HR and Payroll Best Practice: Reducing Risk Through Compliance

This transcript of Effective HR’s “HR and Payroll Best Practice: Reducing Risk Through Compliance” webinar is auto-generated and may contain errors. It is provided for general information only, does not constitute legal or industrial advice, and should not be relied on for any specific decision. For the full context, please watch the webinar above or contact Effective HR.

Michelle Gabauer: It's… Recording already.

Effective HR: All right, hello everybody, and welcome to this afternoon's webinar. We'll just give it another couple of seconds, but we have a couple additional people attending. And you'll see in the webinar that we do have a chat functionality, so as we go through the content, please submit your questions if there is any information that you would like some additional clarification on. Alright, so I think we'll get kick-started. Michelle, are you good to go?

Michelle Gabauer: Think we're good.

Effective HR: Fantastic. Alright, well, good afternoon, everyone, and welcome to today's HR and Payroll Best Practice Reducing Risk Through Compliance webinar. I think in today's fast-moving business environment, HR and payroll compliance is very much not a back-of-office task anymore. It's a critical part of protecting your organization, and what we see at Effective HR is mistakes when it comes to fair work and modern award interpretation, poorly drafted contracts, policies. And just ineffective employee management processes, which can be very costly, both financially and reputationally, for an organization. Today, we'll show you how to stay ahead of these risks, we'll be strengthening your HR and payroll practices, and ensuring that ultimately your organization is fully compliant without adding unnecessary complexity. Our goal is to give you practical, actionable strategies that will… that you can implement, ultimately, immediately within your organization. Now, the session today is being recorded, so we will share this after today's webinar, and you can pass this across to your team for those further insights. Okay, so before we begin, I would like to acknowledge the traditional custodians of the land on which we meet today. I pay my respects to Aboriginal and Torres Strait Islander people participating in the webinar, and to elders past, present, and emerging for their ongoing contributions. Now, as a little introduction, my name's Anna Dawson, I'm a HR consultant at Effective HR, and I'm joined by our fabulous Managing Director today, Michelle Gabor. Between us, we have years of experience supporting organizations across HR, payroll, and compliance. Now, today we have designed a webinar around issues that cause the most headache for Australian businesses. So you'll walk away with a very clear understanding of the Australian compliance landscape, what's changed, what this means for you. We'll be looking at modern awards, employment contracts, policies, and employee protections. The newly established Right to Disconnect legislation, HR best practice frameworks, and an overview of why it's so important to undertake payroll audits and ensure that your organization has proper technology and automation systems in place. As I mentioned at the start, we encourage you to submit questions in the chat throughout the session. We will also address as many as possible. In a Q&A at the end. And if you don't have an opportunity to put forward your question, you can also organize a complimentary one-on-one consultation with one of our HR consultants. The QR code is just on the bottom of each slide, so if you scan that, we can organize an individual session at a time of convenience. I'll hand it over now to our fantastic Managing Director, Michelle, who will be taking us through the technical content. Thanks, Michelle.

