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HR Services

March 2022 Newsletter

Understanding the Importance of a Probation Period

A probation period is an opportunity for an employer and new employee to assess suitability.

The length of a probation period is commonly matched to what is referred to as the ‘minimum employment period’ under the Fair Work Act 2009. For employers with less than 15 employees, the minimum employment period is 12 months. For employers with 15 or more employees, the minimum employment period is 6 months.

A month means a calendar month (as per Section 2G of the Acts Interpretation Act 1901 Cth). For example: an employee commences 1 May 2022. The employee’s minimum employment period will end on 31 October 2022.

When counting total number of employees, you must include all full time and part time employees and regular casual employees. If your business has an associated entity, you must include the employees from that associated entity in your total headcount.

Why is a probation period important?

During the probationary period, should you determine the employee is not meeting the required performance outcomes of the role and terminate their employment, they cannot make an unfair dismissal claim. Once an employee is outside their minimum employment period, should you terminate them, they can make an unfair dismissal claim to Fair Work Commission (FWC) and you would need to be able to demonstrate:

  1. There was a valid reason for the dismissal related to the employee’s capacity or conduct
  2. The employee was notified of the reason
  3. The employee was given an opportunity to respond to the reason related to the capacity or conduct
  4. That the employee was warned about unsatisfactory performance before dismissal
  5. You did not refuse the employees request to have a support person present at any discussions relating to the dismissal

The FWC will consider the above, as well as the size of the business and the subsequent impact on the procedures that effected the dismissal, the degree to which the absence of dedicated HR specialists would be likely to impact the procedures followed in effecting the dismissal and any other matters they consider relevant.

What happens if it is determined that an employee was unfairly dismissed?

The primary remedy for the FWC is reinstatement of the employee to their previous role. However, often it is determined that the relationship breakdown does not make this a viable option and the employee is awarded compensation. The maximum compensation is 6 months wages or the compensation cap, which is $79,250 for 2021-22 FY (the lesser of the two will be applicable).

What’s best practice?

We recommend that all new employees are subject to a probation period that reflects the minimum employment period under the Fair Work Act (2009). This should be stipulated in their contract of employment.

For new employees, you should set clear performance expectations from the outset and have regular catch ups to provide the employee with timely and helpful feedback regarding their performance. We recommend this occur at the employees 1 month, 3 month and prior to their 6-month anniversary.

If you determine that an employee is not suitable for the role based on their performance, by following the above process, you can be confident that as an organisation you did what you could to set that employee up for success and provide them with regular feedback on their progress.

Further info?

You will find the following resources available in our client Resource Hub to support you with the effective management of probation periods:

  • HR guide
    • Managing Performance
    • Termination of Employment
  • Onboarding checklist
  • Successful probation letter
  • Monthly check in form
  • Probation review form

 

Preparing your labour cost budget for 2023 FY

As we approach the final quarter for the 21/22 financial year, many of you will be finalising your budget to determine any projected increases to labour cost for the next financial year. This information may also be used to inform any remuneration increases.

  1. The Fair Work Commission are currently undertaking the annual wage review. This is the review that sets the National Minimum Wage (currently $772.60/week for a full-time employee), as well as the minimum rates in all modern awards. They are currently going through the consultation process and reviewing the statistical data. Over the last 10 years, the wage increases have varied between 1.75% to 3.5%. In should be noted that the 1.75% was 2020 when there was significant uncertainty around Covid. The average increase over the last 10 years is 2.75%. Historically any increases have been made effective from the first full pay period on or after 1 July each year (Covid changed this process with some harder hit industries seeing a delayed commencement date).
  2. Superannuation is due to increase to 10.5% from 1 July 2022.
  3. Insights from the latest National Salary Survey (October 2021) show that the national average annual salary movement recorded was 2.9%. The average annual salary movements by industry ranted from 2.5% to 4.2% across all industries.
  4. According to the RBA, as at March 2022:
    1. Economic growth is up 4.2%
    2. Inflation is at 3.5%
    3. Unemployment rate is at 4.2%
    4. Wage growth is 2.3%
    5. Average weekly earnings are $1328.90
  5. The all-groups Consumer Price Index (CPI) measures household inflation and includes statistics about price change for categories of household expenditure. CPI is important when determining any remuneration increases as it reflects the increased cost of living to employees. Employers often use the CPI increase as the minimum remuneration increase to ensure that their employees are no worse off with their current salary as the CPI increases. According to the most recent ABS update (December 2021) quarter, over the twelve months to the December 2021 quarter the CPI rose 3.5%.
  6. Market remuneration rates are being driven by an increased demand for talent. The above statistical data does not take into consideration the market benchmarking for each position. Liquid HR recommends you also undertake a remuneration benchmarking exercise to ensure your salaries remain competitive and in line or above market rates.

 

Resource Hub

The Liquid HR Client Resource Hub is now up and running and all clients should have received their login details.

The Resource Hub contains hundreds of resources including template contracts, policies, forms, letters, checklists, and HR guides.

If you have any additional resource suggestions, please email enquiries@liquidhr.com.au

To purchase access to the Client Resource Hub, visit https://liquidhr.com.au/product/your-complete-resources-subscription/

 

High EQ – It May be your Organisations Competitive Edge

EQ or emotional intelligence is the ability for an individual to understand, use and manage their emotions. Individuals with high EQ are said to build stronger relationships, handle stress more effectively, deal with change and uncertainty well and ultimately foster a more engaged and positive working environment.

Having a leadership team composed of individuals with a strong EQ can have a profound impact on the overall performance of the organisation. With the increased demand for talent and organisations listing retention of high performers as one of the top priorities, focusing on the EQ of your team is critical.

When organisations prioritise short term performance over EQ and values driven behaviour, the overall culture of the organisation will be impacted. Employees will see people promoted based on outcomes, rather than looking at both performance and the way they interact with others, communicate and lead. Whilst a solely performance-based focus will result in short term growth, over the long term the organisation will experience high turnover, inability to attract talent and a culture that is characterised by disengagement and grievances.

So, you’re interested in assessing and growing your teams EQ, where do you start?

There are many assessments available on the market that can provide you with insight into an individuals EQ. Whilst these are beneficial for candidates as part of your overall recruitment process, you’re already working with other individuals in the business and you have been able to observe the way they interact in a variety of situations.

Going through a review process that incorporates a 360-degree review (feedback from direct reports, colleagues, and other key stakeholders), an employee self-assessment, manager feedback and an EQ assessment can be used together to have a transparent conversation with an employee regarding their current EQ and opportunities to build on where they are. Supporting these opportunities with 1-1 coaching and regular feedback can support you in building an organisation that is robust, highly engaged and productive.

 

Ask an Expert

If you have a question you would like to submit for us to incorporate in our next update, please email enquiries@liquidhr.com.au

We have been trying to implement the new casual conversion requirements. We have a number of casual employees who have met the criteria to be offered either a permanent part time or full-time role. If the employee is offered the option to transfer to full time or part time and they refuse or don’t respond, what do we need to do?

Employees must respond to an offer to convert within 21 days of receiving the offer. If they don’t respond, you are able to assume they’ve declined the offer.

If they refuse the offer to transition, you should keep a record of your offer to transition to permanent employment and the employee’s refusal. The employee can continue to be engaged on a casual basis.

For more information on the above, please contact us on 1300 887 458 and speak with one  of our HR Consultants. If you are interested in learning more about our HR services, including HR OutsourcingHR ConsultingHR Advisory Services, contact us at enquiries@liquidhr.com.au.