The Construction industry is highly regulated and the legislation on employee payments and conditions are difficult to navigate without assistance. This Tech Talk focuses on your rights and obligations as an employer and to help keep you are up to date with all the current information you need to run your trade business.
Watch the full replay of this tech talk below.
Employment Law for Tradies [0:06:26s]
The Fair Work Act and modern Awards are complex systems that can create issues for tradie businesses. Modern Awards set out minimum conditions for employees covered by them, including rates of pay and hours of work. Different industries have specific awards that apply to them, such as building construction or plumbing and electrical work. Employsure services around 17,000 small to medium-sized businesses across Australia, helping them to confidently navigate employment rules and regulations.
Enterprise Bargaining Agreements (EBAs) [0:9:34s]
EBAs replace awards and are beneficial for employees, but not necessarily for employers. Employers may benefit from an EBA if they are going for a tender that requires it. However, more often than not, EBAs are not worth it and can cause financial hassle for the company. Trade unions are common in the construction industry and they play a big role in bargaining for Enterprise agreements. Unions have rights of entry to recruit employees and act as support people for employees in disciplinary matters. There are restrictions on what Unions can do to protect businesses from union interference.
Tradie Award Rates [0:13:10s]
Employers must ensure they pay employees enough to match minimum obligations under the award rate that applies to their trade. Paying above award rate plus penalties or an all-inclusive flat rate of pay can save time on administration but may cause financial hassle for the company.
All-Inclusive Rates can potentially cost a business more money than award rates plus entitlements. Annual leave, superannuation, and sick leave must be paid out at the all-inclusive rate and there is also the risk of underpayment if not done correctly. The specialised wages team at Employsure can assist tradie businesses in calculating all-inclusive rates and potential underpayments. This will help avoid administrative burden of working out allowances and missing any payments.
There are many important considerations when paying employees, including annual pay increases and avoiding potential underpayments. Documentation is critical when using all-inclusive rates; ensure offsetting clauses are included in employment contracts to protect against issues down the line. It’s recommended that employers draft documentation with assistance from employment law professionals. With tradie staff in high demand, you may need higher wages then award rates to retain your good workers.
The fair work act itself is absurdly complicated and then you've got to add on top of that the Australian employment system is arguably the most beneficial system for employees and so on the flip side of that, that means that it's the toughest for employers.
Types of Tradie Employment [0:18:25s]
There are different types of employment in the construction industry, here are some key points to consider for each type.
Building Construction Award
The building and construction award captures a large section of the industry that employs tradies such as carpenters, painters, and other tradespeople. Full-time employees work 38 hours per week while part-time employees work less. For part-time employees, it is important to specify their starting and finishing times each day, days worked per week, and total hours worked per week in writing to avoid potential overtime payments. Full-time employees under this award are entitled to rostered days off (RDO), which can cause issues with time sheets and payrolls.
Casual Employees
Casual conversion clause requires employers to extend an offer of permanent employment after a defined period of time (usually 6-12 months). If employers fail to do so, they can face some hefty fines.
Daily Hire
Daily hire is similar to permanent employment but does not require notice of termination. Employers only need to provide one day’s notice instead of four weeks’ notice for full-timers.
Overall, it is important for employers in the construction industry to be aware of the different types of employment and their respective requirements under relevant awards.
Hiring a Tradie Apprentice [0:22:58s]
Apprentices come with their own provisions that need to be considered, such as a different rate of pay and specific documentation requirements. Apprentices receive seperate conditions to normal employees, including a day off every week for training at the RTO, paid training courses, and textbooks. Employers in building construction must pay for these expenses.
Whether or not it is fine for apprentices to pay for their course depends on the award they are covered by. Employees must reimburse apprentices within six months unless they do not satisfactorily complete the course. If an apprentice fails, businesses still need to pay for it. However, if they haven’t been there at all, that’s the only time businesses wouldn’t have to pay.
Apprentices must join a registered training organisation and have a formal agreement for training between the RTO and the employer. They also need to be registered with a state trading authority. It is important to draft a fixed-term contract for apprentices to avoid unfair dismissal claims after completion of the apprenticeship. If terminating an apprentice, communication with both the RTO and SDA is necessary to obtain mutual agreement. Terminating an apprentice can be difficult unless there is misconduct. Performance issues are not sufficient grounds for termination due to their need to learn and build competency levels.
Every business sooner or later would get an unfair dismissal claim. We need to make sure that we follow the correct processes when terminating employees otherwise they can come back and say hey look this was unfair, this is unjust, this was unreasonable. I'm going to get some money from the company.
Independent Contracting and Sham Contracting [0:25:46s]
Engaging independent contractors incorrectly can lead to significant penalties from various authorities. The difference between genuine contractors and employees can be unclear, leading to sham contracting risk. Misrepresenting the relationship intentionally or unintentionally can result in retrospective payment of employee entitlements incorrectly labeled as contractor payments.
It is important to be careful when engaging contractors due to severe risks. Businesses can be fined up to $63,000 for misrepresenting employees as contractors. Business owners can be fined up to $12,000 per breach if they willingly had someone on as a contractor despite them being an employee. Fair Work Ombudsman can give fines up to $126,000 to just the business owner themselves if they find out about sham contracting.