Michelle Gabauer: What an introduction. Thank you, Emma. Thank you so much for taking us through the agenda, and welcome to everybody. We can see a huge list of names here in attendance, which is brilliant. We have so much to get through today, so I'm gonna try very hard not to, skip a lot of information, but we'll get… hopefully get through everything. And as Emma has said, Emma's gonna be monitoring the chat and the Q&A function. So certainly, if you'd like me to dive in a little bit deeper on a topic, or have a question, feel free to pop that in there, and we'll try and do it live on the webinar, just time permitting. So this… these figures shown on the screen are pretty overwhelming, realistically. So the Fair Work Ombudsman, there's some data there from the last couple of years, but $473 million in underpayments, for the year of 23 to 24. that… that figure, you know, we're involved in remediation work, where, you know, not all firms do remediation work, we do, and I can tell you, there's not many times where, in a larger organization, we see smaller figures. Usually, if it's a systemic problem, these figures creep up so fast, it can be really overwhelming for our clients. That's why this proactive compliance approach is just so beneficial and so important. That… that says here on the screen that the Fair Work Ombudsmen have done six and a half… more than 6,500 annual audits, so… and that's on a yearly basis, which is a lot of businesses in Australia. You think times that each year, there… there is a real risk of our clients and, more employers throughout Australia of… of being You know, really having that check-in with the Fair Work Ombudsman. And with so many Bond Awards, you know, I remember, like, over 20 years ago, the start of my career, there was… there was a lot more awards. We dealt with the transition of state and federal awards into the 120, so it seems like a small figure for… for those who have been in the know for a very long time, but it's still a very, very complex landscape to manage, which definitely leads us into the next slide, please, Emma. Thank you. So, navigating the intricate web of Australian workplace regulations requires constant vigilance, and I really like how that's bolded out, constant vigilance. And what we see is, unless you have that constant eye on your company and on your obligations, this is where we see our clients and employers who come to us for support and for help really start to see issues within their organization. So some of the key pillars that are listed here, we've got the Fair Work Act. This is the primary legislation governing workplace relations, which sets out rights and responsibilities for employers and employees. I'm very much in the Fair Work Act on a daily basis. But I think if you're running a business, you might not necessarily be in there. So, again, keeping abreast of what's going on is very important. Got our modern awards. So this is on an industry-specific basis, an occupational-specific basis, and some are both industry and occupational. So understanding how that operates within, organisations. We've got the National Employment Standards, or the NES, which is the absolute for the federal system of employment in Australia, which covers most employers and employees, not all, but most. We've got those minimum entitlements, and of course, we also still have some state-specific legislation. That's where it gets quite complicated, that sometimes, some aspects of employment in Australia totally different state to state, across one road, depending on where you live, so it can be quite complex, which we appreciate. Our poor clients are trying to run businesses, and they have to keep their heads, aware of all of these different things. So, to talk firstly and more specifically… oh, thank you, Emma, you're well on top of it. It's called Modern Awards. Now, this is something that we, we offer support in on a… this is bread and butter for us. This is on a daily basis, Modern Awards. They are legally binding industrial instruments that set out the minimum terms and conditions of employment for our employees. Now, this is in particular to industries or occupations across Australia, and they cover all those things that we know that they cover. Our pay rates, our hours of work, leave entitlements, etc. Just really specifically, to elaborate on what I said on the last slide, is some awards are industry-specific. So that'll cover, like the example there, the Hospitality Industry Award. Some are specifically occupational, meaning, like, for example, the Clerk's Award. There's potentially multiple different industries that a clerk will work in, but it'll cover them occupationally. We do have some awards which are both industry and occupational, meaning it covers from an industry perspective, but also can be used as an occupational coverage. An example would be the manufacturing award. And we've got the Miscellaneous award. Now, in 2020, there was a very big change to how we use the Miscellaneous award, so if you haven't had your award coverage checked and you use the miscellaneous award, or you have people who are award-free, a bit of a point there to probably get that rechecked, because there was drastic changes in how we use the miscellaneous award. The key big purple box there on the bottom of the screen is very, very important. So, the award-free misconception. So, significant risk is placed where the assumption or I guess, maybe not even assumption. If someone's looked into the fact that someone's award-free, it should be checked pretty consistently. So, some senior managers, managers, or even just salaried staff. We see a lot of… a lot of companies who apply an award-free mentality, meaning we don't use an award for them. mentality, if they're on, say, a salary, they sort of go, nope, I just pay a salary, we don't use an award. So many, I'd even say most, are still covered by a modern award. Now, this is even if they are paid higher than the award. So, we hear this a lot, it's okay, they're paid higher. What we find there, and I think we go into it in more detail in a few slides, but… What we find is that terms and conditions of an award cannot be bought out, in most situations. So, if you have someone who's on a salary who's, say, missed a meal break, suddenly they're going to maybe double time. Suddenly, that big salary simply isn't covering what you think it's covering. And then, even then, you need really good clauses in employment contracts to… to support that sort of situation. So, the misconception there carries a lot of risk, and it definitely should be looked at if… if you haven't looked at it in a while, or if you have salaried employees, it should be looked at consistently. This case study… I'm just catching my screen up. So, the Coles and Woolworths underpayment case, and I'm sure everybody on the call today is at least aware of this case. This is something that… this is in line with different advice in different situations and, I guess, resources that we've been giving clients for a lot of years. But the Coles and Woolworths underpayment case was significant because it really encapsulated the crux of what we see on a day-to-day basis with our clients, and with companies coming to us for support. So recently, the situation was they had 30,000… that's a lot of people across Australia, who were paid a salary. And basically, there was no tracking involved, so these people just worked when they needed to work, and there was no auditing conducted, little to no auditing conducted for overtime penalties, rosters, etc. So some pretty severe failings under the award. So, to be really, really clear, paying a salary does not always ensure compliance. It certainly doesn't cover T's and C's that you might… the terms and conditions of an award that you might not be compliant with, and realistically putting you in a hugely risky situation. So this first one's pay-to-pay offsetting. Now, offsetting is something that we talk about a lot at effective HR. It's usually a very big point of advice for us, for our clients, and this is different ways of managing and, I guess, ensuring compliance when it comes to offsetting. Now, what does that mean? Offsetting is the calculation of overpayments in one pay to an underpayment in a next pay. So what can you offset? What can you use from one To be applied in the next. So… Excluding situations where you're able to Offset on a bigger provision. The awards cover a pay-to-pay calculation method, and that is based on your exact pay categories, your ordinary overtime, penalties, etc. Overpayments