When hiring your first employee, there are certain legal and financial requirements you must consider. Make sure you’re prepared for this next big move by learning your basic responsibilities as an employer.
Employment laws in Australia
Several laws in Australia govern employment and industrial relations. As a first-time employer, it’s important to be familiar with these legislations, and which ones will apply to you.
- Fair Work Act 2009: Considered as the main employment law in Australia, the Fair Work Act 2009 lays down the minimum terms and conditions between the employer-employee relationship. It applies to most Australian workplaces though some businesses in each state or territory remain under the state system.
- Work Health and Safety Standards (WHS): Also known as occupational health and safety (OH&S), this regulation aims to manage health and safety risks in the workplace.
- National Employment Standards (NES): If you’re covered by the Fair Work Act 2009, you must refer to the NES for the list of employment standards you must follow such as the hours of work, working arrangements, leaves, public holidays, termination, and the provision of a Fair Work Information Statement.
- Anti-discrimination laws: Discrimination is unlawful this is why states and territories have certain anti-discriminatory laws to promote equal opportunity and diversity in the workplace.
What type of employee do you need?
The type of employee you will hire determines your obligations as an employer. Employees in Australia are usually classified as:
- Shift workers
- Daily hire and weekly hire
- Apprentices and trainees
To know which of them fits your needs, it’s important to assess your business first. List down the tasks needed to fulfill, the skills needed, and the number of hours required daily or weekly.
Employment costs to prepare for
It’s necessary to be financially ready before hiring your first employee. As an employer, it’s important to prepare a budget for:
According to research, the average cost of hiring an employee is $18,982. Two of the major factors affecting these figures are role and seniority. For example, hiring for an entry-level position costs around $9,772 while for an executive role, it can reach up to $34,400.
To reduce these costs, consider these tips for hiring your first employee:
- Asking for referrals from your network
- Advertising the job opening on social media, particularly on LinkedIn and Facebook
- Using digital interviewing to reduce recruitment costs
National minimum wage
This 2021, the national minimum wage for a full-time employee is $19.84 per hour or $753.80 per week. However, it can still change depending on the employment type, industry, and position. It’s also possible to incur additional costs on allowances, overtime pay, and super.
As governed by the Fair Work Act 2009, you must pay your employee weekly, fortnightly, or monthly through cash, cheque, or bank transfer. In-kind payments are strictly prohibited.
Aside from recruitment and wages, you may also prepare for additional expenses in training, in procuring new equipment for your new employee, or in developing safe systems of work (see WHS).
Need an extra hand in your business without worrying too much about recruitment and admin costs? Try outsourcing.
Documents and records you will need
Some of the documents and records you need to prepare are the following:
- Fair Work Information Statement: It is the document issued by the Fair Work Ombudsman that contains information on the National Employment Standards and conditions of employment. You must give this to your new employee as soon as possible to avoid receiving a financial penalty.
- Letter of engagement: It is an official document that contains the terms and conditions of employment.
- Super Choice Form: It is a form given to new employees that allows them to choose their preferred superannuation fund.
- Employee Tax File Number: It is a unique reference number given to individuals for tax and super purposes. Make sure to request this to your customer to determine how much tax you need to withhold.
- Employee records: It is also your responsibility to make and keep accurate employee records covering employment terms, pay, hours of work, leave, and super amounts for seven years.
- Tax records: Meanwhile, records on tax and super must be kept for five years.
Employees are important business assets. You can leverage their skills, expertise, and time to manage tasks you cannot handle anymore. Instead of crunching numbers and doing other manual jobs, you can focus more on strategizing your next business moves and improving your product and service offerings.