How to Hire an Employee
Hiring an employee for your new business can mark an exciting new milestone. However, there are some important legal tips that you need to know before the starting the hiring
Hiring an employee for your new business can mark an exciting new milestone. However, there are some important legal tips that you need to know before the starting the hiring process. Recruiting the right people is important and a bad hire can cost your business thousands of dollars. Addressing the legal issues that may arise in the process of employment is key for a productive workforce. The following steps can help you make the right decision.
1. What’s right for you? Employee vs. Independent Contractor
In general an “employee” is hired by an “employer” (a person or business) for personal services in return for a wage or fixed payment. The employer-employee relationship is often defined as a “contract of service”, where the employee provides exclusive services to an employer and at the discretion of the employer.
In contrast an “independent contractor” and the principal-contractor relationship is often referred to as a “contract for service”, as the contractor is part of an independent business with an obligation to provide goods and/or services for a price.
See our guide on How to Hire a Contractor to help you decide on which option works best for your business.
2. The Hiring Process
If you decided on hiring an employee, the next step is to promote the position through a position/job description. A position description or ‘PD’ provides prospective candidates with an overview of the role and its responsibilities and can include a selection criteria and information about remuneration. You can also create a Employee Application Form to easily request and collate vital information about prospective applicants. The information from this form will help you to compare and contrast each applicant to make a more informed decision. Additionally, once you’ve chosen the applicant, you won’t need to chase after their personal and professional information.
3. Making an offer of Employment
A written offer signed by the employee is always recommended. A written offer should include the date of commencement of the employment, the position, information regarding wages and any other aspects of the employment relationship that are not set out in the Fair Work Act 2009 (Cth) (Fair Work Act).
4. Employee Benefits
Benefits to the employee can be formulated in an employment contract. It is integral that you make an employee aware of the minimum statutory requirements set out in Australia’s employment legislation, the Fair Work Act. For example long service leave legislation and applicable superannuation legislation.
In addition there are 10 National Employment Standards set out in the Fair Work Act. These standards must be provided to all employees in Australia and along with the minimum wage are the minimum entitlements for employees. The National Employment Standards include: hours of work, request for flexible working arrangements, annual leave, personal/carer’s leave, compassionate leave, community service leave, public holidays, unpaid parental leave.
5. Employment Confidentiality
An employment agreement offers a confidentiality paragraph that requires an employee not to disclose an employer’s confidential or proprietary information. Information that is “confidential” is unique to a particular company similarly disclosure of such information can harm a business.
6. Important considerations in an Employment Agreement
- Confidentiality clauses
- General statement of eligibility for benefits plan
- Non-compete clauses
- Rate of pay
- Severability clause
- Specified probationary period
- Starting date
- Statement of at-will nature of employment
- Title of position being offered
- Any other state, industry-specific, or company required information
- Statement indicating that there are no agreements between the parties other than those explicitly stated within the agreement
If you’re ready to hire an employee, you can easily create an Employee Agreement for a full-time, part-time and casual employee through Lawpath.
“Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.”
Dominic is the CEO of Lawpath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.