Five Employment Law Essentials Every Small Business Should Know

Managing staff as a small business owner can be challenging. Whether you have casual staff, full-time employees or contractors, understanding your obligations is critical to running a compliant workplace.

This article outlines five key areas where employment law commonly affects small businesses.

1. Employee or Contractor?

Many small businesses hire independent contractors to assist with work. However, it’s important to understand whether someone is legally a contractor or actually an employee.

Factors that indicate an employment relationship include:

• The business controls the work and hours

• The worker is not running their own business

• The worker is paid regularly (e.g. weekly or monthly)

Incorrect classification can lead to underpayment claims, superannuation obligations, and ATO penalties.

2. Written Employment Contracts

All employees should have a written contract outlining their employment terms. This includes job duties, pay rates, leave entitlements and termination procedures.

Verbal agreements or casual arrangements can lead to disputes. Written contracts help clarify rights and responsibilities.

3. Pay and Entitlements

Employers must comply with:

1. National Employment Standards (NES)

2. Modern awards (if applicable)

3. The national minimum wage

Check that you are paying the correct rate for the employee’s classification and industry. Also ensure you are providing the correct type and amount of leave.

4. Ending Employment Lawfully

If you need to dismiss an employee, it must be for a valid reason and carried out through a fair process.

This may include:

• Warnings and performance reviews

• Written notice

• An opportunity for the employee to respond

Unfair dismissal claims can arise where employers do not follow proper procedure.

5. Record Keeping

Employers are required to keep accurate records of:

• Hours worked

• Pay slips

• Leave balances

• Superannuation contributions

These records must be kept for at least seven years. Failure to keep them can result in penalties.

Final Thoughts

Employment law compliance is important for small businesses and mistakes can be costly. Get legal advice to stay compliant and avoid claims.

If you are unsure, review your contracts, awards and entitlements, or seek advice from an employment lawyer.

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This blog is intended for general information purposes only and does not constitute legal advice. The content is based on Australian law and may not be current at the time you read it. Legal requirements may vary depending on your circumstances. Always seek independent legal advice tailored to your specific situation before acting on any information provided.