cannot offset underpayments from different periods, in most cases. So, this requires really careful tracking. If you are going to put someone on a salary, it's okay, but it's what we call common law, so it means that the award doesn't go away. You still are needing to abide by the award on a pay-to-pay basis. Now, this next box, global offsetting. This is what we see people do day in and day out. So it's attempts to average out pay across multiple periods. Being that in one pay, I pay over, the next pay I pay under, they'll just cancel each other out. So unless there's very specific documentation in place, that can't be done. So, very often unlawful, like it says, they're in a huge risk of back pay liabilities. So, an annualized salary, just to explain that in more detail. So, some awards, and the number there is 19 out of 121, which is very, very small. Some awards allow for annualised salaries to occur. Now, one, it's only in a couple of awards, and two, they are incredibly hard to manage under the provisions of the annualised salary provisions in those awards. It's very rare, if not never, an occurrence where I actually advise a client to use those annualised salary provisions. That's just because the time-consuming nature and the constant auditing needed to be compliant with those provisions is so difficult that whatever benefit you're getting from an annualised salary is just undone. So, we can always give, of course, specific advice on that, but very, very difficult to manage. So, some brilliant questions here, what you should be asking yourself. In the last 12 months, have you received specialist advice pertaining to how you offset entitlements? And this should be coming from an industrial relations specialist. Does your salary… do your salaried employees consistently meet the better off overall test? If you are doing those tests, how are you applying it? Are you taking into account terms and conditions of the award? So, what do I mean by terms and conditions are things that don't have a monetary obligation. It could be something like. For example, a tea break. A 15-minute tea break is needed to be given to some employees in a given shift length. There's no monetary obligation there. If you miss it, there's no, say, back payment per se. It could just be a breach of the award. That's a very, very, very large fine, and that's usually per occasion, so it's the kind of things, the terms and conditions of the award that don't necessarily have that money value that are also incredibly important. Are you maintaining accurate records for all employee hours, rosters, and entitlements? There is not a situation where I would be, you know, advising a client, yes, don't do timesheets. You know, we have seen time and time again clients maybe be worried, I don't want to have to get my team to do timesheets, they're annoying. I get it. I absolutely get it. My team run off, off timesheets, and I feel bad, because it is difficult. But, you know, very, very important to do for so many reasons. For their safety. for your safety as an employer, and I can tell you, if we're having to step in and support a client through a remediation, or even just a dispute that an employee has raised. very, very hard to win a fight when there is absolutely no… no backing paperwork and proof. So realistically, those… those… those things are so important. Those tracking of hours, having those rosters, and tracking of entitlements appropriately. So, could current payroll assumptions become significant compliance risks? Again, coming back to those salaries, if you've got people on salaries, it's alright, they get paid a lot of money. That would be fine, but are you sure? Are you sure that they're meeting that award compliance? Are we sure that no terms and conditions are being, breached at the same time? And, you know what I quite often hear, and this always makes me smile, we have so many clients who say to us, you know, they might be doing the right thing, those salaries might be covering those award provisions, but they always say, and it's the same sentence, they go, I can sleep at night. And I love hearing that, because it means that the answer, there might not need to be any change within the organization. But at least they know. They know that there's no change, you know, and would just look at it the next audit, the next audit, and they know that there's a time frame of compliance, which is great. So we'll go to the next one, common HR Mistakes. Shame contracting? Which is a bit of a nightmare of one, really. Treating contractors as employees, or vice versa, triggers significant penalties and back payment obligations. Outdated documentation. We had a client recently who showed us a contract which was drafted in the 90s that they were still using. Because it's still referred to, legislation that doesn't exist anymore. So legacy contracts and policies create huge vulnerabilities, that, yeah, employees, they've got ChatGPT, that they can, you know, they don't necessarily fully understand the answer, but they know enough to fight it. And that can be exploited. Flexible work failures, so informal handling of requests without proper documentation, leads to disputes. This is such an easy, easy one to not get wrong, yet we see it time and time again, where the process just isn't appropriately taken. Record-keeping gaps. So, missing documentation, we see this all the time. There is a 6 year, under the Fair Work Act, if there's a remediation case that needs to occur, legally, to go back 6 years. So really asking yourself, do I have 6 years of documentation, that cover all employees within that period, to know when they worked, what they were doing? What their contract said at the time, how they were paid, etc. And that's a lot of documentation. Award entitlement oversight. So even high-paid professionals and managers may have award entitlements that create unexpected liabilities. This is a big one. These are the things… these are the types of cases that we read about where something so minute, because it wasn't looked at under the award, topples the whole case, or topples the negotiations, and suddenly the checkbook has to come out for us to help the client make it go away. It can be quite overwhelming. So, failing to stay updated, so not keeping up, with changes in employment laws, awards, or HR best practice. And a caveat on that one, and certainly if, you know, I can see some names that I actually know on this list of attendees, so hello to all those who are clients of ours. I guess it's… it's not always about fully understanding everything that's going on in Australian employment law, it's about when to come and ask the question. It's kind of that level as an employer that we really recommend you stay at, is if you see a case, or… and we're obviously proactive, but But if you see something and go, oh, that affects me, make that phone call to who you get IR advice from, because it's about knowing when to question. You don't necessarily need to know the answer or understand the answer until you speak to someone who does it. This is all we do, remember? So, we know the answers to most of the questions. So the next one, we're talking about employment contracts. This is by far, I think, one of the highest risks we see on a day-to-day basis. It's, it's one that we see… is a set-and-forget mentality quite a lot. So the importance, firstly, of tailoring written contracts. We see, by far on a daily basis, again. A company will have a contract template, and they use it across the board. So that's fine if it's drafted to cover everybody across the board. Realistically, it should have tailored information on specific business operations. If it's not covering your specific business, it's an off-the-shelf solution. Chances are, you are going to have a big risk gap there. it should always align with relevant awards or agreements, and this is one of our specializations that we do very, very differently to most, consultancies in Australia, is we align employment contracts to the specific award clauses of the company's award coverage, or that employee's award coverage. And that's really, really important. It was actually a huge factor of the Coles and Woolworths case that we spoke about before, where it was assumed that all of those award clauses were covered. And the judge really, really hit down on, well, prove it. And there was no proof. That's something we've been doing for years for our clients. And it safeguards against future disputes and liabilities. So, again, that document is the first thing we look at. The