The 10 biggest issues facing start-ups in 2013: #5 Hiring and firing staff

What are the main issues Australian start-ups are grappling with? Accountancy and business advisor network DFK recently conducted a survey of its clients and staff to identify the top 10.

We’ve already highlighted number 10, cloud computing, and number nine, exit strategies. The beefy Australian dollar is in at number eight, while political uncertainty is seventh and growing pains was number six.

Today we look at number five, how to hire and keep staff or let them go quickly.

It’s not easy to employ staff. It’s a minefield out there with different awards overlapping each other. Are you better off to contract people than employ them? Beware, because you might already have employed them even though you thought you just contracted them. How do you find good staff and how do you keep them?

An employee can be employed in many ways: full-time, part-time, casual or a fixed-term contract. All of these are employment relationships and the employees themselves will fall under one of two categories: award-based employees and non-award employees.

An award-based employee may still be given a contract of employment outlining the terms and conditions of their employment; however, these must not be less than the requirements under the award. Just because you pay an employee above award pay rates, does not mean you are exempt from award clauses.

If you already use or are considering bringing in independent contractors, you must ensure they are, in fact, contractors and not just an employee with an ABN. Fair Work Australia’s website has a contractor versus employee quiz that can determine the correct condition.

“Disguising an employee as an independent contractor is a sham contracting arrangement. This is illegal and penalties will apply,” tells Wendy Jeffery-Lonnie, HR manager at DFK Australia and New Zealand.

What to watch out for in general with employment?

• Ensure you know what award your staff are employed under. The Modern Award system changed considerably in 2010, previous employment conditions and old award requirements may not even exist anymore.
• You must have strong HR policies in place, such as code of conduct and work, health and safety policy.
• These policies must match your company practice, if you document one thing in a policy and do another, you will be at risk.
• Policy statements must be fair and reasonable, particularly if breaches may result in termination of employment.
• Employees have more information than ever before regarding their rights – make sure you know about them too. Use industry updates and free email subscriptions from workplace lawyers and other advisors to keep up to date with the latest employment news.
• Document ALL discussions with your staff! Don’t rely upon good memory. “If it’s not documented; it didn’t happen,” says Jeffery-Lonnie.

How can an employee be terminated quickly?

Employees can be terminated relatively quickly where there is an instance of serious misconduct (for example theft, fraud or assault). This would be deemed summary dismissal. No notice is required for this type of termination.

“Be careful that an instant dismissal isn’t the case of a straw that broke the camel’s back. If a behaviour or conduct has been going on for a period and you suddenly have enough of someone turning up late every morning, etc, this is not a reason for instant dismissal,” advices Jeffery-Lonnie.

By not immediately pointing out an unacceptable behaviour or conduct your silence has been interpreted as an acceptance.

All dismissals (even summary dismissal) must follow due process, meaning follow a disciplinary process, holding meetings, investigations, documentation of notes and formal letters.

In most cases, leaving quickly will increase your risk that a termination will be deemed harsh, unjust or unreasonable or classed as an unfair dismissal, which will result in fines.

The costs involved in an unfair or unjust dismissal or a breach of the Fair Work Act are high. You will need to weigh up any decision involving a quick termination of a staff member with the risk of a claim being made. After a dismissal, an employee has 21 days to lodge a claim directly with the Fair Work Commission. You, as the employer, will not know about a claim until the commission decides to investigate you.

If the employment relationship breaks down, and you want to “help” the employee exit, be careful so it won’t be construed as constructive dismissal, which will land you in trouble.

If an employee comes into your office, slams down their keys and tells you in no uncertain terms where you can stick your job, you need to document it. Don’t let them leave without having signed it. If they cool down overnight, change their mind and come back to work the next day – they are still your staff member. So document it on the spot.

How to keep good staff?

• Do you have high turnover or high sick leave?
• Ensure you complete an exit interview with your staff when they leave. Over time this will give you some trends or common issues. If a high number of interviews give pay as the number one reason for leaving, then check your remuneration levels and employment conditions.
• Communicate, give responsibility and feedback – simple ways to keep good people.

When employing or hiring someone, discuss their short and long-term plans and determine whether you can meet them. Find out what drives and motivates them. What recognition are they seeking? What activities get the best results from them and why?

Having good policies, procedures and systems in place, can help you keep good staff. Often it is not the big things that make staff leave. It is often those little office niggles that create frustration. Don’t ignore the little stuff! Often these things are the easiest (and cheapest) to fix.