JPAbusiness managing director James Price and First IR Consultancy principal Dan Houlihan discuss practical industrial relations issues and what employers need to do to meet their IR obligations to staff.

1. Industrial Relations
Advice for Small to
Mid-Sized Businesses
Contributors:
James Price, JPAbusiness Pty Ltd
Dan Houlihan, First IR Consultancy Pty Ltd

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Table
of
Contents
Introduction
...........................................................................................................
3
Chapter
1:
How
industrial
relations
impacts
business
success
and
business
value
..
4
What
does
it
mean
for
me
as
an
employer?
.............................................................................................
5
Chapter
2:
Meeting
your
critical
IR
obligations
.......................................................
8
1.
As
an
employer,
what
are
your
critical
obligations
to
your
employees,
both
under
employment
law
and
also
to
build
a
professional
and
harmonious
workplace?
....................
8
2.
What’s
your
top
tip
for
covering
the
IR
basics?
.................................................................................
9
3.
What
do
I
need
to
consider
in
terms
of
staff
entitlements
when
a
long-­‐term
staff
member
moves
on?
..........................................................................................................................................
10
4.
What
do
I
need
to
consider
in
terms
of
staff
entitlements
when
selling
my
business?
..
11
Chapter
3:
Employment
contracts
and
employment
‘flexibility’
...........................
13
1.
Do
I
need
an
employment
contract
when
I
employ
staff
and
if
so
when,
why
and
in
what
form?
..........................................................................................................................................................
13
2.
How
do
I
introduce
employment
flexibility
in
my
business?
.....................................................
16
3.
When
should
I
seek
external
advice?
...................................................................................................
17
4.
Can
you
suggest
some
helpful
tools
or
websites?
...........................................................................
18
Chapter
4:
How
to
deal
with
employment
and
staff
disputes
...............................
19
1.
How
can
I
avoid
employment
and
staff
disputes?
.........................................................................
19
2.
If
there
is
a
dispute,
how
do
I
best
deal
with
it?
.............................................................................
21
3.
How
can
I
protect
my
business
during
such
events?
....................................................................
24
Disclaimer: The information contained in this eBook is general in nature
and should not be taken as personal, professional advice.

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Introduction
In this month’s eBook we’re focusing on industrial relations (IR) issues.
This is a huge topic and it’s not easy in an eBook to give specific practical
advice on individual situations, but a number of our
clients and readers have asked us to cover it.
To help meet this challenging brief we’ve called on
Sydney-based industrial relations consultant
Dan Houlihan from First IR Consultancy Pty Ltd.
As one of the principals of First IR Consultancy,
Dan is involved in all facets of industrial relations,
including design and negotiation of enterprise
agreements, providing written employment advice,
industrial dispute resolution, union negotiations,
and providing advocacy before the tribunals and
courts.
Dan has kindly agreed to share some of his extensive expertise with us and
has answered a range of IR-related questions in Chapters 2 to 4.
First up, though, JPAbusiness managing director
James Price discusses why it’s important for employers
to meet their industrial relations obligations, and not just
because it will keep you out of court.

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Chapter 1: How industrial relations
impacts business success and business
value
Comments by James Price
JPAbusiness Pty Ltd
When providing business performance advice and assistance to our clients,
we’re often asked for advice regarding the roles, conditions and activities of
employees in the workplace and how they relate to business performance.
One of the core components of a successful workplace is to ensure the
people resource operates in a very positive culture.
This culture needs to be
aligned to the objectives
of the business and
respectful of the
individuals contributing to
those objectives.
That internal environment
is largely influenced by the
business owner and their
senior team and how they
nurture and develop the
business’s culture.
But, of course, external
factors also have a big
influence on employee
activities and expectations.

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The people talent market is competitive and dynamic and, in Australian
business, it’s very much a global market.
Further to that, the Australian
employment market has some long-
established and regularly refined
employment protection instruments
such as the Fair Work Act, the National
Employment Standards and Work Health
and Safety (WHS) laws that underpin the
way businesses employ people across a
vast array of industries.
What does it mean for me as an employer?
It means, potentially, that keeping up with what industry, government and
the community expects from business owners in employing staff can be a
minefield.
But it also means doing the right thing with regards to your IR obligations is
a cornerstone for ensuring a solid culture within your team.
Don’t pay the price of poor IR compliance
As a business owner, if you choose to underpay your employees, not properly
record and account for their entitlements, not respect and fulfil your
obligations to them under the National Employment Standards, or tolerate an
environment that is either unsafe or disrespectful of community standards with
regards to issues like bullying, harassment and equal opportunity, you will be
penalised.
This punishment is not necessarily about getting ‘found out’ by a union or
an association representing employees, or about the government regulator
chasing you for something you’ve failed to do.
You will be penalised because your business will suffer.

