But gaining a clear understanding of what’s legal and what’s expected of you as an employer can help to make it less intimidating – and help you to avoid common potential legal pitfalls.
We asked Andrew Jewell, the principal lawyer with Jewell Hancock Employment Lawyers, to explain five HR legal dangers employers should avoid.
- Adding broad restraint clauses
A restraint clause in an employment agreement normally applies when a company wants to protect their interests when an employee leaves the business.
Typical restraint clauses may prevent departing employees from competing against the company (known as a non-compete clause) or from actively pursuing former clients to follow them to their new place of employment (non-solicitation clauses).
“Employers should avoid general restraints on competition which are both unenforceable but also unreasonable in the real world,” Jewell says. “Why would you want to stop someone earning a living?”
Jewell adds however that if you sought to impose a restraint which prevents a salesperson selling to your clients for a period of three months, it would likely be upheld. “The basic rule is that restraints are only enforceable where reasonable,” he says.
“More narrow restraints are more likely to be enforceable than broader ones, so a more reasonable employer is usually rewarded with legal protection.”
- Using contractors to avoid employment obligations
There are many genuine reasons where it makes sense for a business to engage a contractor rather than hire an employee. However, Jewell notes that sometimes business owners are tempted to engage contractors to avoid the administrative costs, as well as the obligations associated with employment.
“There are many examples of claims being brought by apparent contractors in which employment entitlements are ordered to be paid, which can total hundreds of thousands of dollars,” Jewell says.
“The lesson for employers is to err on the safe side by engaging employees directly, rather than contractors if a longer-term relationship is sought or arises.” Jewell explains this will not only reduce legal risks, it will also help to facilitate a more certain relationship for both you and the employee.
- Avoiding making casual employees permanent
The question of when you should make a casual employee into a permanent team member can seem tricky to navigate. But according to Jewell, it’s straightforward.
“If a genuine, casual, relationship is sought – one where hours fluctuate depending on a roster and employees can reject shifts without penalty – then there is no risk of breaking the law,” he says.
“But if the relationship has a stronger level of commitment, or is intended to be longer term, then employers should be eager to convert employees to full-time in order to avoid legal risks.”
- Preferencing internships over employment
“Internships are another potential legal minefield,” Jewell says. If a business obtains a benefit from a worker it should pay for that benefit.
Jewell notes that genuine internships can be run through education providers, such as universities and TAFEs, but outside of those formal settings employers should usually employ individuals and pay them their worth (subject to minimum wage requirements). “Otherwise, a traineeship or internship can very quickly have the look of an employment relationship,” he adds.
- Having inconsistent processes
According to Jewell, employment law claims often increase when inaccurate or inadequate records or documentation are kept. Having robust, properly recorded processes is important.
“Formal processes provide certainty for employers and employees alike, and these can often avoid issues that might lead to conflict in the workplace,” he says. “For example, if an employer has a strong anti-bullying policy and process, then issues might be able to be dealt with before any legal proceedings are issued.”
Being aware of these common HR pitfalls can help you ensure that you’re operating within the correct legal frameworks. If you have questions about what’s legal and what’s not, get in touch with Fair Work Australia or speak to a specialist employment lawyer.
Information provided in this article is general only and does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including appropriate legal advice) on whether it is suitable for your circumstances.
