Are you thinking of hiring your first employee? That’s great news – it means business is going good. Delegating what you have been doing yourself so far is not easy but you know you have to do it.
To make hiring even more difficult it is surrounded by a bunch of legal requirements. Those shouldn’t scare you off, though, as they are meant to protect your business and the valuable people that will be contributing to it.
Let’s outline the steps that you need to adhere to when hiring your first employee:
1. Know the basics of the Fair Work Act 2009
This act sets the minimum standards for employment including minimum wages, paid leave, termination and benefits that your employees will be eligible for, depending on the industry you are in.
2. Draft employment contracts based on that
Your contracts should include the standards on working hours, flexible working arrangements, annual, personal and parental leave, termination terms and redundancy pay, fair work information and company policy. In addition you should include information on awards and pay. The minimums vary industry to industry and are also set in the Awards and Agreements document.
3. Know your taxes
As an employer you will be required to pay taxes on behalf of your employees. The best way to go is adhere to the Pay-As-You-Go tax scheme where you withhold tax from your employees’ wages and pay it directly to the Australian Tax Office. You will also be paying super annotations or superguarantee. It requires you to make additional payments of at least %9.5 of the employee’s wages to a fund of their choice.
4. Keep records of everything
You are required to keep employment records for as long as seven years. Having a proper file system helps you adhere to the legal record keeping refulations. You will not only keep payment, communications and working hours records but you will also need to give your employees payslips within 1 day of payment.
5. Commencing employment
To start the employment relationship you need to provide employees with the following:
- letter of offer
- contract to be signed on the first day of employment (they need to receive it previously to review and edit)
- Fair Work Information Statement
- Tax File Declaration
- Company policies
- Non disclosure agreement – no matter if they have access to sensitive information or not
- Confidentiality agreement
6. Terminating employment
The terms of employment termination should be set in your employment agreement. However, upon leaving each employee should sign a termination agreement especially focusing on:
- that they agree with the terms of termination
- that their employment is terminated
- the redundancy pay they will receive
- the agreement of nondisclosure
- the promise of no financial or other claims.
Your company lawyer can help you draft employment agreements, termination agreements, confidentiality and nondisclosure contracts. Do not hesitate to have all of them signed by your employee and you! Those are documents that show you take responsibility for your employees and welcome them to a working environment with a transparent culture.
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