Build Strong HR Systems with Effective HR Structures and Policies for Small Businesses

Every business needs the right Human Resources systems in place to support their day to day operations. In our blog, we will share:

  • The role and importance of a Human Resources system, and 
  • Our top tips for crafting Human Resources Systems that are tailored to meet the needs and culture of your business.

In the ever-changing space of small business, the importance of robust Human Resources systems cannot be overstated. 

Firstly, let me explain what an HR System is.

What is an HR System?

An HR system, short for Human Resources system, is what businesses use to effectively handle all matters related to their employees throughout their employment lifecycle. It can also be referred to as an HR Framework, HR Structure or HR Practices.

It comprises one or a combination of tools including a human resources strategy, policies, procedures, guidelines, employee handbook, software and/or reports.

Now let me explain the importance of such a system, particularly tailored for small businesses.

What are the elements of a HR System?

Let’s explore the elements that comprise a comprehensive HR system tailored for small businesses:

  • Human Resources Strategy: A strategic HR plan aligns human resources objectives with overall business goals, outlining priorities, initiatives, and resource allocation to drive business success.
  • Policies and Procedures: Clear and concise HR policies and procedures provide guidelines for employee behaviour, performance expectations, and workplace environment. These documents should be regularly reviewed and updated to reflect changes in legislation and business needs.
  • Employee Handbook: An employee handbook serves as a comprehensive guide to business policies, benefits, and expectations, providing clarity and consistency for all employees. A business may choose to have an employee handbook and then a few stand alone policies and procedures for greater clarification around a certain topic. 
  • Guidelines: Supporting information which is outlined in company policies and procedures or employee handbook and assist employees and people leaders to navigate the specific skills and knowledge required to perform a task. Ie. Best practice interviewing techniques or handling difficult situations and conversations.
  • HR Software and Reporting: Leveraging technology solutions such as HRIS (Human Resources Information Systems) streamlines administrative tasks, facilitates data management, and generates insightful reports for informed decision-making.

So why is a HR system so important? Let me explain.

The role and importance of a HR System

As businesses navigate through the day to day operations, establishing a robust HR system is not just a choice but a strategic decision to ensure smooth operations and mitigation of risks for employers and employees.

The power of having an HR System in place is:

  • Creating Clarity by setting expectations for Employers and Employees.
  • Ensuring Fairness and Consistency Through HR Systems.
  • Navigating Legal Compliance.

Together these three points enable small businesses to position themselves as employers of choice whilst driving long-term growth and success. 

Let’s explore each of these in more detail.

Creating Clarity: Setting Expectations for Employers and Employees:

Start by establishing transparent guidelines with documented policies and procedures. 

Examples are: 

  • defining acceptable behaviour, 
  • performance standards, or 
  • detailing leave entitlements and eligibility. 

These documents help ensure that employees understand what is expected of them and their manager. It also helps minimise misunderstandings and promote a more productive and cohesive work environment.

In addition, these documents act as a shield, safeguarding businesses from potential legal pitfalls and ensuring compliance with regulations. Whether it’s navigating employment legislation or addressing grievances, having a well-defined set of procedures in place can mean the difference between smooth sailing and hot water.

Ensuring Fairness and Consistency Through HR Systems

Fairness and consistency are essential components of any successful organisation. 

HR policies and procedures are designed to promote these values by providing a standardized approach to various aspects of employment. From recruitment and selection to disciplinary actions and promotions, adhering to established protocols helps ensure that all employees are treated equitably and that decisions are made impartially and consistently across the board.

Navigating Legal Compliance with HR Systems

In addition to promoting fairness and consistency, the elements of an HR system play a crucial role in ensuring legal compliance. 

By staying abreast of relevant laws and regulations and incorporating them into your documentation enables businesses to mitigate the risk of costly legal disputes and penalties. Ie. Legislation, Awards and National Employment standards. 

It is necessary to tailor your HR system to your business and promote a positive workplace culture.

How do I successfully design a HR System?

The key to any business change is to include your employees in the decision. To assist with implementing a successful change, here are our six top tips to follow:

  • Identify the Need and Scope
  • Research and Prepare a Draft 
  • Obtain Feedback
  • Communicate and Roll out
  • Ongoing Reviews

Identify the Need and Scope of your HR System

The first step in developing a tailored HR system is to identify the specific need or issue that you are trying to address. 

This may arise from changes in legislation, business objectives, or feedback from employees. Once the need is identified, determine the scope, identify the correct tool, consider which areas of the business will be affected and who will be responsible for its implementation.

Businesses can foster a more engaged workforce and a stronger sense of belonging among employees with a tailored HR system. It also allows businesses to address specific challenges and opportunities that may arise within their business or industry.

Research and Prepare a Draft

Conduct thorough research to gather information and best practices related to the topic. This may involve consulting industry standards, legal requirements, and existing policies from other businesses. Use this research to prepare a draft, ensuring that it is clear, concise, and aligned with the business. You might like to consider involving relevant stakeholders, such as HR professionals, legal experts, and department heads, in the drafting process to gain diverse perspectives.

Obtain Feedback

Before implementing the new tool, ensure you seek feedback from key stakeholders within the business. This may include managers, employees, customers or outsourced providers. Encourage open dialogue and address any concerns or suggestions raised during the feedback process.

Communication and Roll Out of your HR System

It is now time to communicate and roll out the new tool to the business. It can be helpful to launch the new tool in a face to face setting, where possible. This might be in a team meeting or through a dedicated training session if required to ensure that employees understand the requirements and how to comply with them. It can be helpful to keep a record of who attended.

Ongoing Review

Once HR tools are in place, it’s essential to periodically review and update them to ensure they remain relevant and effective within your business. By staying proactive and responsive, businesses can ensure that their human resources documentation continues to meet the evolving needs of the business.

This may involve gathering feedback from employees, monitoring compliance with the policy, and assessing its impact on business operations. Identify any areas for improvement or adjustment based on feedback and evolving business needs. 

Protecting Your Business Interests Through Robust HR Systems

Every small business must prioritise effective HR management to effectively handle all matters related to their employees throughout their employment lifecycle. 

A HR System is important to creating clarity by setting expectations for Employers and Employees, ensure fairness and consistency and navigate legal compliance. 

A comprehensive HR system, encompassing human resources strategy, policies, procedures, guidelines, employee handbook, software and/or reports. 

By investing in the development and implementation of such a system, small businesses can position themselves as employers of choice, driving long-term growth and success.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

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About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.


Are you looking for more information on the various stages of the employee life cycle?
Or Human Resources in general? 

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Motivating employees back to the office

Motivating employees to return back to the office is easier said than done. In our blog, we will learn our top tips for navigating a smooth return.

In the wake of the global pandemic, many businesses swiftly transitioned to remote work, sending employees home to work to ensure safety and continuity. 

Now, as restrictions ease and the world begins to reset, employers are faced with reevaluating working arrangements.

Before we delve into how to change current interim arrangements and motivate employees to return back to the office, what are the different models?

  • Traditional Office-Based Work
  • Remote Work
  • Hybrid Work

 

Let’s take a closer look.

Traditional Office-Based Work

Employees work onsite at a designated workplace, typically during regular business hours, under the supervision of managers or supervisors.

Remote Work

Employees work from a location other than the office setting, often from home, coworking space, or holiday location.  They use digital tools and communication technology to collaborate with colleagues.

Hybrid Work

A flexible work arrangement combining remote and office-based work elements, allowing employees to split their time between working remotely and in the office.

These are just a few different work arrangements, each offering unique benefits and challenges for employers and employees.

 

How do you assess which option will suit you?

Assessing which work arrangement will best suit your team involves;

  • Evaluating the goals of return to the office work
  • Seeking feedback from employees.