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It can suffer in a number of ways:
• Poor staff retention rates;
• High absenteeism rates;
• Lower than expected performance against job descriptions;
• Poor culture and poor morale within the business impacting the
productivity of your people;
• Poor productivity impacting the business’s ability to deliver on
promises to customers in a productive and efficient way;
• Inordinate time and money taken up with employment disputes
also contributing to lack of productivity;
• Reduced business value when it comes time to sell. An astute
purchaser doing due diligence will use non-compliance in these areas
as a means of beating down the price or requiring indemnities to cover
your failings and claims that may result.
The implications of not respecting and complying with employment and IR
obligations can be much further reaching and debilitating for a business than
simply paying for a lawyer to clean up the mess.
Meeting obligations has multiple benefits
In our experience, if you as a manager or owner are at the stage of getting a
lawyer involved in an IR-related dispute or incident, you’ve missed the
opportunity to avert that risk through good people management practices.
Get it right, comply, focus on your commitments and obligations, and the
benefits will flow: your legal bills will be well reduced and your
productivity heightened.

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What if I can’t resolve a dispute in-house?
Sometimes, despite your best efforts, seeking industrial relations and legal
advice is a must because it’s the best way to address a difficult situation.
Our approach, for clients in that situation, is to introduce them to the team at
First IR Consultancy Pty Ltd.
First IR Consultancy has a wealth of practical
expertise on industrial relations issues and a
solution-orientated approach that ensures a
solid outcome.
Dan Houlihan is one of the principals at First
IR Consultancy Pty Ltd and he’s kindly agreed
to answer some of our questions in the
following chapters.

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Chapter 2: Meeting your critical IR
obligations
Comments by Dan Houlihan
First IR Consultancy Pty Ltd
1. As an employer, what are your critical obligations to
your employees, both under employment law and also to
build a professional and harmonious workplace?
From a legal point of view you have a couple of basic obligations:
1. Ensure you’re paying your employees in accordance with the law.
For most employers that will be based on an award or an enterprise
agreement.
2. Ensure you keep time and wage records in accordance with the
regulations under the Fair Work Act. That involves disclosing who the
actual employer is and the accruing of paid leave entitlements.
To build a professional and harmonious workplace, you need good
communication and structure.
These two elements are key to a professional and harmonious workplace, no
matter the size of the business.
Good communication means ensuring there is clear understanding of your
expectations and the employee’s obligations. You must also understand
that, when you’re running a business, you and your employees may have
different interests and motivations for working.

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Structure refers to ‘employment structures’ – such as understanding your
legal obligations, knowing what award your staff work under, whether your
staff member is an employee or contractor – but it also refers to structure in
terms of how you communicate with staff.
Whenever you have a conversation
with someone, write a note detailing
what you said, when you said it and
how you said it.
This means when you’re preparing to
go into what could be a confrontational
meeting with an employee, you’ve
done some work beforehand so you
can achieve an appropriate outcome
for both the business and the individual,
rather than just reacting in the meeting.
2. What’s your top tip for covering the IR basics?
On July 1 every year there is usually an increase in rates of superannuation,
minimum wages and many allowances. For example, this year there is an
increase in superannuation from 9.25% to 9.5%.
Superannuation is looked after by the tax office, so if you get behind on one
part of your business with the tax office, you can have all sorts of problems
further down the track.
So, my top tip is: make a note in your diary for the middle of June each
year, to find out what is going to happen to wages, superannuation and
allowances on July 1.

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3. What do I need to consider in terms of staff
entitlements when a long-term staff member moves on?
Check with your industry or trade association, your business advisor or a
lawyer about your legal obligations with respect to accrued leave and
superannuation and your employee’s obligations with respect to notice
to you.
You also need to have clear and structured conversations about what
property is yours and what is the employee’s. For example, you may have
provided a laptop and a dongle that has sat in the employee’s home office for
the past three years, but that is still
your property.
If you provided a mobile phone
that is now two years old and you
don’t really care about it, then be
deliberate in making it clear to
the employee that they can keep it.
These days most employees bring
their own devices and their own
phone numbers, but if you
provided the phone number you need to
think about whether you want to keep that
number.
You need to speak to your IT people to
ensure when the employee leaves they
no longer have their email address
or access to your email server or
business information.

