Things to Consider When Issuing New Employment Contracts

When appointing an employee, there are several key areas to consider: status, classification, wage rates, compliance, policy and procedures, letter of appointment, new employment contract template and employee induction.

Status – Permanent / Casual

As stated above, determining the status of a new employee is crucial in the pre-employment phase. If the employee is to be a permanent part time employee, the hours and days worked must be determined in new employment contracts and most awards and many workplace agreements require this to be confirmed in writing.

 

Classification

This means looking to the industrial instrument applicable to the employee and determining what level the position falls under. This may require an examination of the duties, the skills and qualifications required as well as examining indicative roles. It is important to note that Fair Work Australia has focused more on the nature of the work and what jobs the employee actually undertakes, rather than the title or position they occupy when determining the appropriate classification. In "Southern Automobiles v Ransom (2000) 47 AILR 4 it was stated that regard has to be given to the "major and substantial function, purpose or object of the engagement" over the job title. Classifications can be found in Schedule B of Modern Awards or in the applicable workplace agreement or the organisation's job matrix.

Wage Rates

Consideration needs to be given to the classification of the employee and their age to determine the appropriate minimum rate of pay. Following that, any applicable penalties, loadings and allowances should be determined within new employment contracts.

Compliance

Record Keeping:

On appointment, an employee's file must be opened in order to comply with record keeping requirements. This employee record must be kept for a minimum of 7 years.

Employee records include:

-      name of employee;
-      name and ABN of employer;
-       status of employment (permanent full-time, part-time or casual);
-       commencement date;
-       remuneration paid (gross and net);
-       deductions made;
-       hours of work (for part-time and casual employees whose rate of pay is determined by period of time worked);
-       incentive based payments, bonuses, loadings, penalty rates or other monetary allowances;
-       overtime hours (for employees entitled to be paid overtime);
-       leave records (leave taken, balance of leave, cashing out agreements);
-       superannuation details; and
-       termination details (if this should occur).

Payslips

Payslips must be provided to each employee in either hard or soft copy after each pay period.  A pay slip, in order to be compliant, must include the following details:

-       the employer's name;
-       the employee's name;
-       the period to which the pay period relates;
-       the date to which payment was made for this pay period;
-       the gross amount of the payment;
-       the net amount of the payment;
-       any amount paid which is a bonus, allowance, penalty rate, incentive based payment or other separately identifiable entitlement;
-       the ABN of the employer;
-       any deductions made including the amount and to whom the payment was made;
-       if applicable, the amount of the hourly rate of pay;
-       the number of hours employed at the hourly rate;
-       the amount of the payment at that rate;
-       if paid at an annual rate, the rate and the payment period that the payment relates to;
-       if superannuation is paid, it must show the amount paid, the fund into which it is paid, including the name and number.

Fines of up to $1650 per contravention can be issued for neglect of these obligations.

Tax File Declaration

It is important that when the employee commences employment they complete the required tax file declaration form. This will determine how much tax is to be paid out of the employee's wage each pay period.

Fair Work Information Statement

The Act obliges employers to provide a copy of the Fair Work Information Statement for all new employees after 1 January 2010. This document sets out the entitlements of employees under the National Employment Standards outlined in the Act. A copy of this can be found at Australian government website.

Most Modern Awards and many workplace agreements require that any industrial instrument covering the employees, as well as the National Employment Standards  be displayed in a conspicuous place in the workplace.

Policies and Procedures

Policies need to be communicated to employees and training provided as required, ensuring that new employees are aware of the requirements of the business. Access to policies and procedures should be given to employees through an intranet, a handbook, new employment contracts, a noticeboard or other means, to ensure that employees are well informed and have ease of access to any policies and procedures. It is preferable that employees acknowledge in writing that they have read procedures.

Letter of Appointment

Once an offer of employment has been made, committing the agreement to writing simply evidences the fact that a new employment contract has been entered into. A letter of appointment allows for the business to confirm with the employee such things as employment status ie permanent or casual, full time or part time, classifications, date of commencement, hours of work, any probation period, notice of termination provisions, particular matters of importance in the workforce and reference to company policy or procedures. A letter of appointment can also prompt any changes in employment terms to be documented which will assist you if a dispute arises. For example, you might agree to flexible working arrangements with an employee for a short time and it is important that the change in employment be recorded.   Template letters of appointment are located on OSHR and provide a helpful guide as to what sort of information should be given to an employee at the time of employment.

Induction of Employees

Your employee should be inducted into the business to enable them to be well acquainted with the policies and procedures, the workplace itself and the conditions of the workplace. This includes two general types of induction:

Familiarisation with Workplace

An employer should take the time to induct employees into the workplace. This could include the handing over of any keys, directions to lunch room or bathrooms, work stations, introduction to fellow employees, introduction to telephone or computing systems or other workplace specific information.

OHS Site specific

An OHS induction is vital to the safety and well being of any new employee.

Safety procedures for the business should be explained and understood by the employee, including those in place for fire evacuation, identifying risks, manual handling, OHS consultation, methods of safe work for machinery or tools used during employment and the reporting of injuries. In addition, employees should become familiar with OSHR policies and procedures Employers should ensure that the employee has adequately understood the procedures, perhaps through a checklist or quiz at the end of the induction.