48% of Australian employees believe their office policies prioritise what leaders want instead of what employees need, according to a June 2023 Gartner Global Talent Monitor (GTM) survey of 3,493 employees.1 

Let’s explore both steps further.

Evaluating the goal

The first step in motivating employees to return to the office is to communicate the reasons behind the change and the expected benefits gained by working in the office. 

Here are five possible key benefits for a return to the office;

  • Improved Collaboration and Innovation: Face-to-face interaction can facilitate organic, spontaneous discussions and brainstorming, provide instant feedback and collaborative problem-solving. 
  • Enhanced Team Building: Being in the same physical space strengthens relationships among team members by facilitating better understanding, trust, and camaraderie, which are essential for effective teamwork and achieving common goals.
  • Faster Decision-Making and Problem Resolution: Being in the office enables quicker decision-making, clarification, and problem resolution.  Employees can address issues in real time and consult with colleagues or supervisors as needed. This agility can help organisations respond more efficiently to challenges, unplanned problems and seize opportunities. 
  • Prioritise Wellbeing and Mental Health: Being in the same space allows supervisors to check in with their employees more regularly, identify changes in wellbeing, and recognise the signs of mental health in individual employees. 
  • Stronger Company Culture and Employee Engagement: Physical presence in the workplace fosters a sense of belonging, shared purpose, and alignment with the business and customers. Onsite interactions enable employers to cultivate a positive company culture.  Employers can recognise employee achievements, and promote employee engagement through team events, social activities, and professional development opportunities.

While remote and hybrid work arrangements offer flexibility and autonomy, being onsite can provide unique advantages in collaboration, communication, and fostering a cohesive organisational culture. Employers should carefully consider their needs and priorities when determining their teams’ most effective work arrangement.

Seek Feedback

Once you have identified the goals of a return to the office, the next step is to seek employee feedback. By understanding your team’s needs and preferences, you can implement working arrangements that accommodate the business, the employees, and the customers.

Start by gathering feedback from your team members to understand their needs and preferences. Learn of any challenges they face with their current work arrangement, and any concerns about returning to the workplace.

It is essential to analyse the feedback and determine the most effective work arrangements for the business or teams before implementing any changes.

 

How do I successfully implement a change?

The key to any organisational change is to include your employees in the decision. It is also important to motivate employees to return to the office. This transition presents an opportunity for businesses to redefine their culture, collaboration, team building, problem solving, wellbeing and mental health in fostering a thriving work environment.

To assist with implementing a successful change, here are four steps to follow:

  • Develop Clear Expectations: to facilitate a smooth transition, employers and employees can work together to establish clear expectations regarding the return to the workplace. 

Examples can include a potential phased return to the workplace, core hours of coverage, minimum numbers in the office, number of days in the office, a roster of set days, and notification required to change days. Clarity fosters confidence and empowers employees to navigate the transition with ease.

  • Empathy and Understanding: employers must approach this transition with empathy and understanding. Acknowledging the challenges individual employees and their families may face in returning to the workplace and validating their concerns fosters a sense of psychological safety and trust. 

Employers can cultivate a supportive and resilient workplace culture by prioritising employee wellbeing and actively addressing their needs.

  • Update Policies and Procedures: The return to the office can necessitate the revision of policies and procedures or employee handbook.  It is important to accommodate the new working environment and document expectations. 

Examples can include revisiting leave policies, flexible work arrangements, team building, and measures to promote health and wellbeing in the workplace.

  • Set a review period and manage any challenges: Continuously seek feedback from employees to assist in evaluating the effectiveness of the chosen work arrangement and its impact on team performance, productivity, and satisfaction. 

If any challenges or issues arise at any stage of the process, be prepared to address them quickly to avoid a negative impact on the outcome.

By following these steps and maintaining a proactive, supportive approach, you can successfully implement the chosen work arrangement for your team and create a positive, productive work environment that meets the needs of everyone involved.

 

Challenges and opportunities

The transition back to the workplace presents both challenges and opportunities for businesses. By proactively addressing concerns, communicating transparently, and fostering a culture of empathy and inclusion, employers can successfully motivate employees to return to the workplace.  In turn this can create an environment where everyone thrives.

For further information or assistance with managing employees back to the workplace, contact Small Business Society.

  1. https://www.gartner.com/en/newsroom/press-releases/2023-10-17-gartner-hr-survey-shows-australian-organisational-culture-at-an-all-time-low

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

My employee quit without notice, what now

Navigating Unexpected Employee Resignations: Rights, Responsibilities, and Tips for Employers.

It’s a scenario no employer wants to face: an employee abruptly resigning without providing any notice. This unexpected departure can leave employers grappling with questions about their rights, responsibilities, and how to manage the situation effectively.

According to the AHRI’s Quarterly Australian Work Outlook, overall, the average employee turnover for the 12 months to the end of April 2023 was reported at 12%. 1

 

What does it mean to quit?

There are a few different terms; it is also referred to as exit, quit, give notice, resignation, conclusion, and departure. For the purpose of this blog we will use “conclusion” to mean both voluntary or involuntary.

Basically conclusion  refers to the voluntary or sometimes involuntary act of when an employer and employee relationship ends. 

This decision is typically communicated to the employer in writing.

 

Voluntary versus involuntary conclusion.

Voluntary resignation

Employees may choose to resign for various reasons, such as finding a new job opportunity, pay or conditions, pursuing further education, moving location, or addressing personal circumstances.

This is referred to as voluntary resignation and could be one of the following situations:

  • Resignation: an employee may choose to resign from their position.
  • Retirement: employees may retire from their job when they reach the age of retirement or become eligible for retirement benefits.
  • End of Contract/Temporary Position: for employees on a fixed-term contract or in temporary positions, the employment relationship naturally ends when the contract expires.

Involuntary resignation

However, there can be times when an employer may choose to end employment for various reasons such as performance, change in business direction or financial implications, or personal circumstances.

This is referred to as involuntary separation and could be one of the following situations:

  • Termination: an employer may terminate an employee’s contract due to various reasons, including poor performance or violation of company policies.
  • Redundancy: employees may be made redundant due to reasons such as company restructuring, financial difficulties, or a decrease in the demand for certain positions. 
  • Dismissal: similar to termination, dismissal occurs when an employee is let go for serious misconduct or a breach of employment terms.

It’s important to note that the specific circumstances surrounding the end of an employment relationship can vary based on local employment laws and the terms outlined in the employment contract. Employers and employees alike are encouraged to follow proper procedures and adhere to legal requirements when ending an employment relationship.

 

Let’s take a closer look at terms of employment surrounding the conclusion.

Notice Periods

The national employment standards outline the required notice periods depending on probation and length of employment. These notice periods are usually outlined in employment contracts or relevant policies and procedures. It is possible to negotiate a lesser period of notice and in some instances an employee might quit without notice.

Withholding Wages

Withholding wages should be approached cautiously. Employers generally cannot withhold earned wages unless there are explicit provisions in the employment contract allowing for specific deductions, such as unpaid loans or agreed-upon penalties. Using wage withholding as a punitive measure is often legally questionable and may lead to legal consequences for the employer.

Final Payment

Regardless of the circumstances surrounding the departure, employees are entitled to their final payment. This should include any outstanding wages, accrued leave, and benefits owed to them. Ensure compliance with labor laws by promptly providing the final payment as per the established pay schedule.

 

Now that we know a little more about the various definitions and the terms around conclusion, how do we manage that situation when an employee simply quits.

Communication

Initiate a candid and respectful conversation with the departing employee to understand their reasons for leaving without notice. While emotions may run high, maintaining open communication can provide valuable insights into potential workplace issues that might need addressing. This conversation can also contribute to a smoother transition, even if it is still a quick one. Taking into consideration their reasons for leaving and quickly, there is potential to negotiate times that they are available after they finish up, to answer any questions or provide necessary handover information.