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4. What do I need to consider in terms of staff
entitlements when selling my business?
Selling your business can be a little complicated when it comes to
employment.
When you sell your business it depends whether the buyer is purchasing:
• The company’s Pty Ltd shares, or
• The company’s assets.
Scenario 1 – Buying or selling a Pty Ltd company
If you’re selling the company – for e.g. Dan Houlihan Enterprises Pty Ltd –
then the employment and all your obligations to your employees simply
transfer to the new owner of the entity. The name of the employer may
change, but the actual employer remains the same.
If you’re buying the company and you discover the old owner didn’t pay in
accordance with the award or enterprise agreement, or didn’t give people
annual leave, then you, as the new owner, are fully liable for up to six years
of whatever the former owner has done – or not done!
As James mentioned in Chapter 1, an astute purchaser doing due diligence
will use non-compliance in these areas as a means of beating down the
price, or they could require an indemnity clause in the Purchase of Business
Agreement or a particular transfer payment to cover the vendor’s failings
and any claims that may result.
So whether you’re buying or
selling a Pty Ltd company, it
is important to ensure
employment information and
obligations are up to date and
properly disclosed.

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Scenario 2 – Buying or selling a business’s assets
In terms of the second scenario, where you’re winding up the old business
and someone is coming in and buying your assets, then the employment is
probably coming to an end.
In this case all the ‘termination of employment’ issues come into play,
including redundancy and long-service leave for employees with more than
five years service, so it would be a good idea to get some advice.
You can reduce those costs by having the new employer pick up the
employment of the old employee – this can lower your redundancy obligations.
There are particular steps you
have to take – including going to
the Fair Work Commission to get
an order recognising the
employee’s prior service as
service of the new employer –
but it’s certainly an option.
In fact, the ‘transfer of
employment’ test is now much
simpler than it used to be. It’s
basically a ‘Beneficial Use of
Assets’ test.
So if you’ve just sold the assets of
the business and you have a
former employee doing the
same work on the same assets,
then under employment law there
will be considered to have been a
transfer of employment.

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Chapter 3: Employment contracts and
employment ‘flexibility’
Comments by Dan Houlihan
First IR Consultancy Pty Ltd
1. Do I need an employment contract when I employ staff
and if so when, why and in what form?
All employment is contractual in nature. Whether you have a written contract
or a verbal contract, you are bound by a contract.
There are four basic elements to a contract:
• An offer;
• An acceptance;
• An intention to enter into a legal relationship, and
• Offer and acceptance underpinned by valuable consideration.
If you ask someone to come and work in your business and say ‘I’ll pay
you $50,000 per annum’ and they accept, then you have all four
elements of a contract: you have an offer, an acceptance, the valuable
consideration is the
salary, and you have
an intention to enter
into that legal
arrangement of
employment.
So the minute they
verbally accept
your employment
offer, there is a
contract.

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Why you should write it down
If you put your offer in a written form and include all those elements, but also
include “the employment will start on a further date XYZ” then that explicit
term in the contract will prevail. That’s one good reason to have a written
contract.
Another good reason is that it clarifies what the parties have actually
agreed and forces a bit of housekeeping on you as the business owner,
encouraging you to think about exactly what you require of the employee and
to consider your legal obligations.
It makes you think:
• What sort of work will this employee be doing? I’d better put that in the
contract.
• Are they covered by an award or an enterprise agreement? I’ll put that
in.
• Do I have to pay them annual leave and sick leave? Better put that in.
• What about their superannuation entitlements? And so on…
It also means that once a year, when you’re doing your mid-June check to see
what the wages are going to do next year, you get a chance to review the
contract and see if there’s something that’s not working or needs updating.

