“Don’t do it,” says Douglas. Not only does it potentially breach industrial relations laws as discriminatory behaviour, making redundant a staff member on workers compensation does not work to cut premium costs.
“Unless the departing staff member resigns or takes voluntary redundancy, the case estimate for premiums will not be reduced (unless the employee has been on workers comp for a number of years and is no longer ‘premium sensitive’,” he says.
Depending on how long the staff member has been on workers compensation, it can be a breach of workers compensation laws as well.
It’s possible to roll AWAs or ITEAs into collective agreements now before the new law comes into force.
Douglas says that for many employers who rely on contractors and casuals, this is a good idea because after 1 July the rules about what terms and conditions can be part of a collective agreement change, and unions are more likely to become involved in the negotiation and execution of agreements.
He says how firms use contractors and casuals in particular is likely to become part of collective agreements again, ending the flexibility that employers enjoyed under WorkChoices. If employers enter a new collective agreement now, it will be in force until it expires.
Douglas says if business owners are looking to buy distressed businesses that have staff on too generous pay and conditions, there is good reason to act before 30 June.
“Under the current laws, 12 months after an acquisition pay and conditions for staff at the target business fall to match those of the acquirer’s staff,” he says. “After 1 July under the new IR laws, pay and conditions for those staff don’t fall at all for the life of their agreements. So the benefit of the purchase may be limited.”
Be aware that if you outsource work to independent contractors you could be facing increased scrutiny.
Vitale says the new laws covering independent contractors have a strict definition of a contractor, and there have been some recent cases where independent contractors have been found by courts to be employed under sham arrangements, and employers have been forced to pay backpay and fines.
Under the Independent Contractors Act and the Workplace Relations Act, companies can be fined up to $33,000 per offence.
Have you been saving your profits for the past 10 years for a rainy day while your business partner has been living it up? What’s going to happen if your business needs a capital injection?
Lots of companies are experiencing cashflow difficulties at the moment. It’s important that your shareholder agreements provide for when a capital injection is required, are how that will work. Also if it becomes necessary to sell some or all of the business, the shareholder agreements should set out how that will happen.
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