Documentation

Thoroughly document the resignation process. Keep records of any discussions, emails, or reasons provided by the departing employee. This documentation can serve as a valuable resource in case of legal inquiries, disputes, or if the need arises to revisit the circumstances surrounding the departure.

Resourcing Options

Quickly assess the impact of the departure on the team and devise a resourcing plan. Consider redistributing responsibilities among existing employees (but be sure not to overload individuals unfairly), hiring temporary support, or implementing other solutions to ensure minimal disruption to ongoing projects and operations.

Know your Award

The specific requirements for conclusion can be different depending on the award, registered agreement or employment contract when ending their employment. It is important to know which instruments relate to your business and individual positions and apply them correctly.

 

In conclusion.

While unexpected resignations pose challenges, approaching the situation with a focus on legal compliance, open communication, and strategic planning is crucial. 

Understanding your rights and responsibilities as an employer not only helps in managing the immediate impact but also contributes to fostering a positive workplace culture in the long run.

  1. https://www.ahri.com.au/wp-content/uploads/AHRI-report_15.5.23.pdf

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

Managing High-Performing Employees

A Guide to Nurturing Overperforming Employees.

Every workplace will have employees who consistently exceed expectations and deliver exceptional results. While having a high-performing employee can be a blessing for getting through tasks quickly, this level of output  can present its own unique challenges for managers, which are often overlooked or mismanaged. 

To understand what a high performing employee actually is, let’s look at the spectrum of performance and a definition for each. 

  • Underperforming Employees:
    • These are individuals who are not meeting the expected standards or goals set for their job.
    • They might struggle to complete tasks on time, produce work that doesn’t meet quality standards, or have difficulty fulfilling their responsibilities.
  • Performing Employees:
    • These employees meet the basic expectations of their role.
    • They do their job competently, complete tasks on time, and generally fulfill the requirements of their position without major issues.
  • Higher-Performing Employees:
    • These individuals go above and beyond the basic expectations, consistently produce high-quality work, and demonstrate a strong commitment to their job.
    • Higher-performing employees are often seen as reliable, proactive, and valuable contributors to the team.
    • They consistently achieve outstanding results, often taking on additional responsibilities and contributing in ways that go beyond their job description.

In summary, underperforming employees struggle to meet expectations, performing employees meet the basic requirements, higher-performing employees consistently exceed expectations.

Managing high performing individuals – the delicate balance

Effectively managing high performing individuals requires a delicate balance between recognising their achievements, maintaining a productive work environment, and supporting their mental health and well-being.

Now let’s take a look at each section in more detail and consider how you can build into your human resources framework ways to proactively manage high-performing employees, including;

  • Set clear expectations
  • Conduct regular one-on-one meetings
  • Supporting individual mental health and well-being
  • Continuous Improvement and Innovation

Step 1: Set clear expectations

For high-performing employees, who consistently exceed targets, it’s crucial to establish transparent expectations to ensure a sustainable and positive work environment. This involves clearly defining their role using the position description and specifying desired levels of output, such as conducting a specific number of client meetings per day or response times to enquiries.

To maintain clarity, consider incorporating opportunities to revisit expectations during key points in the employment lifecycle, such as probationary periods, annual performance reviews, and when an employee takes on a new role.

Additionally, it’s beneficial to establish clear boundaries regarding standard hours of work and days as well as expectations around additional hours. With the introduction of hybrid work conditions, where the lines between professional and personal life can become blurred, there might be a temptation for employees to work beyond regular hours. By setting team and business rules, we can guide a positive work culture and correct any emerging norms that may need adjustment.

Step 2: Conduct regular one-on-one meetings

Regular one-on-one meetings are essential for managing employees effectively and continually checking in on the expectations set out in the step above. It can also be an opportunity to understand the drivers of motivation (anxiety, achievement, or power), review the expectations set, and make adjustments where necessary.

Setting up a recurring meeting to ensure you always have the time to meet is a great way to prioritise these discussions. When deciding the frequency of the meetings, it can be helpful to think about the following:

  • The stage the employee is at with their role (new or established)
  • Length of time the individual has been in the role
  • Seniority or criticality of the role and the impact of the individual on others
  • Level of impact on the employees’ mental health and well-being

For example, if it is during probation, it might be weekly or fortnightly to ensure clear expectations are understood and met while the employee is navigating their new role and knowledge about the business.

However, if it is during a performance review process, the meetings might be less frequent, and you may decide to hold them every two to three months.

Step 3: Support mental health and well-being

Delivering exceptional results over an extended period of time can have an impact on an individual’s mental health and well-being. 

The Productivity Commission’s Inquiry into Mental Health found that 2.8 million working Australians had mental illnesses that led to them taking time off to maintain their well-being.1

With estimates that workplace absenteeism due to mental health was costing the economy AU$10 billion, and presenteeism adding an additional AU$7 billion, the role business plays in maintaining the mental health and well-being of the workforce was beginning to be unpicked.

It is becoming increasingly important to support your employees, and by checking in regularly with them, you can monitor the state of your employees and address when changes are required. 

It can be helpful to review position descriptions and job design to see how they are coping with the changes in expectations from the industry and customers. In addition, to review leave entitlements that are on offer, ensure employees are taking regular breaks to rest and recharge and consider what health and well-being initiatives your business offers. These can make positive steps towards maintaining a productive work environment and supporting their mental health and well-being. 

Step 4: Continuous Improvement and Innovation

By setting clear expectations and regularly reviewing, you can identify if there is a difference between the employees continuous improvement or innovation. If there is, there is an opportunity to review a process or system. The review can be an individual or team review of how the process can be improved or changed for alignment. Promote a culture of mutual respect and recognition to maintain harmony and maximise productivity.

Managing High Performing Employees effectively.

Managing a high performing employee requires a delicate approach that balances setting clear expectations, regular one on one meetings, promoting collaboration, and conducting effective meetings; you can harness their potential while ensuring their mental health and well-being are also looked after. Remember, managing overperforming employees is not about suppressing their talents but effectively directing them and aligning expectations.

Review your individual employees and address any high performing employees. For further information or assistance with a specific employee or team, contact Small Business Society.

 

  1.  https://www.pc.gov.au/inquiries/completed/mental-health/report/mental-health-volume1.pdf

 

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

Employee? Contractor? Casual, part-time or full-time? Your resourcing questions answered!

There are two common questions I am getting asked at the moment and they are both about how to best resource a business with people.

The first question is what are the pros and cons of engaging someone to complete work for your business as an independent contractor versus an employee. 

The second question is what is the difference between hiring an employee on a casual basis, part-time basis or full-time basis.

There are some key differences of rights and obligations that you need to know before you hire someone, so let’s take a closer look at both of these great questions.

What is an independent contractor?

Independent contractors are also called contractors or subcontractors. They run their own business, often use their own processes, tools and methods to complete their work that they sell to another sole trader or business. 

They aren’t employed by that person or business, but rather usually have their own business. Independent contractors usually negotiate their own fees and working arrangements, including;

  • how work is performed – there is a high level of control over the work they perform, including their hours, work location and how they do the work.
  • financial responsibility and risk – they carry the risk for financial outcome on each task or job, are personally responsible and liable for poor work or any injury sustained while performing the task. Generally have their own insurance policy.
  • tools and equipment – they use their own tools and equipment. However alternative arrangements may be made within the contract of services.
  • delegate or subcontract work – they can delegate or subcontract the services to be performed to another person or business.
  • Hours of work – when setting out the terms of the contract, agreement can be made between both parties regarding what hours will be worked to complete the specific task. This can include the days and times of the week when they will be performed.
  • expectation of continuation of work – they are usually engaged for a specific task or period of time and this is agreed to by both parties when setting out the terms of the contract.
  • Fees and entitlements – they usually negotiate payment as part of their contract for the services and set an hourly rate or payment for a set task. There is no inclusion of leave entitlements, such as annual leave or sick leave. Individuals are responsible for paying their tax and GST (if applicable) and generally pay their own superannuation. 
  • payment of hours – they will usually submit an invoice when they need to be paid. They can be paid on a regular basis, at set project milestones or at the end of the contract or project.
  • managing performance – where an error or underperformance has occurred the employer will provide a notice to remedy or complete services. If the remedy is not sufficient or is within the required time then the contract can be terminated.
  • unlimited work – can work for more than one client at a time without it being a conflict of interest or needing to make a declaration. 