first thing that's pulled up, and it's really the starting point of our advice to our clients to say, well, this isn't covered. This is how we, you know, here are some options on how it can be tackled. So, that next point is the high cost of poor drafting. So, poorly drafted, generic, or legacy contracts can really expose your business to significant financial liabilities, and legal challenges. So a real-world example, we had this one pop up, not that long ago, actually. So, one client's contract framework contained causes that negatively impacted how they can offset. So going back to that offset definition is where if you overpay in one, you know, they pay a higher pay rate, for example, can that additional money be used to offset something that's not been paid? So what happened in this situation is this employer paid a commission. to their employees. And very clearly in the offset clause, it had been drafted, any payments made under this contract can be used to offset. two clauses down. There was the commissions clause that said, this is not… this does not make a part of your contract, basically. So it was excluding itself from the contract. So that remediation went from what they thought wasn't going to be all that bad, because they thought they could use that commission to offset. Into a situation where it was an enormous underpayment remediation process that involved the fairer Ombudsman. Simply because of that word. That one half sentence that we could have fixed. had we… had we helped that client, obviously, draft those con… contracts, but, these are the sorts of situations that we… that we come across, and these… these half-sentences that… that just have these words in them that… that negatively affect clients. So. That's why it's so important to have very specifically tailored contracts for your organization. It should be covering you for how you operate, for the industry you're in, and for what you need it to do. The next one, quite possibly the most boring topic. in the HR realm, being policies. We obviously know their importance, but they're not a fun topic. So policies, in our opinion, are not static documents. Their effectiveness hinges on correct application and regular updates. So, to reflect, obviously, legislative changes in case law, but also company changes, and I think that's a key thing as well that gets neglected. is that if a company changes… it could even be, you know, a manufacturing company gets a new machine in. It could be we're adding a new team to the car… you know, all these things realistically should then We should be going back to the policies going, does this still make sense? we had, off the top of my head, there was a case this year, I want to say, Emma, please correct me if I'm wrong, the huge case with Vision Australia, where their contracts… it was this year, wasn't it? Yeah. Yeah, I'm sure it was this year. where their contracts did not exclude the policy. Actually, I think it actively included the policies into the employment contract. And what this employer did was it didn't follow their own policies. In regards to terminating a staff member, and yeah, the staff member won, because the contract that these policies form part of your employment, and they didn't follow their own policy. The policy stated something about, consultation through a process which they didn't follow. So it's really interesting, the wording there has to be very specific too. So another case study here, Sydney Trains, this was a 2023 case. So, the case specifically was, Sydney Trains dismissed an employee. They had a very, very strict zero-tolerance drug and alcohol policy. Now, I'll get to the very specific nature of what this policy stated, but the ruling, basically, the Commission overturned the dismissal, finding it harsh and unreasonable due to procedural unfairness. Now, the outcome, the employee was reinstated. We very rarely see reinstatement as an FYI. It's usually only in huge companies where the person who terminated, there isn't going to be a conflict there on a personal level, etc. Usually very long tenure, but just as an FYI, it's actually… we don't see it very often. There's usually a settlement involved. They were also awarded compensation, so highlighting the flawed policy. Now, from memory, the policy stated that, the drugs and alcohol policy was that if you're, affected by drugs and alcohol, then, and you come to work. then you're likely to be terminated. Now, the word affected was the key word here, because this employee put forward that I wasn't affected. It was in my blood, but I wasn't affected. So you can see again where this one word that just wasn't thought about thoroughly enough Was… was really undid this case. Now, don't get me wrong, there are going to be situations, potentially, that you find yourself in as an employer where your policy or contract doesn't specifically cover the situation you find yourself in, and that's okay, because sometimes, you know, there might be that bump. It's that then learn to the next time, let's fix it for next time, let's make sure this doesn't hit this company again. So that is the, Now, this next case study, this is… this is leaning again in toward policies specifically, but… but so much more. So, this is the positive duty. These key terms. So, this case specifically is in the media a lot at the moment. It hasn't gone to court yet, but it is in the media a lot. So, the overview is that the CEO, allegedly coerced a intimate relationship with a subordinate. So, claims include assault, harassment, victimization, and a breach of that duty to provide a safe workplace. So, not great that it's in the media, obviously, but a very big, beefy, nasty case. It's not going to be nice to see play out. The defense describes the relationship as consensual, however admitting poor judgment. Now, why that's important to this webinar, it's the positive duty aspect. So, under the Sex Discrimination Act, or we call it the SDA, employers have a positive duty to take reasonable steps to eliminate sexual harassment. So what we would usually talk to clients about this meeting is that to be compliant with this Is you should have at least a policy outlining the definition of sexual harassment. Reporting mechanisms? There should be training involved? There should be what happens if type thing in the policy. The training, realistically, should have its own policy around how often it's run. If new starters start with the organization, how long can they work in the organization before that training has to occur? What happens if a complaint is made? what happens if you serve alcohol at a Christmas party? What happens if… there is… it's… there is case law around… there is actually some significant case law around what steps should be taken to prevent sexual harassment. Now, keep that in mind, is that you might have an organization of, say, 10 people, everybody gets along, they come into the office, and you have, in 15 or 20 years never had a situation of sexual harassment. Specifically, you are breaching this act if there's still not those policies, training, etc. in place. So this is a really interesting one, where this obligation might seem crazy to you. You just think to yourself, there is not a hope that this is going to happen in my workplace, and yet. You're breaching that act if you don't take those positive steps, and that's the… that's that positive duty definition. It's one of the hardest ones, I think, I find trying to talk to clients about regarding, to be compliant, this has to be in place. Your choice, obviously, always your choice, and we'll always support clients no matter what they want to do, but it's… it's a real… it's a real obligation, which… Which, again, makes it hard to be an employer to follow all of these things, and we fully appreciate that. Okay, this next one, disciplinary process and employee protections. Am I going for time? We're going okay. I'm trying to get through a lot of information here today, guys. Please also, like we said, you know, if there is a question or something you want me to go into more detail with, I'm not seeing any questions. Normally, we're inundated with questions, so please feel free to post anything if you do want me to go into more detail. So, disciplinary processes and employee protections. There's a couple of keywords there, that… that really need to be… Followed, fair and transparent. Clear allegations, employee response, impartial investigation, document everything. That's for everybody's protection, including the employees. We don't ever want a situation where the