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Legal Risks & Compliance for Employee Recruitment in Australia

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Employee Recruitment Risks

Employment Law

Employers must take care to manage the legal and compliance risks associated with employee recruitment.


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Managing Recruitment Risks for Employers

The legal risks for employers during recruitment processes are not always fully considered until an issue emerges. Risks are present at every stage of the recruitment process, from the nature of the role itself to advertising, interviewing, selecting, and agreeing on an employment contract.

Properly managing employee recruitment risks is the first step for employers to build strong, safe, and productive teams.

The following six recruitment risks need to be managed by employers when seeking to hire a new employee. Failure to manage such risks can spell commercial, operational and reputational risks, beyond the legal issues involved.

  1. Discrimination Claim Risks
  2. General Protections Claim Risks
  3. Employee Contract Risks
  4. Pay and Entitlement Risks
  5. Work Health and Safety Risks
  6. Competition and Consumer Act Risks

1. Discrimination Claim Risks

All businesses, organisations and individuals have a responsibility not to engage in unlawful discrimination in the workplace. Unlawful discrimination can arise in a range of contexts and at various points of employment, including during recruitment.

Advertising that indicates a bias or preference for applications to possess particular personal attributes may fall foul of anti-discrimination laws. In limited circumstances, discrimination may be permitted, however, employers must take care to ensure their actions fall within an exception to general discrimination prohibitions.

Different anti-discrimination laws exist across States and Territories in Australia. There are also Commonwealth laws that protect people going through recruitment processes:

  • Age discrimination under the Age Discrimination Act 2004 (Cth)
  • Disability discrimination under the Disability Discrimination Act 1992 (Cth)
  • Gender or sex discrimination under the Sex Discrimination Act 1984 (Cth)
  • Pregnancy discrimination under the Sex Discrimination Act 1984 (Cth)
  • Racial discrimination under the Racial Discrimination Act 1975 (Cth)

The reputational damage for an employer or business operator subject to a discrimination claim can be significant. For this reason, employers undertaking recruitment should be aware of the Commonwealth, State and Territory anti-discrimination laws that apply. The Australian Human Rights Commission provides a ‘step-by-step guide to preventing discrimination in recruitment’, which can assist employers to minimise the risk of breaching anti-discrimination laws.

2. General Protections Claim Risks

Many employers do not realise that prospective employees have the ability to lodge a ‘general protections claim’ under the Fair Work Act 2009 (Cth). Claims of this kind are based on the notion that the employer has taken adverse action against the prospective employee due to discrimination, or some other protection afforded to them under the Fair Work Act 2009 (Cth). Such protections include:

  • exercising a workplace right;
  • discriminating against the prospective employee; and,
  • participating in industrial activity.

Questions asked or answered during recruitment, such as in an interview or during contract negotiations, may give rise to risks of this kind. Employers must take care at every stage to ensure they do not breach the general protections afforded prospective employees (and employees more broadly) under the Fair Work Act 2009 (Cth).

The outcomes from a general protection claim include reinstatement or compensation, as well as possible monetary penalties for breaching the protections afforded by the Fair Work Act 2009 (Cth).

3. Employee Contract Risks

It is not uncommon for employers to use standard or old templates to generate their employment contracts. While that may present as a quick and inexpensive option, there are risks to employers by such practices.

An employment contract sets out the terms and conditions of employment, which may govern the rights and responsibilities of both the employer and employee. There are numerous issues that may be covered in a contract and the failure to address certain issues can expose employers to risk, uncertainty and unnecessary disputes.

It is prudent for both employers and employees to have employment contracts reviewed by a lawyer, to ensure compliance with relevant laws of States, Territories and the Commonwealth. Whilst employers may agree on specific terms and conditions with an employee, they are still required under the Fair Work Act 2009 (Cth) to give a ‘Fair Work Information Statement’ that provides information about the ‘National Employment Standards’.

4. Pay and Entitlement Risks

Employers are required to ensure their employees are properly paid according to the relevant award, enterprise agreement, or contract of employment. Failure to pay the appropriate minimum pay entitlements can lead to unnecessary issues, for example:

  • Underpayment of wages in Australia can see employers face action by the Fair Work Ombudsman (FWO), which can result in significant penalties. Additionally, ‘wage theft’ is now an offence under the Criminal Code 1899 (Qld) in Queensland, which can see penalties of up to 10 years’ imprisonment for individuals found guilty of the offence.
  • Failure to properly pay superannuation entitlements can see interest charges and administration fees applied by the Australian Taxation Office (ATO). If an employer fails to comply with an ATO penalty notice directing the payment of superannuation, they can be liable for fines and up to 12 months’ imprisonment.

When recruiting prospective employees, employers ought to act prudently to obtain clarity around their obligations surrounding the applicable minimum pay and entitlements.