Some key things to be aware of are:

  • A contract can be verbal, in writing or a mix of both. Not all arrangements will necessarily be present in a contractor agreement. It can often be difficult to determine the difference between an independent contractor and employee. For example, just because you have to have an ABN or issue invoices doesn’t automatically make you a contractor.
  • It is important to be clear on what is agreed to at or before the start of the working relationship.
  • The type of work that is performed will not automatically determine if the working relationship should be as an independent contractor or as an employee. A person may perform the same type of work as an employee of a business but may still be an independent contractor. This means that whether someone is an employee or an independent contractor will depend on the individual circumstances

What is an employee?

An employee is a person who performs work for someone else’s business. The employee controls how, where and when they do their work. In exchange employees get specific benefits such as leave entitlements and wages are paid including taxes and superannuation on behalf of the employee.

The employer usually determines the rate of pay and working arrangements, including;

  • how work is performed – they perform the work under the direction and control of their employer. Work is controlled by the employer including hours, work location and how work is done.
  • financial responsibility and risk – they have no financial risk (as this is the responsibility of their employer). Generally the employer holds the necessary insurance policies and is both responsible and liable for poor work or any injury sustained while performing the task.
  • tools and equipment – tools and equipment are generally provided by the employer. However alternative arrangements may be made within the contract of employment and a tool and equipment allowance is paid.
  • delegate or subcontract work – they are required to do the work themselves. For example, they can’t ask someone else to go to their workplace and do their work for them.
  • Hours of work – they are required to work standard or set hours (unless they’re a casual employee, in which case their hours may vary from week to week). When setting out the terms of the contract of employment, an agreement can be made between both parties, what hours will be worked. This can include the days and times of the week when they will be performed and can be re-negotiated at any time ensuring it is in writing.
  • expectation of continuation of work – they are usually employed on a permanent basis and have an ongoing expectation of work (unless otherwise outlined in the contract of employment or employed on a casual basis). This is agreed to by both parties when setting out the terms of the contract.
  • Fees and entitlements – the employer usually determines the rate of pay taking into consideration any minimum wages set out by Fair Work Australia or a relevant industry award. There is inclusion of a variety of paid and unpaid leave entitlements, such as annual leave, sick leave or paternity leave. Employers are responsible for paying tax and superannuation. 
  • payment of hours – they will usually receive payment in the next regular pay run. An employee might be required to submit a timesheet to confirm hours worked, for which clients, if any leave was taken and any additional hours worked. This will be outlined by the employer and can be weekly, fortnightly or monthly.  
  • managing performance – where an error, underperformance or misconduct has occurred the employer and employee will engage in informal and formal performance management discussions to try and resolve the issue. If after following a robust process the employee has not resolved the issue their employment might be terminated.
  • unlimited work – the employer can determine if an employee can work for more than one business at a time without it being a conflict of interest or needing to make a declaration. 

Some key things to be aware of are:

  • A contract of employment must be in writing and include particular details about the appointment including employment type, minimum hours, location of work, remuneration, conflict of interest, privacy and confidentiality and termination requirements.
  • It is important to be clear on what is agreed to at or before the start of the working relationship. Any changes to the terms and conditions set out in the contract of employment must be in writing and saved on an employee file.
  • The type of work that is performed will not automatically determine if the working relationship should be as an independent contractor or as an employee. A person may perform the same type of work as an employee of a business but may still be an independent contractor. This means that whether someone is an employee or an independent contractor will depend on the individual circumstances.

What about casual versus part time or full time?

Once you have determined that you are going to hire an employee to perform the duties you will also need to determine the number of minimum hours they will perform. You can engage individuals on a permanent basis or on a fixed term contract and these conditions are set out in the contract of employment. They can also change during the course of their employment, but there are certain restrictions on how this happens.

So let’s take a closer look at the different types.

  • Full-time employees – usually work an average of 38 hours each week (this can vary between 37 – 40 hours depending on the business or industry).

  • Part-time employees – work regular hours that are less than 38 hours or greater than 0. Generally an employee will have a weekly pattern of hours, however a fortnightly or monthly pattern can be arranged and set out in the contract of employment at or before the start or after commencement in writing.
  • Casual employees – work irregular hours that are less than 38 hours and within their availability. The employer will determine the notice period required for setting periods of work. For example a business might have a monthly roster which is provided in advance but then a requirement to be called at short notice to fill in. A casual employee does not have a firm commitment in advance from their employer to ongoing work with an agreed pattern of work.

What is the Casual Employment Information Statement (CEIS)?

Employers are required to give casual employees the CEIS once in any 12 month period (for example, if an employer employs a casual employee temporarily at different stages in a 12 month period, they only need to give them the CEIS once).

The CEIS has information about:

  • the definition of a casual employee
  • when an employer has to offer casual conversion
  • when an employer doesn’t have to offer casual conversion
  • when a casual employee can request casual conversion
  • casual conversion entitlements of casual employees employed by small business employers
  • the role of the Fair Work Commission to deal with disputes about casual conversion.

For further information visit:

https://www.fairwork.gov.au/employment-conditions/national-employment-standards/casual-employment-information-statement

Do my employer obligations change if I employ less than 15 employees?

Yes, there are different obligations for a small business employer (an employer with less than 15 employees). Casual employees are not included unless engaged on a regular and systematic basis. Some of these differences occur for probationary purposes, performance management and concluding employment.

Is there an employment type where the employee only gets paid for the hours they complete?

Yes. Casual employees are only paid for hours worked but there is legislation that says after a period of time they might be eligible for conversion. For further information visit: https://www.fairwork.gov.au/sites/default/files/migration/724/casual-employment-information-statement.pdf 

Is there an employment type where the employee has regular hours?

A part time or full time employee will have a set minimum number of hours they are required to work. These set hours can be by week, fortnight or month. There is the ability to increase and decrease hours, however there is a formal process that needs to be followed and any changes should be agreed to in writing. 

How do I work out the true cost of an employee?

There are key elements required to calculate the true cost of an employee over and above their base salary, including tax, superannuation, insurances, and leave entitlements including loading and future liabilities. You may also want to consider factoring in allowances for equipment, travel, training as an example.

What is the impact of hiring an employee on insurance as I don’t have workers compensation as it is just me in the business?

It is compulsory to have a workers compensation insurance policy if you engage workers or contractors where you expect to pay more than $7,500 a year in wages. Refer to your relevant state authority for requirements.

How do I determine what meal breaks an employee is entitled to?

There are rules for minimum hours before paid and unpaid breaks are required. The specific requirements are set out in relevant industry specific awards. Generally, an employer is required to provide a 10 minute paid rest break after 3 hours and unpaid lunch breaks after 5 hours. The lunch break can vary between 30 to 60 minutes depending on the employer or individual arrangements with employees.

How does it work with setting how many hours, on which days, and at what times? What if there is flexibility or work is remotely performed?

Generally an employer will set how many hours, on which days, and at what times an employee is required to work. This will usually be aligned with normal hours of work or a peak time when client and customer requests will come through. There may be flexibility as to when work is performed or an individual arrangement with employees, however it is a good idea to set some clear expectations around what is acceptable.

There are certain guidelines around maximum hours a day and number of days a week which someone can complete their hours. This is usually around occupational health and safety requirements. If someone is only working a few hours a day this should not be an issue.

