Human Resource Management - Legal framework (employment contracts, common law, minimum standards)

Syllabus Topic

HSC topic: Human resources

key influences

• legal - the current legal framework

  - the employment contract - common law (rights and obligations of employers and employees), minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contracts

Introduction

The legal framework governing human resource management (HRM) in Australia is multifaceted, comprising various laws and regulations that ensure fair treatment, safety, and equitable conditions for employees.

Employment Contract

An employment contract is a legally binding agreement between an employer and an employee, detailing their rights and responsibilities. It typically includes terms regarding:

• Duties and Supervision: The specific tasks the employee is expected to perform and the level of oversight they will receive.
• Hours and Location: The expected working hours and the location where the employee will perform their duties.
• Discipline Policy and Bonuses: Guidelines for employee conduct and potential rewards for performance.
• Overtime, Superannuation, and Benefits: Provisions for extra work hours, retirement contributions, and other employee benefits.
• Salary/Wage and Leave: The agreed compensation and entitlements to various types of leave.
• Confidential Information: Policies regarding the handling of sensitive information.

Common Law

Common law is developed by courts and tribunals. It is based on judicial decisions and precedents rather than statutes. Under common law, both employers and employees have certain rights and responsibilities, including:

• Employer Obligations:
  • Pay correct wages.
  • Reimburse work-related expenses.
  • Ensure a safe working environment.
• Employee Obligations:
  • Follow lawful and reasonable instructions.
  • Perform duties competently.
  • Manage company money and property responsibly.
  • Disclose work-related inventions and information to the employer.

Minimum Employment Standards

The National Employment Standards (NES) set the minimum entitlements for employees. They form the foundation for most awards and enterprise agreements and include:

• Maximum Weekly Hours of Work: Standard working hours to prevent overwork.
• Parental Leave and Related Entitlements: Provisions for employees to care for newborns.
• Annual Leave: Paid time off for holidays.
• Personal/Carer’s Leave and Long Service Leave: Leave for personal illness or to care for family members.
• Public Holidays: Paid time off on national public holidays.
• Notice of Termination and Redundancy Pay: Requirements for terminating employment and compensating redundant employees.
• Fair Work Information Sheet: Providing employees with essential information about their rights.

Minimum Wage Rates

Minimum wages for most employees are determined by the award covering their industry or occupation. These awards set the minimum pay rates, penalties, and allowances, ensuring employees receive fair compensation for their work. Employees are categorized differently based on their employment type, age, or work capacity. Special minimum wages apply to apprentices, trainees, juniors, and employees with disabilities. The National Minimum Wage applies to employees not covered by an award or registered agreement. As of 1 July 2023, the National Minimum Wage is $23.23 per hour or $882.80 per week. The Fair Work Commission reviews the National Minimum Wage and minimum pay rates under awards annually. These reviews typically result in changes that take effect from the first full pay period on or after 1 July each year.

Awards

Awards are legal documents that outline the minimum wages and working conditions for employees in specific industries. They are established through negotiations among employers, employer associations, and trade unions. Awards cover aspects such as:

• Employee Classification and Hours of Work: Defining different employee roles and their working hours.
• Rest Breaks and Rates of Pay: Mandatory breaks and pay rates, including bonuses and penalty rates.
• Redundancy Payments: Compensation for employees who are made redundant.

Enterprise Agreements

Enterprise agreements are collective agreements made at the workplace level between employers and groups of employees. Under the Fair Work Act 2009, there are three types of enterprise agreements:

1. Single-Enterprise Agreement: Between a single employer and a group of employees.
2. Multi-Enterprise Agreement: Between multiple employers and their employees.
3. Greenfields Agreements: Between an employer and a union for a new enterprise before any employees are hired.

Other Employment Contracts

Alternative employment contracts include:

• Part-Time Work: Employees work fewer hours than full-time employees but receive similar benefits.
• Permanent Employment: Continuous employment with full-time hours, paid leave, and other benefits.
• Casual Employment: Short-term employment without entitlements to leave, but with casual loading.
• Fixed-Term Contracts: Employment for a specific period, with terms set for the contract duration.

CASE STUDY: IKEA

IKEA Australia's new enterprise agreement exemplifies how effective human resource management can enhance employment contracts.

The agreement, developed in consultation with employees and voted in favor by them, introduces several innovative policies, such as a 4-day work week, fixed rostering options, and various leave types including parental, grandparent, fertility treatment, Indigenous cultural, gender affirmation, and natural disaster leave.

It also allows employees to observe alternate days of significance, ensuring cultural inclusivity. Notably, IKEA has moved away from employing casual workers, focusing instead on full-time and part-time employees to provide greater job security and access to benefits.

This approach fosters long-term career development within the company. The new policies aim to attract and retain employees by creating a supportive and flexible work environment. Additionally, IKEA has implemented a policy ensuring no length of service is required to access paid parental leave, reflecting the company's commitment to supporting employees from day one. This agreement not only strengthens employee satisfaction and retention but also demonstrates IKEA's commitment to fostering a diverse and inclusive workplace.

SOURCES

Fair Work Ombudsman: Employment Contracts

Parliament of Australia: Basic Legal Expressions - Common law

Fair Work Ombudsman: National Employment Standards

Fair Work Ombudsman: Minimum Wages

Fair Work Ombudsman: Awards

Fair Work Commission: Enterprise Agreements

Fair Work Ombudsman: Employment Contracts

Human Resources Director: Ikea's new enterprise agreement: 4-day work weeks and several leave options