered ‘sham contracting’ and maximum penalties can be imposed from $13,320 for individuals and $66,600 for businesses.
Independent contract workers also have different workplace rights & protections. Under the Fair Work Act 2009, contractors are protected from adverse action, coercion, and abuse of freedom of association. The Independent Contractors Act 2006 is another form of legislation that protects contractors and recognises independent contracting as a legitimate form of work arrangement.Â
Mistakes Small Businesses Make When Paying Employees
It’s easy to make mistakes when it comes to HR practices and paying employees. By understanding what the common HR mistakes are, you can be better equipped to avoid these mistakes and reduce the risk of encountering any legal pitfalls that can put your business in a compromising position.
Here are the most common HR mistakes to avoid:
Employee information errors
The first common mistake in the payroll process often happens when a person is first hired. Errors such as misspelt names, addresses or tax file numbers can create a lot of headaches! If overlooked, these errors can lead to taxation fines or inaccurate payroll taxes.
inaccuracies
Missed or late payroll tax payments cost small businesses an average of $850 per year in fines. If these inaccuracies are consistent, you will witness that cost quickly mounting.
Employee information errors
The first common mistake in the payroll process often happens when a person is first hired. Errors such as misspelt names, addresses or tax file numbers can create a lot of headaches! If overlooked, these errors can lead to taxation fines or inaccurate payroll taxes.
inaccuracies
Missed or late payroll tax payments cost small businesses an average of $850 per year in fines. If these inaccuracies are consistent, you will witness that cost quickly mounting.
HR Onboarding & Training
Tips For Small Business
The most important asset to any small business is its workforce. To ensure the long-term growth and success of your business, you need to have an effective HR onboarding strategy and employee training program.
The following tips will differ from that of larger companies that have bigger HR functions. Regardless, you will find each of these pointers critical to a well-trained and productive small business:
Section 5
Benefits of HR Software
for Small Business
Many small businesses make the mistake of believing that because they have few employees, HR software isn’t needed. The truth is, HR software can be highly beneficial for small businesses. Mainly because you can reduce your employees’ or your own need for undertaking time-consuming administrative tasks and record-keeping, allowing you to get back to your job roles and tasks at hand.Â
HR software automates key HR tasks and reduces the risk of human error. With so many industry changes and updates to workplace laws happening on a daily basis, it can be extremely challenging to stick to compliance while keeping your employees engaged.Â
Here are some of the biggest benefits HR software has for small businesses:
Small businesses have fewer employees, leaving managers with big workloads to manage. The last thing you want to do is to have you or your employees spending hours manually processing tasks such as payroll. HR software enables you to automate these tasks and free your time to focus on other important aspects of your business.
Less costly mistakes
Mistakes are often made during the onboarding process. With HR software, you can allow employees to input their own data into business systems such as daily timesheets, reducing any clerical errors and enabling HR to access employee data all in the once place. Additionally, greater visibility of employee information makes it easier for managers to make strategic decisions.
Less costly mistakes
Mistakes are often made during the onboarding process. With HR software, you can allow employees to input their own data into business systems such as daily timesheets, reducing any clerical errors and enabling HR to access employee data all in the once place. Additionally, greater visibility of employee information makes it easier for managers to make strategic decisions.
Improve onboarding process
By automating everyday HR functions with an integrated software solution, it becomes easier to sift through and secure the best talent for your team. HR software can help to filter out applicants that aren’t a good match and find the best candidates for the job effortlessly. This can help reduce the risk of any costly hiring mistakes that may lead to wastage of time, money and resources.
Improve onboarding process
By automating everyday HR functions with an integrated software solution, it becomes easier to sift through and secure the best talent for your team. HR software can help to filter out applicants that aren’t a good match and find the best candidates for the job effortlessly. This can help reduce the risk of any costly hiring mistakes that may lead to wastage of time, money and resources.
3 Resource Templates
To Get Started
HR Policy Templates
We’ve taken the complexity out of workplace policy creation. Our free HR policy templates can be downloaded and used within your business.
Employment Contract Templates
Let’s face it, creating employment contracts can be daunting. To get you started, our free editable contract templates can be downloaded and used within your business.
10 Point Compliance Checklist
Download our complimentary 10 Point Compliance Check to ensure compliance and help identify areas of risk to your business.
As a small business, it’s likely you’ll need help with HR in some form or another. Outsourcing HR or using HR software can give you the right assistance when it comes to navigating each HR function. HR Connect is here to give you the right advice and support to guide you through the often overwhelming HR process so you can focus on the important stuff. Connect with us today and find out how we can assist your HR function further.
As a small business, it’s likely you’ll need help with HR in some form or another. Outsourcing HR or using HR software can give you the right assistance when it comes to navigating each HR function. HR Connect is here to give you the right advice and support to guide you through the often overwhelming HR process so you can focus on the important stuff. Connect with us today and find out how we can assist your HR function further.
At HR Connect, we see Human Resources as a strategic function in every business, whether small or large, because we know the key to being a successful business is to be a great employer.
Know you’re meeting your obligations as a small business owner and make confident and compliant business decisions with HR and workplace safety advice, and legal support for small businesses.
Reach out to our team today to get more information about how you can streamline your HR functions in your business and ensure you are compliant.
Free up your time to focus on more important stuff