These Are Top Legal Issues Entrepreneurs Should Be Aware of in 2020

Entrepreneurs need to make it a priority to spend a bit of time understanding where they stand from a legal point of view, particularly when it comes to employing others
These Are Top Legal Issues Entrepreneurs Should Be Aware of in 2020
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Director, Voice Lawyers
7 min read
Opinions expressed by Entrepreneur contributors are their own.

When we’re setting up a new business, there’s always a lot to consider - you’ll be prioritising the ‘big’ milestones such as finding your first customer, renting your first premises, setting up a website and finding your first team member.

But with every ‘win’, it’s important to understand the responsibilities that come with this, and that’s why I urge entrepreneurs to make sure that this year they spend a bit of time understanding where they stand from a legal point of view, particularly when it comes to employing others.

You might think that finding the best fit for your company culture is the biggest hurdle to overcome. You’ve finally found someone with the right experience and attitude to join your team. But remember as soon as you make an offer, you’re entering a legally binding relationship. 

The easiest way to get your head around what’s required is by familiarising yourself with the National Employment Standards (NES), which sets out ten minimum standards that cover core entitlements for work hours, leave and termination of a contract. The majority of Australian employees will be covered by the NES, the principle exception being some state and local government staff members.

The next step is to establish whether they are covered by an award, a contract of employment or a ‘common law’ employment arrangement. Awards relate to particular industries or occupations and set minimum standards in terms of pay rates, leave entitlements and other conditions.

A contract is more common for small businesses that may not be in a traditional trade, particularly if they are service-related.  A contract of employment sets out the terms and conditions of employment. It cannot contain terms which are below the legal minimums set out in the NES, awards, enterprise agreement or other registered agreements that may apply.

Without a relevant award or contract your arrangement will fall under a common law employment arrangement, a civil contract that provides the foundation for all employment relationships. It encompasses a number of duties that an employee has to adhere to, such as duty to obey lawful and reasonable orders, and the duty of care and competence. It’s essentially common sense, what you would expect from a productive and healthy employer-employee relationship.

With the rise of flexible working arrangements it can be confusing to see how the arrangement you’ve come to with your employee fits into these more formal ‘older’ style employment structures and there have been a lot of litigation around uber style companies in 2019. If you do wish to move away from the stock standard employment structures you can but with caution. You must consider the BOOT test, that is the employee must be Better Off Overall than if they were employed under the minimum standards and you’ll need to demonstrate how this is the case and both sign off on it.

Another element to consider when moving into 2020 is pay. Did you know that earlier in 2019, the Fair Work Commission determined that a 3.0 per cent increase of the national minimum wage took effect for the first pay period on or after 1 July 2019. If you are employing people on minimum wage and this change passed you by, it’s important to implement it now. While the previous national minimum wage was $18.93 per hour, the new national minimum wage is $19.49 per hour. If you were too busy running the business to take action, you may need to factor in back pay or risk legal proceedings.

One thing we often don’t consider until the issues slaps us in the face is where the law sits in terms of your staff and their use of social media in and out of the workplace. With 18 million - that’s 72 per cent of Australians active on social media, it’s likely your team members use it to publish pictures, connect with friends, and more importantly for you - share opinions. But why is this any of your business? It’s when the lines between work and play blur that you need to understand where you, and they stand. It’s when a team member does something inappropriate that could reflect poorly on you as their employer, or if they directly share comments or confidential information, that you need to be aware of your legal standing.

It’s common for employers in this instance to act swiftly and dismiss anyone who they deem to be negatively slurring their place of work in a public space.

A case of note (O'Keefe v Williams Muir's Pty Ltd [2011] FWA 5311) involved a staff member who went on an expletive-filled rant about his employer and the fact that he had not been paid, as well as sharing comments that could be construed as threats to a colleague. The workplace had a clear Employee Handbook and Deputy President Swan stated that Mr O’Keefe could not argue that he was not aware of what was expected of him and the consequences of his actions.

While the comments were made out of work hours and from his home, and while the court acknowledged My O’Keefe was “frustrated by his unresolved pay issues”, In the end it was decided that “the manner in which he ultimately dealt with the issue warranted his dismissal for misconduct.”

In this case, the employer’s immediate action to dismiss the employee was the right thing to do. But they did have to go through a timely, and likely stressful unfair dismissal court process first, which is never an activity a busy entrepreneur wants to spend their time doing. If you are worried about a team member’s activity on social media, it’s worthwhile to consider the seriousness of it, and the overall threat to the business. It could be that the employee has just not thought about how it might impact the business, or their reputation as a professional, and a word in their ear puts a stop to it.

Before taking drastic action, it’s best to obtain legal advice, and consider what other disciplinary methods might be appropriate, in order to avoid potential unfair dismissal charges.

Running a business is hard work! When you’re busy trying to grow your customer base, stand out from competitors and make sure your staff are paid, and overheads covered, the last thing on your mind can be your legal responsibilities. One thing I always recommend is that when it comes to staff, is to ensure clear communication at all stages. Set up regular one-on-ones with team members and stick to them, however, busy you are. The saying about staff being our greatest asset has a lot of truth in it, and by understanding how the team are performing at work, how content and motivated they are, will make sure you can spot any issues in advance, and avoid any potentially legal situations. Even if your business is a tiny enterprise, seek legal advice when setting out. By ensuring you are ticking the boxes and meeting your requirements from the offset, you’ll be confident that you’re in a safe and secure position, legally as you continue into 2020.

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