Tag Archives: contracts

Ending employment

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OK, you have to fire someone, let them go, end their employment. Maybe one of your key staff has resigned. This can be an emotional exercise on both parts. In this guide we will cover ending employment, what is important for you to understand around entitlements and how to protect yourself from unfair dismissal claims.

Ending employment is an employee’s departure from a job and the end of an employee’s time with an employer. Termination may be voluntary on the employee’s part, or it may be at the hands of the employer.
Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner.

WHY will someone leave your employment?

The most common reasons employment ends are:
  • resignation
  • redundancy
  • termination or dismissal

Resignation is when someone decides to leave on their own accord.  It is their decision and you cannot reject a resignation.  The most common reasons for people to leave are insufficient pay or unfair pay practices, lack of honesty/integrity/ethics, poor manager, lack of work-life balance, and unhealthy/undesirable culture.

Redundancy occurs when an employer either becomes insolvent or bankrupt or the job function is no longer needed. This is a tough decision especially if you are letting go of a hard-working and loyal employee.

Dismissal is when you let someone go for poor performance, conduct or changes to operational requirements.

WHAT is important to understand about resignation, redundancy & dismissal?

There are different rights, obligations and legislation that come as a result of ending employment.

Your obligations as an employer will depend on whether you are under the state or national industrial relations system.

Notice periods

You must provide a notice period to an employee when ending employment except for some cases of dismissal. The length of notice will vary based on their length of service, type of employment, award, agreement or employment contract, and age. You can have the choice to let the employee work their notice period or you can pay them out (known as pay in lieu of notice). If you pay them out, they must be paid the same amount as if they had worked to the end of the notice period.

During this notice period, the employee may take annual leave only if you approve it and sick leave with sufficient evidence.

Notice periods do not apply to employees who are: casuals, employed for a specific period or task, do seasonal work, fired because of serious misconduct (such as engaging in theft, fraud or assault), and daily hire working in the building and construction or the meat industry.

Employee entitlements

You must pay an employee all their entitlements when employment ends. These may include:

  • outstanding wages
  • accumulated annual leave
  • accrued or pro-rata long service leave
  • redundancy pay
Genuine Redundancy

Some businesses have wrongly used redundancy to unfairly dismiss an employee. According to Fair Work Australia:

A genuine redundancy is when:

  • the person’s job doesn’t need to be done by anyone
  • the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.

When an employee’s dismissal is a genuine redundancy the employee isn’t able to make an unfair dismissal claim.

A dismissal is not a genuine redundancy if the employer:

  • still needs the employee’s job to be done by someone (eg. hires someone else to do the job)
  • has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement or
  • could have reasonably, in the circumstances, given the employee another job within the employer’s business or an associated entity.
Redundancy Pay

If someone is made redundant, they will be entitled to redundancy pay and special taxation rates will apply to those payments. https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements
https://www.ato.gov.au/Individuals/Working/Working-as-an-employee/Leaving-your-job/Redundancy-payments/

Unfair dismissal

You must have appropriate policies and procedures in place to manage employee performance. Terminating or dismissing an underperforming employee must be done in a manner that is fair, reasonable, and just.

HOW do you ensure you have terminated an employee correctly?

Small businesses with fewer than 15 employees have greater abilities to end employment via dismissal. The Small Business Fair Dismissal Code provides a framework for dismissal to ensure the procedure is fair. It also provides small business owners with some level of protection against unfair dismissal claims.

Under the Code an employer can dismiss an employee without notice for serious misconduct includeing theft, fraud, violence and serious breaches of occupational health and safety procedures.

In other cases, the small business employer must warn the employee a reason that he or she is at risk of being dismissed if there is no improvement. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given. Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

The small business employer must provide the employee with an opportunity to respond when a warning is given and allow the employee a reasonable chance to rectifying the problem. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

An employee who is on a probation period is not likely to have worked the minimum period to qualify to make an unfair dismissal claim. The Fair Work Act 2009  indicates that an employee must be employed for a minimum of six months, or 12 months if the employer is a small business with fewer than 15 employees to make an unfair dismissal claim.

More details and a checklist can be found here. https://www.fairwork.gov.au/ArticleDocuments/715/Small-Business-Fair-Dismissal-Code-2011.pdf.aspx

Those businesses with more than 15 employees’ details around unfair dismissal can be found by visiting Fair work Australia. https://www.fairwork.gov.au/ending-employment/unfair-dismissal

HINTS ending employment

You should always treat people with respect and simply put yourself in their position and treat them how you would expect yourself to be treated irrespective of the circumstances.

An exit interview can be a great way to understand more about your business. This could help you measure morale, see what needs improving, and understand how well they were managed.

If someone is leaving for a better opportunity be happy for them and thankful for how they have helped you to date.  Be proud that you may have helped them to the next step.

SUMMARY –  ending employment via dismissal

People who leave by their own accord or others that you must remove have certain entitlements. The Small Business Fair Dismissal Code provides a fair framework allowing greater abilities to end employment via dismissal.

It is critical you perform this process correctly and follow the rules.  If you are not experienced in this area we advise speaking with an employment lawyer or at the very least visit the Fair Work website for further clarification. https://www.fairwork.gov.au/ending-employment

Finding a business premises

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You are ready to make that big move and open a restaurant, or maybe the home garage is not big enough anymore, maybe you want to be considered seriously and need a professional workspace.  How do you go about finding that property? This guide will help you on that journey of finding business premises.

