Navigating Employment Law for Small Businesses

All businesses in Australia, whether you operate as a sole trader or company, must comply with the minimum entitlements under employment legislation and regulations. Many businesses must also comply with specific requirements associated with its industry. Failure to adhere to employment laws can result in investigations and fines.  But did you know that there are certain exceptions or variances for small businesses?

A small business employer is an employer who has less than 15 employees. When assessing the number of employees engaged by an employer it is necessary to include all workers, including part time and full time employees, casual workers who are employed on a regular and systematic basis and any employees who work for associated entities of the employer. 

Exceptions in employment law for small businesses include:

Redundancy

Redundancy happens when an employee’s employment is terminated because the employer either:

  • does not need an employee’s job to be done by anyone, or 
  • becomes insolvent or bankrupt.

Redundancy can happen when the business:

  • introduces new technology (e.g. the job can be done by a machine); 
  • slows down due to lower sales or production;
  • closes down;
  • relocates interstate or overseas;
  • restructures or reorganises (e.g. merger or takeover).

When an employee’s job is made redundant and their employment is terminated, their employer must give them redundancy pay. Typically, employees of a small business don’t get redundancy pay when their job is made redundant. However, an award or employment agreement may have different redundancy provisions and override this exception.

Minimum employment period

The minimum period of employment (otherwise known as probation period) under the Fair Work Act is 6 months of continuous service, however, for small business employers the minimum employment period (i.e. maximum probationary period) is 12 months. This gives small business owners more time to decide if an employee is a good fit for the job and their business. 

However, whether or not the employee has completed the minimum employment period should not be the employer’s only consideration when thinking about terminating an employee’s employment. As an employer, you must handle matters professionally, sensitively and comply with employment laws, otherwise you can put your business at risk.

Legal requirements around employment can be daunting for small businesses. There are free resources available for small business owners to help you meet your legal obligations, including: 

It’s important to get legal advice early before putting your business at risk. At Cohen Legal we are able to assist small businesses on all aspects of employment law, including:

  • preparing employment contracts and policies;
  • providing advice in relation to employment matters, such as applicable awards, employment entitlements and other obligations under the Fair Work Act, performance management, disciplinary processes and workplace complaints as well as terminations;
  • assisting with employment law disputes, including restraint matters, unfair dismissal and adverse action claims and claims for breach of contract.
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