Good people are at the heart of every successful business. So, it goes without saying that effectively and efficiently managing the human resource function within a business is fundamental to its success.
For most small and medium sized businesses, however, the reality is that HR is often intertwined into general business practice as opposed to being its own function, leaving much room for improved compliance and profitability.
Attraction, retention, remuneration, safety, compliance and training are at the core of getting the right people in the right role at the right time. These all play a vital part in the future prosperity of a business, but in order to excel in any one of these areas, HR compliance is key.
Why is HR compliance important?
Simply put, HR compliance is important because all businesses, big and small, must comply with employment laws, rules and regulations. Fair Work Inspectors have the right to enter a business at any time to investigate possible breaches of workplace laws including entering the premises, conducting interviews, requesting the names and addresses of employees, requesting relevant documents or records and issuing compliance notices.
With increasingly complex and regulated workplace laws, rules and regulations in Australia, businesses that are not HR compliant are exposed to risks of fines, significant back-payment bills, adverse publicity, reputational damage, litigation in court, reduced employee performance and increased turnover.
What is the real cost of a poorly managed HR function?
In a candidate driven market with a worsening labour shortage, businesses simply cannot afford not to prioritise effective HR management and compliance. The average cost of replacing employees can range from 30% of the annual salary for low-wage, high turnover roles to more than 150% of the annual salary for highly educated executive positions. This combined with typical employee turnover rates means that businesses across all sectors are losing millions of dollars on vacancies. Therefore, the recruitment, management and retention of employees is more important than ever.
How can HR compliance and best practice help throughout the employee lifecycle?
Businesses should look at dedicating significant time and resources to developing, implementing and maintaining best practice when it comes to effective HR management. In turn, this will not only protect its most important asset – its employees – but will also increase profitability.
Each business will have different needs and requirements, so understanding the specific HR obligations of the business throughout the employee lifecycle will not only help to attract and retain employees, but also prevent exposure to any risk.
Hiring employees – Is the position description up-to-date? Does the job advertisement communicate the requirements of the role effectively? Are the interview guidelines and questions relevant and lawful? What is the process when screening candidates and conducting reference checks? Does the employment contract comply with all applicable workplace laws?
Paying employees – Which award or agreement is applicable to each employee? What is the minimum wage for the role? Are there any penalty rates or allowances? How often should employees be paid? Are there any independent contractors, casuals or seasonal workers? Which employees are entitled to employee benefits such as superannuation and leave?
Keeping records – Are payslips, timesheets and rosters recorded accurately? Are these records stored adequately?
Offering leave and other benefits – What is the leave entitlement for each employee i.e., annual, personal, carer’s, family and domestic violence, community service, long service, parental? Are employees entitled to request flexible working arrangements?
Dealing with difficult or underperforming employees – What is the difference between discrimination, harassment and bullying in the workplace? What course of action can lawfully be taken when dealing with each? How should underperforming employees be dealt with? What steps can be put in place to improve employee performance and productivity?
Ending employment – What is considered appropriate workplace behaviours? Does the code of conduct or applicable policies outline these? Are employees aware of this? What are the employer’s rights and obligations when it comes to dismissal, notice and final pay for employees?
The current labour market shows an increasing demand for skilled and motivated staff, who are more mobile between roles due to low unemployment. This means vacancies and non-compliant HR practices could cost businesses more time and money than ever before. Focusing on HR compliance can foster a fair, safe, ethical, diverse, inclusive and profitable workplace which in turn will help attract and retain the right people.
At Cornerstone HR, we provide outsourced HR support to businesses ensuring compliance and best practice, and assist with all employee matters. We provide HR support at any level, and will tailor our service to the needs and requirements of your business. If you require HR assistance, get in touch with our team for an obligation free chat – we can help!
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