WHAT do we need to decide first to find new business premises?

Your journey starts by deciding on the criteria by which you will make your decision.  The better your list the better result you will get. 

You need to consider:
  1. Will you buy or lease/rent a property?
  2. Would you be prepared to share it with others?  There are options around co-location or shared offices where you can run your business from a location shared by other businesses and thus share some of the facilities like a conference room or even a receptionist.
  3. What are your needs and wants in a property? – If you are opening a restaurant you probably need to be in a popular location.  If you are opening a retail store does that need to be in a mall. Will customers find you in an industrial estate? How much room will you need? If you are establishing an office you would need around 10 square meters per person. Do you need a kitchen or 3-phase power? How much parking will you need? Can trucks access your location easily? Do you need to be close to your customers? Is there a need for public transport so your workers can get to work? Do you need to consider your future needs?
  4. Will council zoning impact your choice?  For example, some business types cannot operate in a residential area.
  5. What is your budget? Can you afford it? Also consider other outgoings like office set up, moving costs, annual rental increases.

HOW do I find the right business property?

Now the search begins in earnest! There are several ways you can find properties:

  • Find the location yourself by searching for your desired area.  A For Lease sign is a dead giveaway
  • Speak to a local real estate agents
  • Contact a commercial real estate agent
  • Find a Property Broker, they will search on your behalf
  • Use the commercial sections of property websites realestate.com.au or domain.com.au

Using your search criteria and now having a list of possible locations, it is time to visit those properties. Be patient, do your homework and be careful not to make hasty decisions.

Once you have made up your mind it’s time to negotiate the price.  Chances are you can get it for cheaper so start talking turkey. 

HINT

A good idea is to ask existing neighbors questions about the location/ intended premises.

Be sure to read our essential guide on renting an office

SUMMARY – Finding the right business premises!

Decide if you will buy or lease then come up with a  want/need criteria list. Be patient and don’t forget to negotiate on price.

Electricity deals to save money

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We all dread that quarterly electricity bill at home and unfortunately, in the business environment it is probably only going to be larger. In this guide we look at ways to save power and how to get a better deal.

WHY should I compare electricity companies?

Once electricity supply was from the state governments now we have a deregulated market and different retailers can compete for your business. (Note WA is still Government-owned).
Competition should lead to better pricing and save you money!

WHAT can I do to save power?

We need the power but at least there are ways we can reduce our bill saving us valuable money. We can:

  • Shop around for the cheapest deal
  • Install solar panels which can reduce your bill with either a payment upfront or monthly overtime to pay for the panels.
  • Use more energy-efficient lighting, devices, and machinery.
  • Ensure devices etc. are turned off when not being used.
  • Use power-hungry devices when rates are cheap, for example, at night
  • Use an energy broker or consultant to negotiate a deal.

HOW can I get a better deal on my power bill?

The best method of quickly saving money is to review what prices you can get.  Being a small business, it is unlikely you will get a special deal based on massive usage but energy retailers are keen to get your business if you are in the market.  The great news is there is an easy way to compare prices. You will see providers quoting a reference price/point (benchmark electricity price set by the government) and a discount.  This enables easy comparison between companies to make a quick decision.

Other terminology you should understand:
  • Discount– reduction expressed as a % below the reference price. Always check to see for how long the discount will last, as price may increase after this period.
  • Rates – This is how much you pay per Kilowatt-hour Kwh (a 100watt lightbulb on for 10 hrs uses 1 Kwh).  Rates may be flat or expressed as peak or off-peak or based on time of day billing (charges go up during busy times).
  • Sign up discount – normally expressed as a $ amount discount off your first bill
  • Exit fees– a charge to move to a different energy retailer
  • Payment options– you may be offered a fixed monthly charge which gives you predictability of costs or variable usage charges payable by all the normal methods, for example, credit card
  • Combined discounts – you may get a better deal if you sign up to gas as well as electricity
  • Contracts– some offer no lock-in contracts others sign you up for a period but normally based on a deal
  • Accuracy of billing – When calculating your electricity usage, your retailer can either estimate your usage, potentially overcharging your business, or measure it. It is worth investigating the technique employed by your retailer or package.
  • Availability– If you have locations in different states you may have to have multiple retailers.
  • Green Power – Normally more expensive but derived from renewable energy sources such a wind. Sometimes referred to as carbon offset.
  • Locked-in pricing – sometimes expressed as peace of mind or fixed.  Here a retailer will lock in the cost per Kwh for a set time.  The benefit of this is you are protected from any price increase.
  • Late payment fees – charge if you do not pay your bill on time
  • Customer service – Either online only or telephone as well.  Hours may vary. 
  • Solar feed-in tariff – how much you will be paid per Kwh to give electricity back to the grid.  Most solar panel solutions allow you to use your solar power first before feeding your excess back into the grid.

HINTS

A good thing to know is that if you have a blackout in your town it is not the electricity retailer who is fixing it rather the energy distributor. https://www.energymadeeasy.gov.au/frequently-asked-questions/who-is-my-energy-distributor

To compare energy retailers pricing you can visit:
Energy made easy
Finder

SUMMARY – Small Business Electricity

No one plan will be right for all small businesses so shop around and you might be surprised how much you can save for a bit of research.