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What to include in a contract
A contract must ‘describe the relationship’ so it should include the wage to
be paid and a description of the work to be performed i.e. you’re coming to
work for me as a clerk, a CEO, or whatever, and I will pay you XYZ.
It’s a good idea to include a formal job description with the contract,
which both parties must sign. This provides the basis for managing and
reviewing performance against expectations.
Contracts should state your expectations regarding things like appropriate
dress, hair styles, daily start and finish times. This eliminates confusion later
on and reduces the chance of disputes.
Brief is best
Contracts of employment don’t have to be 80-page documents – they
should be relatively brief and straight forward. Standard form documents
are largely fine.
The only people you should generally avoid having a written contract for are
genuine casual employees. That means ad hoc employees, the casual you
use once or twice a month when someone is sick, not the casual that comes
in every Thursday, Friday and Saturday.

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2. How do I introduce employment flexibility in my
business?
Employers are always saying “I want my employees to be more flexible”, but
what does that mean?
If they’re acrobats that’s fine, but to me ‘employment flexibility’ is one of
those phrases that has been almost denuded of meaning.
The only way you can introduce employment flexibility in the business is if
you’re very clear about what it is you want to do.
Do you want your employees to be able to come to work earlier and finish
later? That’s fine, but have that conversation with them and make part of the
conversation about money. Do you want your employees to work four days a
week instead of five? Again, have a chat to them about it.
But first you need to be clear in your own mind about exactly what it is
you want.

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Flexibility works both ways
Flexibility is a two-way street; it’s not just about an employer being able to
make more and excessive demands on an employee.
A small business owner is usually pretty good at walking both sides of the
street because they recognise they have a personal relationship with their
employees, as well as a professional relationship.
Write it down
It helps to have your ‘flexibility requirements’ written down.
It might not be an offer, but if you’re going to engage in a discussion with
employees then you should be taking notes about what is said, anyway.
If you can’t write down the flexibility you want, because you’re not really
sure what you want, you have a problem.
3. When should I seek external advice?
The simple answer is: if you’re unsure, get advice.
If you don’t know the answer, then that’s a really good time to seek external
advice from people like me or your business advisor.
The clients that make the best use of us call once or twice a month and
spend 15 minutes on the phone discussing particular issues. They get a
little bill every month for a couple of hundred dollars.
The clients who ring us once every six months, because they’ve taken a
stab in the dark and done something without any advice, can end up facing
substantial costs. They may have gotten themselves into a situation that will
cost anywhere from $25,000 to $30,000 to get out of and back to normal.
Make sure you ask for the advice to be written down, even if it’s just an
email, so you build up a little reservoir of knowledge and don’t have to rely on
your own memory if the situation ever arises again.

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4. Can you suggest some helpful tools or websites?
Three good websites, particularly when you’re starting a business, are:
• Fair Work Ombudsman – Whether an employee or employer, this is a
good place to start. They give general advice about employment
issues – rates of pay, award coverage and adverse action.
• Australian Taxation Office – For tax and superannuation issues, this
site is always worth having a look at.
• Fair Work Commission – This site has a list of all the awards and
often has template documents you can use, such as template
employment contracts, and has information about basic employment
entitlements and payslip requirements. It also gives you an idea of
the information you have to record, information you have to keep and
information you have to give to employees every time you pay them.
In terms of generalist IR advice, look at some of the larger law firm websites
and subscribe to their newsletters.
If you’re doing a little more of this sort of work, there are dedicated websites
for most industries.
Joining an employer association might also be worthwhile – they can
provide more tailored advice at low cost.
For a more detailed legal perspective, you can use:
• Australasian Legal Information Institute
• Australian Government ComLaw website

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Chapter 4: How to deal with
employment and staff disputes
Comments by Dan Houlihan
First IR Consultancy Pty Ltd
1. How can I avoid employment and staff disputes?
You can’t – all you can do is be prepared.
Proper preparation means having structures in place:
• Be clear in all your dealings with employees;
• Be clear in terms of your expectations and the rewards on offer;
• Impose standards and communicate them to employees;
• Provide regular feedback and review of performance and expectations.
The courts will back you 100% in terms of an employer ‘giving reasonable
instruction’ and requiring compliance to ‘reasonable and lawful directions’.
Those are your rights as an employer.
What is considered a ‘reasonable’ instruction?
In order for your instructions to be reasonable, they’ve got to be
comprehensible.
Reasonable means cogent, i.e. clear and logical – I want you to do ‘X’.
Your instructions don’t have to be ‘right’. They can be 100% wrong from a
business advisor’s point of view, but it’s your business and you’re entitled to
run it as you see fit, so long as you’re ‘reasonable’ in terms of your requests to
employees.

