By Kathleen Tierney
September 6, 2017
This article is the second in a 6 part series on the “Dirty truth of handshake agreements”
The realities of disgruntled employees (and former employees), dodgy business owners, or the enforcement of Australian employment laws and regulations, render a ‘handshake agreement’ as a potentially dangerous liability. Unfortunately, just a ‘handshake agreement’ does not protect you, your business or your employees.
Getting caught out at Fair Work
Incredibly, despite all the recent media examples of high profile cases including Australian wide franchise organisations, entire industry sectors, and celebrity chefs, being heavily and publicly fined by the Fair Work system, many business owners are still prepared to take a risk, ignore the rules, and hope they don’t get caught out.
It is our experience, and as evidenced in the annual statistics from Fair Work, ‘handshake’, scam, and simply ‘half-baked’ employment agreements and arrangements, are still widespread throughout Australian industries. In fact, we are pleasantly surprised and extremely impressed when a small to medium sized business already has robust workplace compliance in place before we start working with them, as it is simply not the norm.
Why SME’s have their fingers crossed?
That proper workplace compliance is the exception for most small to medium sized enterprises (SME’s), means that many businesses, business owners and employees are not adequately protected. However, when discussing these issues with business owners, we hear a range of attitudes and responses such as, the ever optimistic ‘she’ll be right’, the stressed hopeful ‘fingers crossed we don’t get caught’ to the more malevolent and defensive position of taking umbrage and display of arrogance.
And, in cases when an employer is trying to do the right thing by implementing workplace compliance essentials such as Letters of Appointment and policies, often he or she is confronted with push back and irrational (possibly suspect) indignation from their employees.
Old fashioned puts lives at risk
Recently we assisted a responsible client to issue updated Letters of Appointment and a few pertinent policies (such as Drug and Alcohol) to each of his 20 tradies. These employees were consigned to work on major new commercial construction works, where Workplace Health and Safety is paramount, the owner must comply to extensive site and contract terms and conditions, and the jobs for the whole team were put at risk if there are any compliance issues or breaches.
So, the business owner was understandably upset when at least one of the employees resigned saying he preferred to work the old-fashioned way with just a ‘handshake agreement’.
Resistance at substantial risk
However, despite even the loudest opinions of business owners, managers or employees, if any employer does not have proper workplace compliance in place, they are at immediate and substantial risk of:
- the surprise visits, audits or scrutiny of the regulators, such as the ATO, Fair Work Ombudsman, ASIC or Worksafe
- time consuming responses to employee claims, hearings and court appearances
- the cost of defending your position, regardless of having been otherwise fair in your dealings
- loss of sales and reputation
- negative media attention
- disruption to the company, and turnover of staff
- hefty fines, penalties and/or jail terms
- civil law suits
- non-budgeted lump sum back payments or settlements
- inability to properly address performance issues with employees
We believe that being haphazard or choosing to ignore Workplace Compliance is not worth the risk to you, your business or your employees. Look for our next article in which we discuss the good news and how workplace compliance is not too hard to achieve for any sized business
About the Author
Kathleen Tierney is the Executive Director and Owner of Business Embassy and its parent company, Career Embassy. She helps Australian companies with business management, HR services, policies and procedures. Kathy believes that great leadership and business success is achieved and sustained by connecting with our personal values.