employee hasn't been given a reasonable chance to respond just because they misunderstood something. You know, that's unfair, so that's really important as well. Consistent application. Meaning, you deal with one situation the same as the next. Progressive discipline, so, you know, don't ignore it, ignore it, ignore it, and then… Bob's gotta go. It's gotta happen today type thing, that will only come back to hurt you in the long run. Legally compliant, obviously, confidentiality and clear communication. So, the case study down the bottom, ABC of this year. So, the employee was a journalist, was employed by the ABC, and she was dismissed, so serious misconduct on the spot. Following a social media post that was deemed to breach the ABC's social media policy. The Fair Work Commission found that ABC breached its own enterprise agreement, which required a formal warning and an opportunity for the employee to respond. So, just quickly, coming back to whether or not your employment contract has very specifically contracted or excluded your policies, this can be an absolutely huge risk. If you have a policy in place within your organization that says, you'll get 3 warnings before we terminate you. And you… you've accidentally, or are unaware that your policies have been contracted into your employment contract. It will be deemed unfair if you don't follow those full three warnings. It could be something quite serious. So this is where small wording applications throughout these documents just become an absolute paramount feature. So the consequences in this case, the Fair Work Commission ruled in the employee's favor, obviously, awarding her $70,000 in compensation, for the dismissal. There was actually other aspects of this case, it came into an unlawful dismissal as well. But furthermore, the point being is that even though this person, this employee. probably did breach the policy. It was irrelevant, because the process was incorrect. We have helped clients, and we've been in situations where we've seen cases where You think about the termination itself being… valid. They've done something really, really serious, but because one step of that legal process wasn't taken, it could be anything from right of reply, right to a support person. there's so many different aspects that need to be dealt with very, very specifically. One wasn't taken, it's unfair. It'll be deemed unfair. So it's very process-driven when it comes to an unfair dismissal. Different for an adverse action case, but for unfair dismissal, it's really step-by-step process. Unless you've sat down and read the Fair Work Act, like, me and my team. You know, I'd be certainly getting some advice on the matter. Right to disconnect on the next slide, please, Emma. This is an interesting one, because I feel like this is the type of thing where… I don't know, sometimes, sometimes I think things are in place to cover a very minute amount of employees in Australia, and yet it's just… just there to make life harder for employers. So, Right to Disconnect has been in place for a little while for larger employers, and this year, late August, for under 15, so small employers. So basically, what I really wanted to cover in this right to disconnect is, you know, we talk through different things about defining reasonable. So you can basically refuse work contact to the employees can outside work hours unless unreasonable. So I always come back to that discussion with clients about what is reasonable. There is no legal definition of reasonable. We have precedent to work off, absolutely, but All in all, reasonable should always be defined. If your organization It's 24-7, is got critical-type application, medical, anything like that. Defining reasonable is going to be very different to, say, an accounting practice that's only open from 8 until 5. You know, there's going to be different levels and application of what is defined what is the definition of reasonable. Unless you've defined that as an employer, these cases, and even just complaints from staff, become very, very hard to manage. If something has been defined, you have something to work off. This is the definition. I've given it to you in writing, and now we can talk about the specific nature of what happened, and if the right to disconnect occurred here or not. So that's definitely something that I… yeah, perfect, thank you. On to the next one, which is a claim that happened regarding right to disconnect. This was a really interesting one. It was the first one, for starters. This employee of a school took stress leave during non-term time. So it was a school, so it was in, school holidays, and they took stress leave. So during her leave. She received work-related communications regarding alleged misconduct. The employer claims that the school's requirement for her to respond whilst on leave was unreasonable, and infringed upon her newly established right to disconnect. The subsequent dismissal, because she didn't respond, is alleged to be adverse action, because she was exercising a right to disconnect. So, this is really… and just as a very quick encapsulation of adverse action, right, the workplace right. So, adverse action is the… is the other side of the coin for an unfair dismissal. So, a dismissal is unfair. Adverse action involves both dismissals and situations that are not dismissals, and in this case, it was a dismissal, but this could be something if somebody's exercising a workplace right, so if they complain about their pay. and they get terminated a month later, or sooner, they could lodge an adverse action case to say, it's my right, as an employee, to ask about my pay. You've terminated me for it. You can see how vast these types of claims can start to become, and in fact, the Fair Work Commission has put out information very recently to say we're overwhelmed. There are so many cases coming at us under the General Protections Legislation. The General Protections Legislation covers adverse action cases. That's an FYI, that's the terminology. So, it's easy to see there are so many legal rights of an employee. You think of the Fair Work Act, this document's enormous. Any of those rights. they can lodge this adverse action case. So this is where, again, taking those steps, finding out, okay, we want to terminate this person, they haven't responded, have we looked at every avenue? Have we taken every applicable step so that this is deemed reasonable? So that's a really interesting case that, that, has come out recently. Contractors versus employees, this is one we have to help our clients through a lot. So, employee characteristics. An employee works for a business under its direction and control. Works integral to the business operation, receives wages, PIYG, Entitled to leave, super, award, etc. employer usually provides tools, equipment, and training. Usually outside of that, it's award-specific, so some awards say you've got to bring your own boots, or something like that. No financial risk for errors or poor work. Different to the independent contractor characteristics. Works independently of invoices for services, usually for a project, painting a house. Here's your invoice type thing, as opposed to how many hours it took. So not entitled to leave or award entitlements. Usually uses their own tools and equipment, and bears financial risk and liability, for their work. Now, this is interesting. This is where it gets very, very complex, and I'm not going to go into the whole picture today, unfortunately, but… The whole relationship test is one. Test that is majority of the time used. There are other situations and a different test is used, but it's on a much minor scale, so we won't go through that. And what this test does is that it allows the judgment to have no single factor is the determining Reason to classify someone as an employee or an independent contractor. So what they examine is the entire relationship. You could have an independent contractor agreement that is airtight. You could have them invoicing you appropriately, and they could be using their own tools. But one thing happens, two things happen, which make the judge go, do you know what? This… you're trying to cover it up, or something like that, and they could absolutely be determined as shame contracting. There's very big fines, and usually back payment costs involved in that. So, it's always a risk. And I would absolutely advise to be getting advice, or at least definitely getting that advice, to think about the risks involved if you have any contractors. So, the next slide… thank you, Emma.

