Article 4 of 6 : Dirty truth of handshake agreements – SMEs can now have corporate level compliance

By Kathleen Tierney
(Career Embassy)
20 September, 2017


What was once only affordable to the largest corporations, purpose built online systems are now available to all sized budgets. Further, with the advantages of online apps. the best workplace compliance packages are now available as paperless systems. Although there are only a few in the market, the best systems are those that:

  • are independent (not selling bank, superannuation, or insurance products to your employees);
  • provide a full range of policy documents and management guides that may be used as is or customised to your business;
  • a mobile friendly application that operates like an intranet style system with online dual file access and exchange between employees and managers alike;
  • offer easy online form completion and policy “acceptance” tracking per employee; and
  • direct online/phone access to experts who can compliant advice and guidance on the entire range of employment issues in the context of your business strategies.

Meanwhile, we’ve compiled a few ‘tips and hints’ about each of the six key workplace compliance components mentioned above that you may find useful. These are:


The Letter of Appointment — from elsewhere

Unlike many we have seen (and fix!), it is best that the Letter of Appointment document not just be cut and pasted together from various templates from the internet. The ‘cut and paste’ or ‘copied from elsewhere’ versions often feature key terms and conditions that are totally irrelevant, illegal or refer to attachments that don’t exist.

Ideally a Letter of Appointment is written in easy to understand language, has all the requisite elements and customised to both the business and specific role. A Letter of Appointment must reflect the type of employment (full time, part time, casual, fixed term, etc), and addresses the following considerations; being,

  • that there is a very clear legislated requirement that all employees are provided with a written description of their employment terms and conditions (aka Letter of Appointment);
  • legislation prescribes that certain terms and conditions must be included in the written agreement;
  • providing a well written and compliant Letter of Appointment is an important opportunity for employers to exercise rights that are available to them; and,
  • as a written contract, the Letter of Appointment is a document that can be referred to and relied upon in disputes.


Pay rates

Essentially, we believe that it is worth the time and effort to ensure that rates paid to employees are correct. Unfortunately, calculating pay rates accurately is not always easy and most employers who are paying a flat rate or “above the Award” rates may not be doing so correctly. A few common errors we see are:

  • Calculating rates of pay can be a challenge especially when industry allowances apply. And, the most common error that we see is that an assumption is made that an above the Award flat rate of pay includes the annual leave loading. Unless the Letter of Appointment specifically notates such, and the appropriate amount has been included in the flat rate of pay, employers may be in breach of the law. Likewise, with overtime, penalty rates and allowances.
  • Also, if the employer does not specify in the Letter of Appointment that permissible flexibility has been applied to rates of pay, overtime, or hours of work, the flat rate or above the Award rate paid may not be sufficient, and again the arrangement is in breach of the law.
  • Often over optimistic employers make commitments to new employees that promise incentives or bonuses that may not eventuate. These offers need to be carefully worded and communicated to the employee so the expectation of entitlement is always well managed.

Our suggestion is to never take pay rates for granted and always get them checked. Further, if you are offering employees other benefits, such as incentives, bonuses, car allowances and so on, ensure that the appropriate tax and superannuation is applied.

Robust workplace compliance requires more than pay rates and letters of appointment. Look out for our next article that explains why policies and practices underpin success and protect you’re your business and your employees against scrutiny.


About the Author

Kathy Tierney
Kathleen Tierney is the Executive Director and Owner of Business Embassy and its parent company, Career Embassy. She helps Australian companies with business management, HR services, policies and procedures. Kathy believes that great leadership and business success is achieved and sustained by connecting with our personal values.


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