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Managing employment-related risks in the workplace

A SMALL to medium business (SME) employing staff is faced with essentially the same tangle of state and federal regulation as large-scale employers, including publicly listed companies.The federal government’s recently launched Work Choices has as one of its stated objectives to disentangle and simplify this regulation. However, an SME can only really take advantage of these legislative changes if it is a constitutional corporation, in other words, a company. Meanwhile, the employment-related risks an SME faces in the workplace on a day-to-day basis remain many and diverse. The first step in managing these risks is to identify them, then assess the priority which they should be dealt with and then make the changes necessary to manage these risks.Viewing the employment relationship as a continuum spanning the recruitment phase, to engagement, to employment and concluding at the termination of employment, assists in the risk evaluation process.Recruitment Risks at the recruitment phase have been dealt with previously in this column, but a word of caution. If your sixth sense is telling you to be wary, don’t proceed with the hiring. If the current skills shortage prevents you from heeding this advice, read on.Engagement This phase includes making an offer of employment, agreeing terms and conditions of employment and recording them in writing. Risks during this phase are many and include: making conditional offers of employment; lack of clarity about what has been offered and accepted; written offers not reflecting verbal offers; no limits placed on the time within which an offer can be accepted; employees commencing work before final agreement has been reached or before clearance is obtained on conditions previously imposed (eg results of a pre-employment medical check or drug screening); lack of awareness of minimum terms and conditions of employment imposed by legislation; award or certified/enterprise bargaining agreement; uncertainty as to employee or subcontractor status; part-time or casual; uncertainty as to whether the written documentation should be a letter of appointment, contract of employment, employer/employee agreement or an Australian Workplace Agreement; and whether the documentation needs to be registered, stamped or similar. Assessing priority in dealing with these risks depends not only on the immediate needs of the SME’s business, but also the workplace culture in place, short- and long-term business plans, the sophistication of the in-house human resources function, its preparedness to accept change and innovation in hiring staff and its financial position. To assist in prioritising, it is worth remembering the legal risks an SME is exposed to, including claims for breach of an award, unlawful discrimination (eg in choice of terms and conditions offered, non-union membership; disabilities etc), unfair dismissal or unlawful termination for misleading and deceptive statements made.Employment In addition to some of the risks already identified, there are people/management type issues and performance/conduct management issues. The risks associated with these, if not resolved in a timely and mutually beneficial manner, could escalate and lead to industrial disharmony, staff losses, union involvement, industrial action, workers’ compensation claims for work-related stress or claims for unlawful discrimination for, among other things, sexual or racial harassment.For example, an employee complains over time to his employer about his workload. The employer takes little or no action. The disgruntled employee discusses his situation with colleagues, who suggest he should speak to the union representative.During this time, the employee’s productivity level starts falling away and he starts losing interest in his work. At his performance review, the comments about him are negative and he is told that unless his performance improves sharply, there may be a parting of the ways.The employee feels betrayed. His concerns about his workload were not being taken seriously and he is now being blamed. There is no recognition for his loyalty or good work over the years. This causes the employee emotional turmoil and anxiety. He sees his doctor, who certifies him unfit due to work related stress.On receipt of the certificate, the employer feels the employee’s claim is not genuine and wants to sack him. Managing this scenario requires balancing competing interests and risks.It would be wise for the employer to develop strategies with various options so as to be better prepared to deal with a range of possible different responses by the employee or his representative.If this scenario causes concern, it would be advisable to seek professional advice before acting.Beyond these human resources issues, workplace behaviour, if allowed to get out of hand, could result in criminal prosecutions. Not necessarily against the employer, but against colleagues.Imagine where one employee takes out a restraining order against a fellow employee, both of whom normally work side by side. What arrangements would the SME need to make to allow work to continue as normal? Termination When the employment relationship has broken down, the employer has the right to terminate the employee’s employment. However, if the termination is unfair or unlawful, the employee may have recourse to, among others, the Industrial Relations Commission or the Equal Opportunity Commission.Generally, to minimise the risk of an unfair dismissal claim, a valid reason to terminate (eg poor performance, misconduct, operational requirements) and the procedure adopted in effecting the termination, must be fair.An SME may still be liable for an unlawful termination where an employee’s employment is terminated on discriminatory grounds (eg disability, union membership, pregnancy etc). Work Choices has not changed this.Where SMEs are concerned about managing employment and related risks in the workplace, professional advice should be obtained at the earliest opportunity.Maria Saraceni is a partner at Jackson McDonald Lawyers and the head of the firm’s workplace relations practice.

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