Effective HR: Sorry, Michelle, just a quick question has come through, just on contractors. Is there a scenario that an employee can pay super on behalf of a contractor?

Michelle Gabauer: rental. Absolutely. So there are situations where you must pay superannuation for a contractor. That's usually if they're… usually if they're, working for you, labour primarily, so… If you bring someone in to do labour-based work. This is really important that there are situations where you have to pay super. There are situations where you… can pay super, but you still are in a situation where they're supposed to be an employee. So it does not override or definitely get rid of your risk. If they're supposed to be an employee, then, you know, it's just a risk that you bear, depending on what decision you make. superannuation is definitely a big one. Also, when it comes to superannuation, it needs to go through a compliant super fund. So, if your contractor is giving you an invoice and just putting 10%, 12%, gosh, I was talking in the near 90s then, put that 12% on the invoice. for you to pay to them, that's not compliant, and if you are found that you had to have paid super, you will have to also pay it on top. If super's outside of the payment quarter, usually you can't claim it as a business expense. and there's fines and interest applicable. It is one of the most costly mistakes to make. So, it's not about, I guess… sorry, what was the exact question? Let me just open it back up again. can pay super. I guess that can stood out to me. Must pay super? Yes. Does it undo any of your risks? Almost never. So I hope that answers the question. It's really important to get assessment on whether or not that person could be determined as an employee. To be really clear as well in… in answering that Very rarely would we be able to say to you, they're an employee, they're a contractor. Because the test that's taken… in a judgment is so determined on what that judge thinks the situation covers. So, if there's risk, the decision is going to be commercial for you. Will you carry that contractor and run the risk of a sham contracting situation being presented to you, or should we flip them over to be an employee? And it's always your decision to make. So I hope that answers the question. I don't like the… I don't like the word can. I feel like that's misleading. I would say situations must. In addition to that. Make sure it's through a compliant super fund, and it really doesn't undo any risk. Make sure that that assessment is there to start with, which is, are they actually an employee or a contractor? Like I said, it's a commercial decision at that point. We back our clients no matter what, but… There's risk, definite risk. This is such an important slide. Thank you for moving on, Emma. So, the hidden risks threatening your business. This top one. I can't tell you how many times in a day I say, set and forget. Set and forget, set and forget. It's… Quite possibly the biggest… issue we see is that many businesses implement HR and payroll, other systems, processes, or they put someone on a salary, for example, they assume that they're protected. This mindset. is always the factor that leaves those gaps. And they compound. They compound over time. And obviously, discovery HR and payroll mistakes often surface only after it's been escalated. So that's the other really key problem. someone will come and say, oh, I think I've been underpaid here. by the time you go back 6 years, it's not a quick, let's just… let's just update the payroll system. You know, you're facing a remediation. The remediation alone is a very expensive process, not only from external consultants like… like us. The manpower we have to put into a remediation Let alone internal resources. You know, there's a lot of information that needs to be sent to us to make these things work. Dealing with the ombudsman, usually having to go back through the rest of the staff to see if the same… same problem has happened. So, that discovery too late one is the costly bit, and the set and forget one is the why. Every single time. It's, you know, it's… that's always how we've paid it. Oh, when was the last time we looked into that interpretation? That's a worry. So yeah, this is such an important one, because, you know, you have a company, or you're a manager in a company, you need to understand, you really need to understand your risks. It's that whole sleeping at night. You know, conundrum, let's get to that point. All right, next slide, please. Look how scary that picture is. That is AI-generated, I love it. It's… it's a doomsday for payroll. I love it. So why payroll compliance matters more than ever? This is a really, really busy area of effective HR, so we run payroll audits, both system audits and financial payroll audits. And it's, again, that thing of a lot of companies go, I just don't know if I'm paying correctly. So we audit that process, and very, very busy. criminalisation, of course, as well. So, 1st of January, fines are enormous, but it's potentially criminal. There is a real risk now, of a director of a company going to jail if it's found that those underpayments were deliberate. If they're not deliberate, obviously there's avenue to not… it not be criminal, but nothing really undoes the risk factor of those remediation and underpayments. to heavy penalties on top of any remediation work that needs to occur. Huge, huge loss of employee trust. There's, there's, you know, George Columbaris, his name went down overnight. Due to massive underpayments, you know, you think that that reputational damage And it's very, very complex. So, Australian payroll complexity, there's layered state laws. There's multiple awards, usually. Tax super record keeping, it's everything. So, payroll compliance matters so much, and it's one of those things where, you know, we've had clients where we've had to make minor tweaks to their payroll system, and they've gone from non-compliant to compliant overnight. And it's a… it's a small job to do that, and yet they just didn't know at that time that they weren't compliant. Even interpretation of instruments is something that I find really, really interesting, where a company will have an interpretation of an instrument, but recident has happened, so a case has actually occurred since they did that interpretation, and that's usually years and years and years ago. And it's… it's… I shouldn't say change, change is the wrong word. It's instilled an interpretation that is correct. If a judgement is made, that's the interpretation. So there needs to be steps made. There was a big one if you're in the SHADS industry, the social community home care disability industry. There was a judgment this year that was different to the Fair Work Ombudsman's. interpretation of how to pay a certain shift type. That's enormous. So it's changed an industry-wide how to apply payment for a certain shift. So there's all these things that we need to keep… keep up to date with. I am rushing, Emma, I promise. I'm going through the last few slides, and I always talk too much in webinars. So why businesses struggle to conduct regular payroll audits? And this is, you know, we get it, there's time constraints internally. Do you know what? Before I go through this, this slide, I really want to preface this by saying. I can't tell you how many times, us as an organization.