What if an employee is part time or full time and they need to attend an appointment? 

Employees will be able to access paid leave entitlements. Generally attending a medical appointment doesn’t cover the use of sick leave. Medical appointments and elective surgeries that are pre-arranged can only be covered by sick leave if an employee is not able to work because of a personal illness or injury. They could use annual leave or shift their hours around the appointment which most people do. 

For further information or assistance with determining the best way to resource your business, contact Small Business Society.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

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About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

Make your business stand out to employees

Have you ever wondered what makes your business stand out and become a place where everyone wants to work? 

We know the journey of building a successful business is quite the adventure. There are many highs and lows to business including, but certainly not limited to; cash flow, client or customer relationships, marketing and networking. 

The most important one though, in our opinion, is your people.

Your people are what make your business successful, they are walking and talking brand ambassadors for your business. So what makes them want to work with you? What makes them want to stay? What makes them want their friends and family to work with you? 

How do you make your business stand out to these potential employees?

Let’s dive into our six simple yet powerful ways to make your business a magnet for attracting and retaining talented and skilled people.

1. Growing Together

Imagine working in a place where you’re not just doing your job, but you’re also learning and growing. That’s what your employees are seeking too! Create opportunities for learning, mentorship, and a chance to move up the ladder. When you show that you care about their growth, you create a workplace that’s exciting and full of possibilities.

Let’s have a look at an example. Company X regularly conducts “Innovation Fridays,” where employees are encouraged to collaborate on passion projects outside their regular responsibilities. One such project led to the development of a new product line, boosting the company’s revenue and giving employees a chance to learn and grow in areas of interest.

2. Balancing Act

We all know life is about more than just work. That’s why offering flexibility is like a breath of fresh air for your team. Whether it’s flexible hours or remote work options, giving your employees the chance to balance their work and personal life makes your business a truly caring and supportive place to be.

Let’s have a look at an example. At Company Y, employees have the option to work remotely twice a week. This flexibility not only allows them to achieve a better work-life balance but also results in increased productivity and job satisfaction. As a result, the company has seen a decrease in turnover rates.

3. Cheers to Wins

Think about the last time someone said “Great job!” or “You did it!” – how did it make you feel? Celebrating wins, whether big or small, is like adding a sprinkle of happiness to your workplace. Recognize your team’s efforts and let them know that their hard work doesn’t go unnoticed. This kind of appreciation makes your business feel like a big family celebrating each other.

Let’s have a look at an example. Company Z celebrates employee achievements by holding a monthly “Employee Spotlight.” This recognition program highlights exceptional performance and contributions, giving employees a platform to share their accomplishments and inspiring others to excel.

4. Team Spirit

Remember the excitement of working on a school project with friends? It’s the same feeling you can bring to your workplace. Encourage open conversations, involve your team in decisions, and create an environment where everyone’s ideas matter. When you work together like a team, it’s not just work – it’s a shared adventure.

Let’s have a look at an example. In Company A, the management organizes quarterly team-building retreats where employees from different departments collaborate on fun and challenging activities. This has strengthened relationships, improved communication, and boosted overall team morale.

5. Walking the Talk

Every business has its own values – things it believes in and stands for. Make sure these values shine through in everything you do, from hiring new team members to the daily tasks. When your employees see that you’re living these values, it adds a sense of purpose to their work. They know they’re part of something meaningful.

Let’s have a look at an example. Company B, committed to sustainability, has implemented various eco-friendly initiatives such as solar panels, waste reduction strategies, and electric vehicle charging stations. These efforts align with the company’s values and attract environmentally conscious employees.

6. A Thriving Community

By weaving these simple yet impactful ideas into your business, you’re not just making a workplace – you’re creating a community where people want to belong. It’s not about just hiring employees; it’s about inviting them on a journey. Your business can become the place where people don’t just work, but where they find joy, growth, and a sense of purpose.

Let’s have a look at an example. Company C fosters a sense of community by hosting regular “Lunch and Learn” sessions. These gatherings feature industry experts discussing relevant topics, enabling employees to learn, network, and feel like they are part of a larger professional community.


So here’s to crafting a workplace that’s as exciting as your business’s future! Let’s celebrate the magic of making your business stand out and be a workplace everyone wants to be a part of!


Contact Small Business Society to leverage your business and power up your Human Resources today with an HR strategy session.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

The Power of AI and how it is being used in HR.

Artificial Intelligence (AI) is transforming Small Businesses and Revolutionising Human Resources.

In today’s rapidly evolving digital landscape, small businesses constantly seek innovative ways to stay competitive and thrive. One technology that has emerged as a game-changer is Artificial Intelligence (AI). 

With its ability to analyse vast amounts of data, automate processes, and provide valuable insights, AI is revolutionising various industries, including human resources (HR). 

Would you be surprised to hear that 97% of businesses plan to implement the technology in two years, according to a new study conducted by Forrester Consulting on behalf of Grammarly Business in May 2023.¹

In this blog, we will explore how AI is transforming small businesses and discover how it can be harnessed to enhance HR tasks, ultimately empowering businesses to operate more efficiently and make smarter decisions.

Artificial Intelligence has become an increasingly popular buzzword in recent years, but what exactly is it? 

Simply put, AI refers to the development of intelligent machines that can perform tasks typically requiring human intelligence. From self-driving cars to voice assistants like Siri and Alexa, AI has woven its way into our everyday lives, often without us even realising it.

AI systems are designed to analyse and interpret vast amounts of data, recognize patterns, and make predictions or decisions based on that information. This ability allows AI to accomplish tasks more efficiently and accurately than humans in many cases. It’s like having a super-smart assistant who can quickly process information!

But don’t worry; Artificial Intelligence isn’t out to take over the world or replace human jobs (despite what some sci-fi movies may suggest). Instead, it aims to enhance human capabilities, making our lives easier and more convenient. Think of AI as a helpful sidekick that can assist us in various ways.

AI isn’t just for big corporations or tech giants. Small businesses can also benefit from this transformative technology. Its tools can help small businesses automate repetitive tasks, analyse customer data to personalise marketing efforts, and even optimize supply chain management.

Artificial Intelligence also has the potential to revolutionize customer service. Chatbots powered by AI can handle customer inquiries and provide instant support, ensuring round-the-clock availability. This means no more waiting on hold or delayed responses to emails and social media messaging. Plus, AI can learn from customer interactions, improving its responses over time.

Artificial Intelligence is a powerful tool that has the potential to transform various industries and improve our daily lives. It’s not something to be feared but embraced as a helpful ally. While there are ethical considerations and challenges to address, the potential benefits of AI are immense. 

AI is already impacting diverse fields, such as Allied Health and Finance, to name a few.

How to enhance HR tasks with AI

Here are some ways you can enhance HR tasks with AI:

1. Streamlining Recruitment and Talent Acquisition:

Recruiting and hiring the right talent can be a time-consuming and resource-intensive process. AI-powered tools can simplify this process by automating candidate screening, analyzing resumes, and identifying the most suitable candidates. These tools leverage machine learning algorithms to match job requirements with candidate profiles, significantly reducing the time and effort required to find the perfect fit for a role.

2. Improving Employee Onboarding:

Efficient onboarding sets the stage for employee success and engagement. AI can enhance this process by providing personalized training plans and resources, automating paperwork and administrative tasks, and offering interactive virtual assistants that guide new employees through their initial days. These AI-powered assistants can answer common questions, provide real-time support, and foster a positive onboarding experience.

3. Optimizing Employee Engagement:

Maintaining a motivated and engaged workforce is crucial for small businesses success. AI tools can help monitor employee sentiment and engagement levels by analyzing data from various sources, including employee surveys, performance evaluations, and social media. These insights enable HR teams to identify areas for improvement, implement targeted interventions, and foster a positive work culture.

