- Businesses pay up to $40,000 to avoid unfair dismissal claims
- Managing poor performance of staff a key issue
- Cloud-based HR programs provide templates and advice
A painting company which fired a painter for not following his work schedule, being involved in a fight and swearing at his manager had already given him several warnings in the past two years.
But the Fair Work Commission said the company had failed to follow due process and found in favour of the dismissed painter.
Businesses typically turned to HR lawyers and consultants after an issue had flared up and were often unequipped to deal with legislated employment requirements. Inexpensive cloud-based HR services were helping business owners write their own staff contracts and avoid unfair dismissal claims.
Two Australian HR-focused cloud programs, Enable HR and Workforce Guardian, worked in a similar fashion. They used specialist law firms to create templates for employment contracts and a library of advice for scenarios such as unfair dismissal, setting holidays and performance reviews.
Unfair dismissals were a growing risk. Often businesses paid “go-away money” of $2,000 to $4,000 dollars on average to stop ex-employees proceeding. Some payments were as high as $40,000.
“Employees are far more educated now than they’ve ever been. There are more risks associated with not just the (unfair dismissal) application but defending and settling it,” said Richard Breden, managing director of Enable HR.
Issues with employment contracts and performance management could also cost a business thousands of dollars, even when not prompted a complaint.
The Fair Work Ombudsman has conducted thousands of audits to check staff conditions and documentation. It has aggressively enforced the law with heavy penalties for each breach.
Businesses are often reluctant to be proactive in managing employees because of fear of reprisals
“There are provisions in the (employment) Acts that can destroy a small business and destroy individuals. Regardless of how big or small you are you need to comply,” Breden said.
Companies selling HR cloud services claimed they could assist or even replace a part-time HR person in larger businesses. A 50-person business could save tens of thousands of dollars by avoiding the need to hire an HR specialist.
“One of the big business drivers for enterprise clients is that they can save lots of money on HR admins by providing (HR advice) directly to line management,” Breden said. Instead of employing an HR manager to instruct line managers in handling staff they can be transferred into more valuable areas such as training and skilling.
Small businesses tended to push aside HR issues altogether as a non-critical aspect to operations. An admin assistant or receptionist usually held responsibility for writing up employment contracts in smaller businesses, Breden said.
A lack of expertise in managing HR issues exposed a business to legislative breaches and accompanying penalties, as well as unfair dismissal claims.
“There is no way you can expect someone to keep the business aware of every aspect of (HR legislation) without some support,” Breden said. “The benefit (of a cloud HR service) is that it’s constantly kept up to date by one of the best HR law firms in the country.”
The most popular area of HR was performance management, Breden said. Scheduled reviews as well as managing employees through poor performance or conduct were hot topics.
“We’re finding that businesses are often reluctant to be proactive in how they manage employees because of fear of reprisals or the cost of these transactions,” Breden said. “Giving them tools to be proactive and track history to defend their actions is really important.”
Image credit: Enable HR