According to a survey conducted by the Human Resources Director magazine, HR professionals are spending an increasing amount of time managing legal and compliance work.

HRD’s Global HR survey, which garnered responses from more than 4,400 industry professionals around the world, including Australia and New Zealand, found that there is widespread caution around legislative changes. Approximately 30% of HR professionals reported that they are ‘strongly involved’ in identifying risks and ensuring compliance.

Always a challenge

People and regulatory issues certainly keep more than a handful of HR Directors awake at night. “Keeping abreast with breadth and depth of legislation is always a challenge,” is how one Australian respondent put it. While a respondent from New Zealand, commented, “We are facing huge H&S legislation changes and getting the business to buy into those and understand them fully is going to be challenging.”

As another respondent noted, “Just having the stamina to stay in this profession and cope with the legislative changes is hard enough.”

And these are HR professionals talking. For any owner or manager of a small to mid-sized company you probably don’t need a survey to confirm that HR compliance is one of your biggest challenges. It’s a fact of your business life, day in, day out.

But I think the really scary thing for non HR professionals is that when it comes to HR compliance, regulatory changes and risk, in most cases you don’t even know what you don’t know.

Always changing

Rules and regulations are always changing so it’s almost impossible for companies to keep current while also running and growing a profitable business.

Indeed, there have been a number of changes in workplace legislation such as the harmonisation of national Workplace Health & Safety laws; the introduction of workplace bullying laws; as well as annual changes to the minimum wage and Award rates that you need to keep a close eye on.

Contract and temporary workers

Just consider, for example, how the employment landscape is changing. Contract and temporary workers are expected to make up as much as half of Australia’s total workforce by 2020.

As contracting increasingly becomes a long-term career option for tradespeople and professionals alike as well as a prerogative for employers, the legal requirements for engaging contract workers require close scrutiny. The practice (whether deliberate or not) of misrepresenting an employer/worker relationship as one in which the employee provides a contract for services, known as sham contracting, attracts stiff penalties.

As an employer, ignorance is no defence. Nor is simply paying your contractors over the “Award” rate. Not fully understanding the law or the implications of hiring a worker as a contractor when they really should be classed as an employee makes no difference. If you are in breach of the regulations, you will be fined. And fined heavily. That’s why it is important to maintain an up-to-date understanding of how employment legislation in relation to the employment of temporary workers and contractors.

Hefty fines

As a recent case in point, the family trust of Gary Morgan from Roy Morgan Research has been fined more than $300,000 for a sham contracting arrangement used to hire a maintenance crew at a Melbourne city property.

The company argued that the workforce, made up of tradesmen such as electricians, carpenters and labourers, wanted to remain contractors and were paid above the Award rate.

However Fair Work Building and Construction believed that the family trust, Linkhill, had failed to comply with its obligations under workplace law. The employment watchdog argued that the company had a significant relationship with the workers and so they should have been classed as employees, and not hired as independent contractors.

The Federal Circuit Court ruled that the 10 tradesmen were deprived of $178,941 in unpaid wages and statutory entitlements such as annual leave, superannuation, travel and meal allowances, because the company had misrepresented their employment relationship. The company has been ordered to backpay these wages.

Linkhill has appealed the Judge’s findings, and will be appealing the penalty order.

Legal responsibility for all workers

Another common mistake that business owners make is assuming that they have no legal responsibilities for temporary workers because they’re not employees. However, it’s important to understand that the legal definition of a worker includes employees, outworkers, apprentices, trainees, students gaining work experience, volunteers, contractors or subcontractors and their employees.

Therefore, as an employer, you can be held liable for failing to take proactive steps to prevent unlawful behaviour such as discrimination, harassment and bullying of your entire workforce.

WHS changes

Likewise, the changes to work, health and safety mean that you have to make WHS compliance a priority for all your workers. You need to identify ‘officers’ under the harmonised WHS legislation and ensure they are able to adequately discharge their obligations which involve conducting regular risk assessments and ensuring that adequate supervision and training is available to all workers (not just employees) and officers.

Primary challenge

As HR professionals struggle to understand the changes and meet compliance requirements and reporting, it’s common for owners and managers of small businesses to feel totally overwhelmed.

That’s why you can rely on enableHR to reduce the uncertainty around people and HR and WHS regulatory issues that keep you awake at night. enableHR gives you the  benefits of corporate HR system, and eases the challenges of managing people, empowering you as an owner or manager to deliver day-to-day HR and WHS management efficiently and cost effectively.

Contact us at Human Resource Services today to find out more about enableHR – 07 5530 1571