HR essentials: Simple ways for SMEs to avoid falling foul of Australia’s workplace laws


Australian workplace law and employee exploitation is a topic that has received a lot of media attention in recent months. From million-dollar corporates to local franchises, it is an all-too common area for slip-ups, regardless of the size of the business.

We’ve seen this become a recurring issue that has plagued high-profile names like 7-Eleven and Caltex of late, but has also snared smaller businesses like frozen yogurt store Yogurberry as well as a Hobart-based Muffin Break store, all of which could have easily been avoided with simple HR policies and procedures.

Making mistakes when it comes to workplace entitlements can lead to expensive consequences and legal ramifications, so it’s important that business owners have reliable systems in place to ensure they are operating correctly and are safeguarded.

Some of the most common pitfalls that small business owners can fall into include:

  1. Misunderstanding industry award rates

Award rates change are revised frequently and it can be easy, especially for small business owners to miss, overlook or misunderstand important updates and incorrectly pay staff without realising.

Subscribe to Fair Work Australia’s employer newsletter to receive important updates to workplace law and be sure to check the website for information on awards relevant to your businesses. Awards have different requirements specific to a number of factors including age, tenure at company, seniority and more. Alternatively for a simpler option, tech-based HR systems can automatically keep you updated and ensure your employees are receiving entitlements in line with the more current industry requirements.

  1. Miscalculating salary and payroll requirements

Once you understand awards, ensure that your payroll is compliant with these requirements.

Failing to meet payroll requirements can lead to lots of time consuming admin work to calculate back-payments for staff. In serious scenarios, it can also lead to expensive fines.

Automated payroll systems are an easy way small business owners or accounts departments can ensure proper wages are calculated for regular hours, overtime, sick leave, holiday pay. Apart from being a reliable way to make sure employees are receiving their entitlements, these systems can also help minimise admin, particularly around end of financial year.

  1. Misunderstanding superannuation requirements

Superannuation can be a complicated area of employee law, particularly when aspects like salary sacrifice superannuation contributions are brought into the mix. It came to light in a recent report from Industry Super Australia and Cbus, shows up to 2.4 million Australians are being shortchanged for up to four months of entitlements valued at $1489, equivalent to a national total of $3.6 billion a year, due to poor superannuation procedures.

To avoid finding yourself in hot water, minimise the amount of unpaid obligations hanging around and pay superannuation regularly. SMBs can often accumulate superannuation contributions over a three to four month period. That amount appears on their balance sheet as a liability but the cash is in their bank account so some businesses will incorrectly use that amount as working capital. In the event that something goes wrong, then those payments aren’t being made and it can lead to a legal issue.

All superannuation conversations should be transparent. Your employees and payroll managers should understand all salary sacrificing legislation before any arrangements are made. To ensure you’re safeguarded, you should also familiarise yourself and staff with new tech to be introduced by the Government.

As of July 2018 single-touch payroll (STP) will become mandatory for businesses with more than 20 employees. This kind of tech is already available to SMBs and reports super contributions in real-time, making all parties more visibility over superannuation

  1. Incorrectly training staff

If you’re employing staff, training them correctly (or hiring people with a good understanding of workplace law) is one of the most important things you need to do, particularly if you don’t intend to play an active role in managing the business’ payroll or HR processes.  Managers need to understand and implement policies that comply with regulations so your business doesn’t fall foul of the law.

Invest in proper training for your staff and ensure they understand what they’ve been taught. Leading HR platforms have libraries of information that allow you to distribute fact sheets to staff and receive signed acknowledgement of policies so the same information and understanding is constant across your business.

By implementing simple systems and introducing smart technology, SMBs can save time and money, ensure that they are operating legally and their employees are receiving the entitlements they deserve – plus business owners can avoid the huge headaches that can stem from poor HR practices.


About the author

BenThompsonBen Thompson is a HR lawyer and founder of Australia’s leading HR, payroll and employee benefits platform Employment Hero.  The company recently closed an over-subscribed Series A funding round.