Employment bungles can result in costly fines, unwanted media coverage and stress. Employment law expert and partner at Chen Palmer law firm, Susan Hornsby-Geluk, explains the common errors SME owners make and, importantly, what can be done to prevent finding themselves on the wrong side of the law.
What are the most common mistakes SME owners make when it comes to employment law?
The most common issues I see are around process. Employers without a dedicated HR function are often unaware that the law requires them to follow certain processes, particularly when it comes to disciplining employees or conducting restructures. A failure to follow these procedures can result in personal grievances, and unfortunately, ignorance of the law is no defence.
What processes can SME owners put in place so that staff are aware of expectations?
The key building block is a legally compliant employment agreement and a good job description. If you don’t have these, you’re in breach of the law. You can include a 90-day grievance-free trial period, which can be an effective tool for a smaller employer.
The second thing is to have a good code of conduct that sets out your expectations clearly and concisely. All employees should be required to sign off that they have been provided with a copy of the code of conduct and understand its terms so they cannot claim that they were unaware of their employer’s expectations later.
The last, and most important thing, is to communicate with your people. I find that employers often shy away from having difficult conversations with employees and let minor inappropriate behaviours continue. Problems then compound because the employee hasn’t been told that their behaviour is inappropriate until it reaches a point where the employer can’t tolerate them any longer. And that’s when things can go badly wrong.
What risk do SME owners take if they take no action when an HR problem is brought to their attention?
They’re going to face lost productivity, reduced engagement amongst staff, and they may also lose the opportunity to nip the issue in the bud. If matters are allowed to fester, they inevitably escalate and may reach the point of no return when, if they had been addressed early, they may have been able to be resolved. The worst case scenario is that employers face a personal grievance, which can potentially cost hundreds of thousands of dollars, unwanted publicity, not to mention hours of management time.
What rights do employers have if employees are not complying with the boss’s instructions?
Provided that the employer’s instruction is both lawful and reasonable, and the employee clearly knows what’s required of them and is still choosing not to do it, then the employer has the right to commence disciplinary action. Following a fair process, this could ultimately result in the dismissal of the employee. However, the process is important and the employer does need to listen to what the employee is saying and why they’re not following the instruction.
What steps should you take if you want to suspend and later dismiss an employee?
It is actually a more complex process than you would think. As a bare minimum, to discipline an employee you need to:
- Investigate the allegations thoroughly;
- Advise the employee of the specific allegations they’re facing, the possible consequences and the right to be represented;
- Give them an opportunity to provide their explanations and responses in front of a decision maker who is free from bias and predetermination;
- Give them an opportunity to be heard on the proposed course of action.
Best practice is to record all of this in writing as you go.
To lawfully suspend an employee, generally you need a specific provision in the employment agreement allowing this. You are required to consult with the employee before making any decision to suspend, and should give the employee an opportunity to seek advice before they provide their feedback.
Suspension is an area where employers often get the process wrong, so the best advice is to seek help early on.
As a starter for ten, many employers assume that if they send an employee home, but continue to pay them, they are simply on special paid leave rather than suspended. In reality there is no difference, and if an employee is required to remain away from the workplace – without their consent – this is a suspension.
What are the key points to remember regarding the 90-day employment trial period?
Make sure you have a legally compliant clause drafted into your written employment agreement for a start. There have been cases even recently where an employer has sought to rely on a non-compliant trial period, only to find they’ve left crucial wording out.
Secondly, make sure that the prospective employee signs the employment agreement well before they commence employment. The trial period won’t take effect if the employee signed the agreement after they’ve already started work, even if it’s five minutes into their first day.
Lastly, if you’re dismissing an employee during the trial period, make sure you do so before the end of the 90th day. And if the employee asks, you should give them reasons for their dismissal. Ideally the employee should not be surprised by your decision.
How can employers prevent themselves from getting into legal wrangles?
The best thing to do is to take advice when you’re setting up your business from someone who specialises in this area. Getting good employment agreements and policies in place will lay a solid foundation. Taking courses about employment obligations can also be a good idea.
Lastly, if you think things could possibly go bad or you are not sure about what to do, take advice early. A few dollars spent now can save you thousands later.