It starts blurring the line between independent contractor and employee when hiring multiple people or having them continually work on tasks. There are lists of questions available called Multi-Factor Test Questions to help you identify if the employment falls under independent contracting or not, but it doesn’t necessarily mean that’s the definitive answer, always sought professional advice if you are unsure.
Risks of Improper Employee Termination [0:32:49s]
There are many risks associated with improper employee termination and it is important to follow correct procedures to protect your business. If an employee is terminated without following correct procedures, they can make a claim for unfair dismissal. The claim can be up to six months’ pay or 26 weeks’ worth of pay from the company. The process you take when terminating an employee must be fair and reasonable to avoid these claims.
An adverse action claim is when an employee is discriminated against for something like pregnancy or ethnicity. This type of claim is uncapped, which means it can result in huge fines and amounts that need to be paid back. Employees can also make claims for bullying and harassment in the workplace.
However, the biggest risk associated with improper termination is not having correct policies and procedures in place to follow.
Why you need a Contract for Employees [0:35:53s]
Contracts provide certainty around obligations for both employers and employees but many small businesses may not have them due to the cost involved with engaging lawyers to draft them up. Written contracts will help you stay compliant with statutory obligations, protect your businesses and employees, set expectations, and help enforce those expectations.
Confidentiality agreements are also important to protect businesses. Post termination restraints are used to protect businesses from employees taking clients or other employees after work. Overall Contracts protect businesses from potential harm caused by employees while also setting clear expectations for what is expected in your business. It’s important for employers to train their employees on company policies so that they understand them fully.
A lot of small businesses don't have contracts because they just don't want to engage a lawyer to do it for them, because lawyers can be expensive but they're incredibly important when managing risk. Essentially contracts provide certainty around your obligations and those for the employee.
Wage Policy and Employment Law [0:41:48s]
The Fair Work Act has undergone significant changes recently. There are increased penalties for serious violations where employers knowingly breach their obligations. Employers are prohibited from cashback schemes where they unreasonably make an employee spend or pay money for the employer’s benefit.
Time tracking is not just important for costing labor but also a legal obligation. It is an obligation for all businesses to keep records of employees’ timesheets and payslips for seven years, with increased penalties for non-compliance. Keeping accurate records can help protect both employees and employers down the line. TradiePad offers a variety of job management and project management systems that manage time tracking and time sheets to help employees with this.
Trade Industry Allowances and Entitlements [0:46:24s]
The building construction industry has various allowances that are often overlooked, including tool allowances, industry allowances, and special allowances. These can be built into the rate of pay or separate from it. If you fail to include these allowances it can result in underpayment of your employees.
Other trades and industries also have unique entitlements that employers need to be aware of, such as redundancy schemes and crazy entitlements found in awards. Joinery, Building, Trades, plumbers, electricians, all have their own unique entitlements that employers need to be aware of. Awards may contain crazy entitlements such as specific redundancy schemes where employees receive redundancy pay even if they resign voluntarily.
How Employsure Help Tradies [0:48:18s]
Employsure helps employers with employment law and compliance, here are four key ways they can help:
Compliance Review
A complete review of workplace documentation including contracts and policies is conducted to ensure compliance with legislation. Wage rates and payslips are also reviewed for compliance.
Unlimited Professional Advice Service
Employers can receive advice on any employment relations or workplace safety issue at any time of the day.
Peace of Mind
Following the company’s advice on termination procedures can protect employers from unfair dismissal claims.
Assistance with Employee Issues
Employsure provides assistance with employee issues such as absences, workers’ compensation claims, and health and safety concerns. They have over 900 clients in trades alone and around 17,000 clients in construction or building trades.
It's an obligation for all businesses to keep records, keep time records and keep payslips of employees for seven years so each employee needs their records kept for seven years and the penalties have now gone up for that.
Portable Redundancy Scheme [0:51:06s]
Queensland has a portable redundancy scheme called the Building Employees Redundancy Trust. This is a common scheme where you pay into the State based fund and they pay you out when needed. Building Trades also have portable long service leave which is state-based.
Inductions In the Construction Industry [0:51:06s]
On-site specific inductions are managed by head contractors running the site. It’s their obligation to provide those site inductions so that employees are familiar with all of the things they need to know about first aid, master points, etc. Company level inductions cover things like what happens if you’re injured or there’s some sort of incident. It’s important to make sure employees know what’s expected of them and what your policies and procedures are.
Industry Specific Redundancy Scheme [0:54:09s]
There is an industry-specific redundancy scheme under building construction that applies to permanent employees and casual or independent contractors. There are specific regulations in this scheme that most employers don’t know about. Even if the employee has been there for less than a year, they will receive some sort of redundancy payout. Within the first year, it’s 1.75 hours for every week that they work.
MEET THE SPEAKERS
As a Senior Employment Relations Adviser, Scott provides specialised advice on complex employment relations and work, health and safety matters to Employsure’s small business clients across Australia.
Clinton is driven by a passion to help the construction and field services industries evolve through the use of technology and education.
