Starting a business is an exciting experience, but it can also be challenging – especially when it’s time to hire your first staff member. Here are some of the essential steps you need to take to ensure you’re complying with Australian law and doing the right thing by your new employee and yourself as a business owner.
What kind of employee do you need?
Obviously, if you need to hire an employee, you have work for them to do, but you have to think realistically about how much of it there will be. There’s no point hiring a full-time employee if the work can be completed in part-time hours.
If you’re not sure how long the work is going to last, you may consider hiring a temporary staff member through an employment agency – or if you need someone in the short term with a specific skill, you can hire an independent contractor. It all depends on the nature of the work and whether or not you need an employee on a permanent basis.
Your legal obligations as an employer
As an employer, you have a number of legal obligations to your workers. Many of these are financial responsibilities, including:
- Paying them the right wages
- Ensuring they receive pay slips
- Making sure they are reimbursed for any expenses they incur related to their job
- Making PAYG tax payments to the Australian Tax Office
- Paying the right contributions under the Superannuation Guarantee legislation.
You are also legally obliged to make sure the workplace is safe for your employees, and you must have workers compensation insurance for each one of your staff members.
In addition, you are expected to maintain certain standards of behaviour – you must treat your employees with respect, and not say or do anything that could humiliate them, distress them or damage their reputation.
Please be aware that employment laws differ between different states and territories – you must make sure you are complying with the law where your business is based.
If you decide to hire an independent contractor
Your legal responsibilities are different if you choose to hire an independent contractor instead of a permanent employee. An independent contractor is legally self-employed, so you are not their employer. They are responsible for paying their own tax and super. The fees you pay them for their services are negotiated between you and them, and they will invoice you for their fees, so you do not have to provide wage slips.
If you hire a permanent employee, it is illegal to claim they are an independent contractor – some business owners attempt to do this to avoid having to abide by their legal obligations as employers. This is known as “sham contracting”, and it carries a penalty of $54,000.
How to find the right person for the job
Most business owners find new employees through advertising the job and interviewing the strongest candidates. You should choose someone who has the skills and experience you’re looking for, to make sure they will be able to do the job proficiently from the outset.
It is your responsibility to check that the person you hire is legally allowed to work in Australia, even if they’re an independent contractor. You can be penalised for employing an illegal worker, even if you w