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Be clear on your expectations
Telling staff “I want you to be more responsive to my clients’ needs” is not an
example of a clear instruction, but I hear it from clients all the time.
What does that mean?
• Should the employee sit by the phone and wait for the clients to ring?
• When the client asks for a steep discounts on bills, should the
employee say ‘yes’?
Having clear expectations means you can actually measure them and it
means you can require your employees to meet your standards, maintain
them and enforce them.
Providing clarity is a key way to avoid disputes.
Deal with potential issues early
Lots of disputes between employers
and employees occur where there
has been aggravating behaviour over
a period of time.
The classic for me is employees
rocking in at 8.35 or 8.40am, when
they’re supposed to start work at
8.30am.
Punctuality is a big thing for me and it
annoys me when employees waltz in
late.
If they want to come and speak to me
about changing their start time to 9am
because that suits their lifestyle,
that’s fine, I’m happy to have that
conversation.

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What I don’t want to do is sit there for weeks, taking notes about their late
arrival times, have a meeting about it, blow up and pull the trigger, when the
employee had no idea I was even upset.
If there’s something ticking you off, either performance or conduct related,
deal with it early.
If it can be dealt with, it can be fixed.
2. If there is a dispute, how do I best deal with it?
This will depend on the nature of the dispute and who is involved.
If you’re an employer with a number of employees, it can be almost anything,
and might not even involve you.
But if at least one of the parties is in your employment, it’s your problem.
Inter-employee disputes
The most common disputes arise between employees and often include
allegations of bullying, harassment or discrimination.
An employer has a vicarious liability for the actions of their employees, so
their problem is also your problem
In the case of inter-employee disputes you need to make a decision about
which version of events you believe and what action you should take on
the basis of your belief.
While doing that you’re subject to a court or tribunal peering over your
shoulder and telling you you’ve got it wrong or right.
So how do you get it right?
The answer is: through proper process.

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What does ‘proper process’ entail?
For an inter-employee dispute, following the proper process means getting
the facts.
You need to have a conversation with the alleged perpetrator and alleged
victim. This gives the employees an opportunity to give their viewpoints about
what happened, how and why it happened.
Your job as an employer is to work out whether or not it occurred and, if it did,
what sort of sanction, if any, you are going to impose.
Bring a third-party to the meeting
Because it could end up in
court, it’s a good idea to
have someone else in the
room during this
conversation, whether as a
note taker or support person
for you.
Also give any employee
you’re interviewing the right
to have a support person.
Can an employee bring
a ‘representative’?
No, a support person is just that – a person there to support the employee,
not represent them.
To get to the bottom of the matter you need to speak to the people involved.
If someone wants to bring their lawyer or barrister, that’s fine, but they are
there in the capacity of a support person.
Your conversation is with your employee – that’s your right.

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What if the employee refuses to discuss the issue?
If an employee doesn’t want to come to the meeting and talk about these
allegations you have the right to direct them to come along.
If they refuse, that is a failure to follow a ‘reasonable and lawful
direction’ and jeopardises their employment.
What if I can’t reach a
resolution?
If you’re unsure how to proceed,
then go back to Chapter 3,
Question 3: When should I seek
external advice? Whenever you’re
unsure.
Employer-employee disputes
As an employer, you can find yourself involved in disputes related to issues
such as:
• Safety
• Performance
• Wrongful termination
• Pay and conditions
If you have a dispute with an employee you need to take as much of the
emotion out of it as you can.
Have a third person in the meetings – it will assist you in maintaining a
proper decorum and running the meeting properly.
Most disputes should be able to be worked out. Do it over a cup of tea or
coffee, don’t do it over a beer.
Try to deal with the issues, rather than the emotions. And, as always, if you’re
unsure, seek external advice.

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3. How can I protect my business during such events?
The best way to protect your business is to follow proper process, because
all of these decisions are reviewable in the courts and tribunals.
If you have a fight with your employee and decide that’s it, they’re fired, the
courts can order you to take that employee back on and give them
compensation of up to six
months’ pay.
Don’t allow yourself to build up a
head of steam, because your
rational mind will take the back
seat and you’ll do something you
might really enjoy at the time,
but repent at your leisure,
possibly in court.
You don’t want to see people
like me in those
circumstances – all you do is
give us money.
So, again, my best advice is: follow proper process.