Effective HR: As a team, have seen.

Michelle Gabauer: internal HR or internal payroll in a company be set up to fail? What I mean by that is Internal HR and internal payroll processing. 99 times out of 100 do not have the background and skills to appropriately look at interpretation of instruments, when it comes to really complex things, and look at the auditing function that a company might need. You are setting them up to fail if that gets lumped on them. why it's so important to, I guess, put that job externally is so that there can be that communication of, okay, here's why we need to change this. It's… it's putting that sort of pressure on their shoulders. is, you know, internal HR specifically. You know, I… usually, for those roles, you're going to find people who are focused more on that cultural aspect of an organization. We call it HR, but realistically, there's a multitude of avenues of specialization. Personally, I'm a terrible recruiter. It's a running joke within our team. It's not my skill. What I am good at, though, is interpreting legislation and industrial instruments. So I don't recruit for us, because it's not what I do best, it's not what I do well. I get someone who's good at it to do it. Usually, an in-house HR practitioner will be more culturally focused. Compliance-focused, yes, but more culturally focused. And so, these types of really high-level IR auditing functions need to sit with someone who can do it. And that's why we're so busy, is companies more and more are not rely… are not… I guess, focusing on putting that reliance on their internal teams so that they can get on with their job. And these… it's like getting your tax… I can run my own tax return, that doesn't make me an accountant, that doesn't mean I understand tax law. So, it's those sorts of functionalities. So, the key points here, obviously, though, are time constraints, limited resources. Everybody's busy all the time. I swear everybody I talk to at the moment is very, very busy. They often push proactive audits to the bottom of the list. It's only if someone maybe complains that something pops up to be done. Cost perspective, audits are frequently seen as obviously an expense. Well, they are an expense. Again, it's that future. It usually, in most cases, will be cheaper than the problem itself. expertise gap, like I said, you know, I, I had a client once, just quickly, who… they ran a manufacturing company, and they were really down. I was talking to them one day, they'd made a few mistakes in their compliance, and they were really down about it. And I ended up just going, do you know what? I can't run a manufacturing company. I wouldn't know how. I wouldn't be very good at it. you're not supposed to be an expert in IR. That's why you've engaged us. So don't feel bad about not knowing everything. This is… you've done the right thing. You've called us, and that's what you need to do. What you need to be good at is running a manufacturing firm. So, it's a good way of looking at it. You're not supposed to be the best of the best at everything. And underestimating that risk, I mean, underpayments aside, that compliance component, the fines that come with it, not to mention the reputational damage, so they're all very, very important things to consider. The payroll audit process. Just as an FYI, it's a very, very important thing if you are considering one, so how we would ignore… what to look for in a process, and this is how we approach it. One is the scoping. We would never just take data and start calculating. We have to understand the company. What are you trying to achieve? Why do you have people on salaries? Why do you have people part-time? All these different, I guess, parts of the process are so important. Data collection and assessment. This is where we gather so many pieces of paper from you. Payslips, timesheets, employment contracts. It's… it's not, okay, just to look at a timesheet and cost it out. We have to know the offset clauses per contract, or if it goes to the ombudsman, it's likely to be pushed back. Usually we have to focus on different award interpretation, and that's aligned with the client's expectations before any calculations are done. And then, of course, a detailed report, and that would be the minimum that I would be asking you to expect if you are getting an audit done. Next one. So, leveraging technology and automation. So, we partner with a number of brilliant companies, and I am picky when it comes to software. If there's a passion point of mine, it's different, technology-focused. I guess, resources that make life easier, so I've only partnered with the ones that we absolutely know and trust, so we can definitely recommend software solutions for companies. And… things that should always be in them. I'm on the last few slides, and I've left Emma no time at all to wrap this webinar up, that they're scalable, software, so we look at the size of the company. Are you going to be growing? Will this software be a solution for you in two years? Because they are costly to implement. built-in compliance. A lot of software these days have fantastic compliance focuses, which is brilliant. You've got the cultural aspect, which is great. But compliance will potentially put you in jail or not. Big fines over in the compliance area, so yes, I rely very much, especially, you know, a real, real focus on that compliance aspect. employee self-service. I can't tell you how many clients I've seen get pieces of paper with a new address on it that they update for the employee. If there's a typo, guess whose problem it is. So employee self-service is a big one where the employee can deal with their own… their own data. and automated data transfer. No more typing of timesheets. We don't want to see anything like that. So, leveraging technology and where it is in Australia at the moment is so important. You think, take the cost of it, it will 10 times make its value there. It just… it's truly something to think about if you don't have good systems in place. So, some best practice, some realistically, let's wrap up the webinar by saying, what do I need to remember walking out of here? Audits. Make sure you understand how your staff are employed. Make sure you identify those gaps, and just know your risks. Like I said before, sometimes risks are always going to be there. You don't necessarily have to make changes, but understanding where your risks lie is such a fundamental aspect of being either a business owner or manager. Award and contract review. If you haven't had your employment contracts looked at recently, if you haven't had your award coverage and classifications looked at recently, definitely look to get them done. Make sure that your employment contracts aren't off the shelf. General employment contracts we see fail time and time again. They should be specific to your award, they should be specific to your company, and then the employee. So they really need to be Very, very tailored to your organization. Take integration. I can't stress that one enough. The benefits I've seen clients have in having good background software supporting them in this process, is just integral. Policy development, as boring as it is, clearly I find it boring. It's so important. You know, tailoring it to your industry. Tailoring it to your organization and your staff. get that expert support. Like I said before, this poor manufacturing client I have, he was so down. I said, no, this is… you've done the right thing. Be good at what you're good at, and outsource, you know, to specialists. The rest? And training and guidance, so equip your managers with how to deal with confident decision making. You know, if they see something in your organization. Do they know what to do? Are they going to raise it with you? Do you know what to do? So really having those processes in place to enable them to do the best, the best job. Emma, I've left you with 2 minutes, because that's… that's all my slides, I'm sorry.

