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Businesses face ‘verbal’ risk

NEW research shows many small businesses are facing risk and expense by relying on verbal agreements with their staff over work conditions.

The research by Curtin Business School’s School of Management head Lawson Savery found the cost of operating under multiple awards or agreements was high.

He said small firms could save money by rationalising those arrangements.

Curtin Small Business Unit executive director Tim Mazzarol said too many firms operating under workplace contracts relied solely on verbal agreements.

“This is fraught with risk and leads to a proliferation agreements, resulting in excessive complexity and cost,” Dr Mazzarol said.

Professor Savery said many small business owners did not know how to negotiate a workplace agreement.

“They are often great at the technical side of their business but don’t have the human resources expertise,” he said.

“A lot of small business owners are starting to look around at what other people in similar industries are paying their staff.

“However, you end up underpaying your staff if they are more efficient and if your staff is less efficient and you are paying them the same as someone else you could go broke.”

For the past three years the WA Department of Productivity and Labour Relations has been running a free Workplace Liaison Service to help small businesses come to terms with workplace agreements.

The service is now being extended into regional areas.

DOPLAR officers will go out to a small business and go through the employment condition options with both the proprietors and staff.

Together with the Small Business Development Corpora-tion, it has also developed a booklet on workplace agreements which includes examples. The booklet is due for release in December.

Professor Savery said some small business owners were turning back to the old workplace award structure.

“I don’t think businesses can go back to the award structure in the present political climate,” he said.

“A lot of things have been cut out of awards. Workplace agreements are starting to take over.

“This is a major issue for small businesses. They need to think about how they can get their workplace agreements into shape.”

A DOPLAR spokesman said the beauty of workplace agreements was they made small business owners think about what they needed in their business.

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