5. Work Health and Safety Risks

An employer should ensure they have current workers’ compensation insurance that is appropriate for their business or organisation. Workers’ compensation insurance is compulsory for employers across Australia. In Queensland, for instance, failure to hold worker’s compensation insurance carries a maximum of 275 penalty units for individuals and 1,375 penalty units for corporations. In the event insurance payments become payable to an employee, an uninsured employer may become liable to pay a percentage of compensation paid.

Australian work health and safety laws place significant due diligence and compliance obligations on business. It is critical for all businesses to match leadership and culture with the right legal advice, technologies and strategy. Non-compliance with work health and safety duties by a person conducting a business or undertaking (PCBU) exposes workers, contractors and others to risk and injury. Failure to implement and maintain safe systems of work exposes persons conducting a business or undertaking to possible civil and criminal liability.

Employers should take steps to understand the work health and safety requirements of the role they are recruiting for and ensure that the employee they hire is properly trained to comply with their health and safety responsibilities.

6. Competition and Consumer Act Risks

The Competition and Consumer Act 2010 (Cth) (formerly the Trade Practices Act 1974 (Cth)) is a national law that regulates how all businesses must deal with others, such as competitors, customers and suppliers. With respect to employee recruitment, it is unlawful for a business or organisation to post misleading advertising about job opportunities under the Australian Consumer Law, which is part of the Competition and Consumer Act 2010 (Cth). Relevant provisions are as follows:

  • Section 18 prohibits misleading and deceptive conduct; and,
  • Section 31 prohibits companies from doing anything that is likely to mislead people about the nature of employment available, availability of employment, as well as the terms and conditions of employment.

An example of the use of such laws with respect to recruitment processes may be seen in the case of Rakic v Johns Lyng Insurance Building Solutions (Vic) Pty Ltd (Trustee) [2016] FCA 430. In that case, misleading representations were made to a prospective employee about the profitability of the business, which was relevant to a remuneration package offered. The Federal Court of Australia found that based on those misleading representations, which breached Australian Consumer Law, the employee had suffered a compensable loss or damage of $333,422. The case highlights the significant financial consequences that may follow findings of misleading or deceptive conduct and misleading conduct relating to employment.

Employers that breach the Australian Consumer Law may face civil or criminal consequences. It is critical for businesses and business operators to be mindful of the risks associated with conduct that may breach competition laws

On-Demand Resources

On-Demand Resources

On-Demand Resources

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Managing Employee Recruitment Risks – AustraliaThe legal risks for employers during recruitment processes are not always fully considered until an issue emerges. Risks are present at every stage of the recruitment process, from the nature of the role itself to advertising, interviewing, selecting, and agreeing on an employment contract.Viewemployment-contractsrecruitment
Steps in Workplace InvestigationsThe steps in workplace investigations relate to procedural fairness. In Australia, disciplinary decisions based on unfair workplace investigations may be challenged and decisions reversed. The risk of an unfair workplace investigation derailing a disciplinary process may be minimised by early advice from an experienced employment lawyer.Viewdisciplinary-processes workplace-investigationsworkplace-investigations
Unfair Dismissal Claims – Success Rates & OutcomesIf an unfair dismissal claim is successful, the Fair Work Commission may order a person's reinstatement or the payment of compensation. The decision as to whether reinstatement or compensation is awarded is a discretionary decision based on what the Commission considers to be just outcome.Viewemployment-lawunfair-dismissal-claims
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National Employment Standards – NESIn Australia, 11 minimum employment entitlements must be provided to all employees covered by the National Employment Standards (NES). These 11 minimum employment entitlements will protect full-time and part-time employees if their job falls under the national workplace relations system (i.e., Fair Work Act 2009 (Cth)).Viewemployment-contractsnational-employment-standards
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Responding to a Workplace Investigation into Bullying ComplaintsFacing a workplace investigation into a workplace bullying complaint can leave people feeling stressed, uncertain and isolated. Getting informed about how you may respond to a workplace bullying complaint, as well as your rights, responsibilities and options is essential for anybody facing an issue of this kind.Viewworkplace-bullying workplace-investigationsworkplace-bullying workplace-investigations
Responding to a Workplace Investigation into Sexual HarassmentSexual harassment complaints often result in formal workplace investigations. Generally, Australian laws define sexual harassment as involving (1) unwelcome conduct of a sexual nature; (2) the conduct leaves the person feeling offended, humiliated or intimidated; and, (3) the reaction of the person is reasonable in the circumstances.Viewsexual-harassment workplace-investigationssexual-harassment workplace-investigations
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Steps in a Disciplinary ProcessThe steps in disciplinary processes relate to procedural fairness. In Australia, unfair disciplinary processes may be challenged and decisions reversed. Employers and employees both face risks when dealing with a disciplinary process, which may be minimised by early advice and assistance from an experienced employment lawyer.Viewdisciplinary-processesprocedure
Grievance Handling PolicyA grievance policy explains the process and procedure followed by a business or organisation to resolve grievances or complaints against an employee. A grievance handling policy ought to outline the standard procedures for expeditiously resolving complaints and set out the rights and responsibilities of employees at every level.Viewdisciplinary-processesgrievances procedure

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