4. Assisting in Performance Evaluation:

AI-powered systems can assist HR departments in evaluating employee performance more objectively and accurately. AI algorithms can generate comprehensive performance reports by analyzing relevant data such as productivity metrics, client feedback, and project outcomes. These reports help identify high-performing employees, pinpoint skill gaps, and provide valuable input for performance appraisals and career development.

5. Ensuring Fairness in HR Processes:

Unconscious biases can inadvertently influence HR decisions, leading to unfair outcomes. AI algorithms can help mitigate this issue by removing biases from the decision-making process. For example, during the initial screening phase, AI tools can anonymize candidate information, focusing solely on qualifications and skills. This approach helps promote fairness and equal opportunities in hiring and other HR processes.

HR professionals are discovering a newfound superpower with the help of AI technology

Your HR professional isn’t extinct just yet; instead, HR professionals are discovering a newfound superpower with the help of AI technology. By leveraging AI tools, HR professionals can streamline their tasks, make data-driven decisions, and focus more on strategic initiatives.

AI empowers HR professionals by automating time-consuming processes such as resume screening and candidate sourcing. Outsourcing these tasks allows HR teams to sift through a larger pool of candidates efficiently and identify the most qualified ones without getting lost in a sea of applications.

While AI takes care of repetitive tasks, HR professionals can focus on strategic initiatives like talent development, employee engagement, and shaping company culture. This shift allows them to bring their expertise and creativity to the forefront, driving meaningful changes within the organization.

In a nutshell, AI empowers HR professionals by automating processes, providing data-driven insights, and freeing up their time for more strategic endeavors. With AI as their sidekick, HR professionals are poised to play a pivotal role in shaping the future of work.

Contact Small Business Society to leverage your business and power up your Human Resources today with an HR strategy session.

 

  1. Commissioned study conducted by Forrester Consulting on behalf of Grammarly | Maximizing Business Potential With Generative AI: The Path to Transformation, July 2023.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

 

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

The value of HR when an employee resigns or leaves.

We often associate Human Resources (HR) professionals with the onboarding process and employee engagement strategies. However, their role goes beyond welcoming new hires and satisfying existing employees, as they also play an important role when an employee resigns or leaves the business.

Employees can leave our businesses for a range of reasons. In fact, the 12-month employee turnover rate to the end of April 2023 is currently 12%, with 20% of organisations reporting annual turnover of 20% and above.1

Employees leaving a business can impact the level of service the business is able to provide due to reduced employee levels. As well as the affects on team morale due to the person leaving and due to possible angst over workloads and delegation of tasks.

There is also managing client expectations due to a new contact.

This is where you need HR professionals, who have a unique opportunity to add value to exiting employees as they transition out of the organisation. 

Let’s explore ways HR professionals can make this process more positive and beneficial for everyone involved.

1. Exit Interviews with a Personal Touch

Exit interviews provide a valuable opportunity for departing employees to share their experiences and provide constructive feedback. HR professionals can conduct these interviews with a personal touch, showing genuine interest and empathy. Creating a safe and non-judgmental environment encourages honest communication, which helps the organisation identify areas of improvement and provides closure for the employee.

2. Offering Support and Guidance

Leaving a job can be an emotional and overwhelming experience. HR professionals can offer support and guidance to exiting employees by providing information on career transition resources, job search tips, and professional development opportunities. Sharing industry contacts and recommending relevant networking events or workshops demonstrates a commitment to the individual’s ongoing success beyond their time with the company.

3. Providing References and Recommendations

A positive reference or recommendation can significantly impact an employee’s future career prospects. HR professionals can play a vital role in this regard by offering to provide references and recommendations based on the employee’s performance and accomplishments. By helping exiting employees showcase their skills and potential, HR professionals can contribute to their professional growth and enhance their job search efforts.

4. Exit Surveys for Continuous Improvement

Just as HR professionals conduct employee satisfaction surveys, they can also implement exit surveys. These surveys help identify patterns and trends in employees’ reasons for leaving, highlighting areas that need improvement within the organisation. By analysing the data from exit surveys, HR professionals can develop strategies to enhance employee retention and satisfaction, ultimately benefiting current and future employees.

5. Alumni Programs and Knowledge Sharing

Creating an alumni program can be a valuable initiative for small businesses with people who may become valuable advocates for the organisation or potential partners in the future. HR professionals can maintain positive relationships with exiting employees by staying connected even after they leave the organisation. Such gestures create a network of alumni connections that can be maintained through occasional check-in emails, inviting them to company events, or connecting on professional networking platforms, which helps foster a sense of ongoing support and goodwill. 

6. Clarity on final pay and entitlements 

HR professionals can provide advice about the legalities of processing final payments. However the employment relationship ends, it’s essential to follow the rules about notice periods and inclusions in final pay for each situation.

7. Consistent and timely exit processes

To ensure a consistent and timely exit process for all employees, develop a checklist to document all the necessary steps required to be completed before an employee leaves. The checklist is completed by the employee together with their Supervisor or Manager.

Let’s take a closer look at an example when an employee resigns of a good employee exit with structured HR processes.

Let’s consider the case of John, who has been working as a software engineer for a technology company. John has been contemplating a career change and has decided to pursue a different industry. Understanding the importance of a smooth transition, John follows the established HR process for resignations.

John schedules a meeting with his immediate supervisor, Jane, to discuss his intention to resign. During this meeting, John thoroughly explained his reasons for leaving and expressed his gratitude for the opportunities and growth he experienced with the company. He offers to assist in the transition by creating a detailed handover document and volunteering to train his replacement if time permits.

Jane, appreciating John’s professionalism, assures him that his contributions will be valued during his remaining time with the company. She discusses the transition plan, which includes identifying potential candidates for the open position and allocating resources to ensure a seamless transfer of responsibilities. Jane also arranges an exit interview for John with the HR department to gather feedback and address any concerns he may have.

In the following weeks, John fulfills his commitments and collaborates closely with his team to transfer knowledge and complete ongoing projects. He actively participates in onboarding the new hire, providing guidance and support. On his last day, John meets with HR for the exit interview, where he gives constructive feedback about his experience and offers suggestions for improvement.

As a result of this well-structured employee exit, the transition process is much smoother. The company can minimise disruptions to workflow, maintain client satisfaction, and effectively fill vacant positions. John’s professional approach fosters positive relationships, leaving a lasting impression on his colleagues and ensuring a positive reference for future opportunities. 

Additionally, the exit interview feedback helps the company identify areas for growth and employee retention strategies.

By implementing these changes to your employee exit process, you will ensure that employees leave the organisation on a positive note. 

A negative exit experience can impact legal and legislative requirements, your business’ brand, your ability to hire top talent, internal team morale, and even your reputation with customers. It makes good business sense to exit employees consistently and positively. A positive employee experience doesn’t end at the exit door—it extends into the future, benefiting all parties involved.

Contact Small Business Society for a review of your employee exit process or enroll in our online course.

  1. https://www.ahri.com.au/wp-content/uploads/AHRI-report_15.5.23.pdf

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

 

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

Understanding Long Service Leave.

How well do you understand Long Service Leave (LSL) entitlements, and how can you best manage them?

Throughout an employee’s employment, an employee will need to take leave from the business for a range of different reasons. There are various leave types, with different entitlements and accessibility, which employers and prospective employers need to understand to meet legal obligations. Long Service Leave is no exception. 

Note, this article is in reference to Victorian businesses.  Employers outside of Victoria can contact the long service leave agency in your state or territory:

What is the purpose of Long Service Leave?

Let’s first start by understanding the purpose of leave. Leave is time allowed away from work, generally requested in writing, by an employee to cover special circumstances occurring in the employee’s life, including resting and recharging to look after their physical, mental, and emotional well-being. 

Long Service Leave is, as the name suggests, leave that an employee can take for providing a long period of service to their employer. 

