Companies with 50 or fewer employees rarely have a formal human resources department; instead, duties from recruiting to benefits administration are scattered among of colleagues–an accounting manager might manage a payroll vendor while mid-level employees write job listings, and a manager makes key hires.
A report by the University of Melbourne shows that the Fair Work Ombudsman was more likely to engage in litigation against small businesses rather than medium to large ones. One worrying sign for small business employers is that the FWO is strategic in picking its targets and it usually wins with a 95% success rate. Research has shown that successful claims have risen principally because small businesses (under 100 employees) are more likely to get decisions wrong because of their lack of HR expertise.
But what do the fines look like ‚ ¨ let’s use unfair dismissal as an example;
Where compensation is payable, it is capped at the lesser of six months pay (24 weeks) or the equivalent of exactly half the current unfair dismissal high income threshold, which, as of July 1 2014, is $133,000. This means the maximum amount of compensation that can be awarded is $66,500.
This amount of compensation could have a serious impact on the cash flow of the average Australian small-to-medium business. The cost for the employee to lodge the claim is also insignificant in comparison to the amount of compensation they could receive if the claim is successful.
Between July 1, 2013 and December 31, 2014 the FWO received 8365 requests for assistance from employees in Queensland. Of this 1235 were requests from the Gold Coast which is the highest of any regional centre in Queensland
The Below table shows a breakdown of the contents of settlement agreements made at conciliation. The table shows that 49% of monetary payments are below $4000 and 79% are below $8000.
Where agreements reached at conciliation involve the payment of money, no distinction is made between payment of compensation and payment of outstanding entitlements that may form part of the agreement.
Over the years, the role of Human Resources (HR) has been labelled as the hiring and firing component of an organisation. Hiring and firing sounds simple, so why should a small business incur the cost of engaging a Human Resources Professional?
In reality, HR is very encompassing, complex, and time consuming. HR Professionals are required to wear many hats and be knowledgeable in:
- employment laws
- human rights
- organizational behaviour and structure
- health and safety
- compensation
- benefits
- talent acquisition
- and policy development, to name only a few functions.
The challenge in having a limited understanding of the role of HR is that perception of task simplicity leads many business owners to the do it yourself approach. By being a self-reliant small business, you may lack the necessary HR comprehension, miss keeping up to date on new laws, standards, and mandatory people-related requirements; potentially leading you to take on risks, you are not aware of.
In consulting a Human Resources Professional, you will receive appropriate guidance on important legislative updates such as, minimum wage increases, overtime compliance, or even health and safety trainings to ensure compliance and minimize risk to your business. You may even gain some new knowledge on the importance of policy development, and the retention and development of top talent. We can also ensure that you have effective policies and procedures in place and frameworks to support you legal compliances and people development