Effective HR: No, that's okay, that was amazing, Michelle, as always. Thank you for that in-depth knowledge on all things HR and payroll. In the last couple of minutes, and before we go into a Q&A session, I'd just like to take a quick moment to share how effective HR Can continue to support your organization beyond today's session. For those who are new to us, or would like a quick refresher, we provide tailored support across all areas of HR and IR consulting, compliance, HR documentation, training. We do HR system and payroll implementations and payroll auditing. and remediation. So, all of those are our primary pillars that we support organizations in. Now, we often hear from businesses that they are frustrated from traditional HR models. This can include speaking to multiple different advisors who offer conflicting advice. The headaches associated with not receiving timely advice, or just struggling with reactive providers who are waiting for you as an organization to reach out, rather than actually having that proactive support. And that's why Effective HR are very purposefully designed two flexible service models. The first one being what we call HR on demand, which is a fantastic pay-as-you-go model. There's no minimum cost, long-term contracts, and it's really Ideal for organizations that are looking for ad hoc HR support, or needing support with one-off projects such as HR compliance audits, and also payroll audits. Importantly, what is so fantastic about Effective HR is that we provide dedicated consultants, which is just fantastic for building that rapport with your consultant, having that… that individual really understand the nuances of your organization, and having that consistency in advice. Now, our other service model that we do offer is also HR Partner. Now, this is a proactive, all-inclusive model. It offers HR support at a fixed monthly rate. And what it includes is everything. It includes your HR compliance assessment, unlimited access to advice, tailored contracts and policies, and really importantly, the maintenance of that documentation, as Michelle's demonstrated. The legislation and case law is constantly changing, which means that your documentation needs to be constantly updated to reflect those changes to ensure that you do have that protection for your business. We tailor up these packages so you can include things in, like, conciliation, representation, and also payroll and HR system integration. Now, I know we've gone a little bit over today. I'm happy to open up the floor to any questions. We've covered a lot of different topics. If you would like to take your questions offline, there is a QR code on the big screen, so please scan it. There is a contact us details, and we would be happy to have a one-on-one HR consultation meeting with you to understand the nuances of your business and look at how we can help and support your organization in the HR and payroll space. So if you do have any, questions, pop it in the chat functionality or the Q&A, and Michelle and myself would be more than happy to provide some… some advice.

Michelle Gabauer: We normally get inundated with questions.

Effective HR: Yes, well, I think today's topics, they're… they're big topics. I think there's a lot of information as well to digest when we're talking about everything from disciplinary processes, to right to disconnect, to contractor engagement. But all topics are really relevant in today's employment landscape, and we've seen a lot of legislation changes just over the last 12 months, with all of these topics.

Michelle Gabauer: Definitely.

Effective HR: Well, it doesn't look like we've got too many questions coming through, so if you do want to take it offline, absolutely scan that Q&A code, Q&R code. We will be sharing the recording after today's session, so please reach out if you have any questions thereafter. But thank you, everybody, for attending today.

Michelle Gabauer: Thanks for your time.