LSL offers paid leave entitlements that can be taken at full or half pay and accessed on a pro-rata basis after seven (7) years of service. There are a few other key differences, so let’s take a closer look.

Which legislation covers Long Service Leave?

LSL is covered by the Victorian Long Service Leave Act 2018. Unlike other leave entitlements and employment conditions, which are covered by an applicable award, enterprise agreement, and other registered agreements. 

Who does the Long Service Leave Act 2018 apply to?

The Long Service Leave Act 2018 applies to Victorian employees, excluding employees under some Commonwealth enterprise agreements and pre-reform awards and other Victorian laws. It covers full-time, part-time, casual, seasonal, and fixed-term employment types and includes employees under specific labor hire arrangements.

Who does the Act not apply to?

The Long Service Leave Act 2018 may not apply to employees covered by a federal award or workplace agreement – individual or collective – where that award or agreement contains its own Long Service Leave provisions.

The Long Service Leave Act 2018 does not apply to employees who have their long service entitlement provided by another act or regulation – such as workers in building and construction, where the CoINVEST scheme provides it.

To determine whether an award or agreement applies instead of the LSL Act 2018, you can call the Fair Work Ombudsman on 13 13 94.

When does an employee become entitled?

An employee will be entitled to take LSL after completing a minimum of seven (7) years of continuous employment with one employer. They will have access to pro rata entitlement based on years of service and hours worked. Be sure to check minimum entitlements if not in Victoria, as it can be different. 

Understanding continuous employment

Continuous employment refers to when an employee has either attended work in line with their employment contract or accessed all forms of paid leave for accrual towards LSL entitlements. Examples of applicable leave include annual leave, carer’s leave, paid and unpaid parental leave, and long service leave.

Unpaid leave exceeding 52 weeks will not count unless:

    • The period of absence is taken to be a period of employment in accordance with the relevant written or oral employment agreement,
    • The employee and employer agree in writing before the leave is taken that the leave taken is to be considered a period of employment,
    • The leave taken is because of illness or injury, and
    • Is any other form of leave provided for in the relevant written or oral employment agreement.

Portable Long Service Leave

In some Australian states, legislation provides for employees in the security, community services, building and construction, coal mining, and contract cleaning industries with access to portable long service leave.

For portable long service leave in the:

How to apply for Long Service Leave?

As a business, you should decide how employees can apply for leave and what notice period is required. 

It is helpful to provide employees with an overview of leave, including:

    • leave types and entitlements,
    • how much leave they can take at any one time, and
    • if there are certain times they cannot take leave based on how your business operates. 

For example, your business may have a shutdown period over Christmas/New Year.  Employees need to understand this and know about their accruals and your procedure for negative or unpaid leave in relation to this period. 

Employees can take LSL in minimum periods of one day at a time and should apply with written notice in a reasonable timeframe (as outlined by the business). Leave can be taken at full or half pay.

Unlike annual leave, employees are unable to cash out Long Service Leave, and employers are unable to require employees to take Long Service Leave to manage excess leave entitlements.

How do you calculate Long Service Leave entitlements?

To calculate LSL entitlements, you will first need to identify ordinary hours and calculate average hours over a set period of time. 

Ordinary hours will take into account if an employee may have moved between full-time, part-time, or casual employment, or vice versa. 

Average hours under the 1992 Act are where an employee’s hours of work were not fixed or their hours of work changed at least once in the 12 months before leave was taken, the employee’s hours of work were averaged.

The employee will be entitled to the greatest of the three averages, and any periods of unpaid leave are to be excluded from the averaging exercise:

    • The average weekly number of hours worked in the 52 weeks (1 Year) immediately before the employee starts long service leave.
    • The average weekly number of hours worked in the 260 weeks (5 Years) immediately before the employee starts long service leave.
    • The average weekly hours they worked during the employee’s entire period of continuous employment with the employer.

Working somewhere else while on Long Service Leave

An employee cannot take LSL from one place of employment to gain employment at another place. However, if they are already employed by two places of employment, an employee can take leave from one position and work at another.

What happens when someone resigns?

After a minimum of seven (7) years of continuous employment, when processing an employee’s final pay, regardless of why the employment ended, some leave entitlements, including any unused LSL, need to be paid out. The amount is to be paid in full on the final day of employment at the employee’s current rate of pay.

Managing Long Service Leave 

Once you have at least one employee eligible for LSL, it can be helpful to start planning what you will do during periods of leave. Things that you need to consider are:

    • Leave Liability – ensuring you have enough money set aside to pay for the leave period. Employees will be entitled to paid leave at their current rate of pay (even though they will have accrued the leave throughout their employment and at lower rates).
    • Maintaining records – leave balances need to be calculated and shown on payslips. Requests for leave should be received in writing and saved on an employee file or in an electronic payroll system / employee self-service. 
    • Update documentation – to communicate the entitlement, accessibility, and expectations around Long Service Leave, create or review and implement any policies or handbooks on Long Service Leave.
    • Coverage – It is helpful to have a plan for when an employee applies for leave and how you will cover their period of leave. The plan might differ depending on the length of time or the position they hold. It might include a combination of sharing the workload amongst your current workforce, utilising a casual workforce, or outsourcing the work.

Whatever your business situation, it is essential to understand your employees’ leave entitlements and correctly accrue and pay their entitlements. Talk to us at Small Business Society for assistance in navigating Long Service Leave for your employees. 

 

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

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About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog

Know your management style! How to proactively manage your employees.

The ability of a leader to positively influence and motivate an individual and a team largely depends on their management style and personality. 

While there are many different types of leaders across businesses, teams, and industries, there are some key elements that make a good leader in any situation. There are also two major management styles that exist — proactive and reactive — and managers tend to use one style more than the other in interacting with their teams.

According to data on Australian Leadership Trends from Swinburne University, evidence shows that there are still large gaps between what we expect of leadership performance and how institutions lead, with large gaps in place.

The good new is, effective leadership and awareness of management styles are skills that can be learned!

Let’s start by understanding two key terms:

1. Leadership

Leadership refers to an individual’s ability to lead, influence, or help others to be the best version of themselves, building individual skills and achieving business goals. It also extends to the ability to accomplish this for teams and businesses.

We are not all born leaders, but it is a powerful skill that can be developed over time through training, mentoring, and observing others in leadership positions.

2. Management Style

Management styles refer to an individual’s ability to coordinate a range of resources, including human, financial, and material resources, to deliver an outcome or goal. The management style refers to how the individual interacts with the resources to get what they need and can be proactive or reactive.

So, What are proactive and reactive management styles?

Proactive management style

A proactive management style involves anticipation and preparation for future events or problems before they occur. This style focuses on prevention rather than reaction and emphasizes planning, foresight, and taking preventive measures to avoid potential issues or, where possible, reduce the impact of potential problems.

Reactive management style

A reactive management style is based on responding to problems or situations after they occur. It involves addressing issues as they arise and finding solutions to resolve them. This style focuses on fixing problems rather than prevention and emphasizes short-term focus and dealing with things along the way.

Are Proactive or Reactive Managers better?

In short, not necessarily. A leader will need to understand both reactive and proactive management styles. They may have a natural tendency towards one style but need the skills to know when to apply each style. 

Identifying the difference between proactive and reactive management styles will assist leaders in making decisions about which style is required in different situations.  

Comparing Proactive and Reactive Management Styles

Proactive Management Style Positives

There are four key positives of a proactive management style; including

  • Strategic planning
  • Better resource allocation
  • Enhanced innovation
  • Develop preventative measures

Let’s take a closer look at each.

  1. Strategic planning: promotes long-term planning and strategic thinking. It encourages leaders to set clear goals, develop comprehensive strategies that respond to changes in the business and industry environment, and allocate resources effectively to achieve those goals.
  2. Better resource allocation: helps leaders to plan and allocate resources efficiently and effectively. By anticipating future needs and challenges, leaders can appropriately allocate resources such as finances, personnel, and equipment to achieve business goals.
  3. Enhanced innovation: encourages innovation and creative ideas. By anticipating future trends and market demands, leaders can foster a culture of continuous improvement and innovation. Teams and individuals will have input into developing new products, services, and processes to help businesses and teams stay ahead of the competition and drive growth.
  4. Develop preventive measures: improves leaders’ ability to assess situations quickly, mitigate risks, and minimise negative impacts before they lead to bigger problems. By assessing future events and changes, leaders can develop measures to reduce the impact on operations, customer satisfaction, and profitability.

Proactive Management Style Considerations

There are three key considerations of a proactive management style; including

  • Resource-intensive
  • Uncertainty
  • Unnecessary concern

Let’s take a closer look at each.

  1. Resource-intensive: requires dedicated time, effort, and resources to anticipate, plan, and implement preventive measures. It may involve conducting market research, risk assessments, and scenario planning. 
  2. Uncertainty: Despite proactive measures, the future is still uncertain, and businesses and teams may only sometimes accurately predict or prevent all potential problems. External factors such as changes in the market, regulatory environment, or resourcing disruptions can still cause an impact.
  3. Unnecessary concerns: are likely to appear through the process of trying to anticipate future events and challenges and putting in place a plan for scenarios that may not eventuate.

Reactive Management Style Positives

There are four key positives of a reactive management style; including

  • Quick response
  • Short term focus
  • Flexibility
  • Reflection

Let’s take a closer look at each.

  1. Quick response times: allows leaders to respond quickly to problems or situations as they arise. It emphasizes finding solutions to address issues promptly and minimizing their impact on operations, customer satisfaction, and profitability.
  2. Short-term focus: it can be advantageous when short-term actions are needed to resolve immediate issues. It may not require extensive planning or resource allocation, making it more feasible and practical for specific problems.
  3. Flexibility: allows leaders to be more flexible and adaptive to changing situations. It enables leaders to respond to unexpected events or challenges and make decisions on the spot without being constrained by pre-planned strategies or processes.
  4. Reflection: allows businesses and teams to reflect on how they respond to a problem and situation. Documenting the allocation of resources such as finances, personnel, equipment, and innovation will enable teams to increase responsiveness.

Reactive Management Style Considerations

There are three key considerations of a reactive management style; including

  • Lack of foresight
  • Higher Costs
  • Unnecessary Concerns

Let’s take a closer look at each.

  1. Lack of foresight: focuses on addressing issues as or after they occur, which may result in missed opportunities for prevention or early intervention. Leaders may find themselves constantly firefighting and repeatedly dealing with the same issues without addressing the root causes.
  2. Higher costs: may result in higher costs due to unplanned expenses associated with problem resolution. Businesses and teams may need to invest in emergency measures or rush to find solutions, which can be costly and impact profitability.
  3. Unnecessary concerns: are likely to appear through addressing events and challenges as or after they occur. It can cause unnecessary concerns mentally and physically amongst employees for scenarios that could have been anticipated. Employees may find themselves in a situation where they are operating under pressure and stress, which frequently can cause burnout.

    Examples of Management Styles

Now that we understand the benefits and constraints of using a proactive or reactive approach let’s look at some examples.

What are some ways to be a proactive leader

  • Developing a Human Resources Strategic Plan that supports your business plan will enable your business to have the right resources to support your business goals.
  • Regularly meet with your employees, get to know each other, build trust and support each other.
  • Address performance management early to support your employees to perform their best and set clear expectations on what is expected of them.
  • A robust reporting framework will enable leaders to identify trends and roll out initiatives in advance.
  • Care for your employee’s health and well-being and invest in what engages and motivates them to be in the best frame of mind to perform their role.

What are some of the ways to be a reactive leader

  • Unanticipated customer or support needs increases may occur during peak times of the day, month, or year. A leader’s ability to make quick adjustments to resourcing can improve the experience for everyone.
  • Emergency or incident may occur, and a leader’s ability to assess the situation, reallocate resources and provide the necessary support can make all the difference. 
  • Developing a structure or template for reflecting on reactive situations can help to gather the necessary information and to provide insight into future events and challenges.

Real life examples of Management Styles

If we were to put some of these into practice, this is what they would look like.

Poor employee performance

Poor employee performance can be caused by various factors, including lack of motivation, insufficient training, personal issues, or simply a mismatch between the employee’s skills and job requirements. In this scenario, let’s assume that an employee consistently misses deadlines, produces low-quality work, and has received negative feedback from clients or colleagues.

A proactive manager would take a more preventative approach and address the issue before it becomes a bigger problem. They would start by setting clear expectations and goals, and providing feedback and coaching.  They would offer additional training or resources if needed, and providing support to help the employee improve their performance. A proactive manager would also actively seek to understand the root causes of the poor performance and work with the employee to address them.

In contrast, a reactive manager would wait until the situation has escalated and may take a more punitive approach. This includes issuing warnings or terminating the employee’s employment. A reactive manager may also focus more on the negative consequences of poor performance rather than addressing the underlying issues.

Ultimately, a proactive approach to managing employee performance can prevent issues from escalating and foster a more positive and productive work environment.

Unplanned resignation

An unplanned resignation can have a significant negative impact on small businesses. It can create a sudden gap in the workforce, leading to decreased productivity, increased workload for remaining staff, and potential loss of business opportunities. 

A proactive manager would have contingency plans to address such a situation. This includes cross-training employees and maintaining a pipeline of potential candidates for key positions. They would also communicate regularly with employees to detect potential issues early and address them before they escalate.

A reactive manager, on the other hand, may panic and make hasty decisions that could exacerbate the situation. They may scramble to find a replacement, neglecting to consider the cultural fit and skillset needed for the role. They may also fail to provide adequate support to the remaining employees, leading to a higher risk of burnout and turnover. 

Ultimately, a proactive approach is more likely to minimize the negative impact of an unexpected resignation and ensure the continuity of operations can have a significant negative impact on small businesses.

Unplanned ill customer

In the event of an unplanned ill customer in a restaurant, a proactive manager and a quick-thinking, trained reactive manager would be able to respond effectively. 

A proactive manager would have policies and procedures in place.  They would also have staff training, to ensure they are equipped to handle medical emergencies calmly and professionally. They would take swift action to assist the customer, ensure their privacy and comfort, and contact emergency services as needed.

A quick-thinking, trained reactive manager would use their experience and training to assess the situation and take appropriate action quickly. They prioritize the customer’s safety and well-being, communicate effectively with staff and emergency services, and make decisions calmly and effectively. Ultimately, both approaches can effectively respond to an unplanned ill customer in a restaurant, provided that the manager is prepared and trained to handle such situations.

Apply a blend of Management Styles

For a leader to positively influence and motivate an individual and a team, individuals need to understand reactive and proactive management styles. They need to have the skills to know when to apply each style. 

As a leader, you can’t always accurately predict future events and challenges before they occur, and you must be able to respond to unexpected events and scenarios. By applying a blend of management styles and fluidly moving between the two, a leader will increase their effectiveness and trust with their teams and the individuals within them.

 

Contact Small Business Society to develop a plan for your leaders.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

 …….

Sign up to Small Business Society and receive our newsletter each month plus other great resources to assist you on your Human Resources journey.

* indicates required

 

About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

Looking for more information on the various stages of the employee life cycle or Human Resources in
general?  The following may interest you.

Articles to assist you leadership development:
Develop successful leaders and managers
Help your leaders lead

For further articles to assist you with your staff engagement:
Effective employee engagement
Staff engagement through a healthy work environment

Do you know your Human Resources terms?
15 must know HR terms

Plus lots more information and advice:
Small Business Society Blog