Most Startups begin with, and are driven by, big dreams. A big vision and lots of risk of failure thrown in, for good measure. Many of us are aware of the statistics; more than 60% of businesses fail within the first 3 years. The reason for this is that it’s tough, really tough. Cash flow is a constant challenge, Startups are focused on sales, products, building profile and a great culture. Basically survival!

As a second thought, comes their team, and recruiting the best possible talent for the business. It’s my belief that your team is your greatest strength and also, potentially, your greatest liability. Key to your success is recruiting, motivating and retaining high performing teams, which increases productivity and profitability.

Unfortunately, SMES are fronting up to the Fair Work Ombudsman in far greater numbers than corporates and there is a good reason for this. They don’t have the level of HR support and knowledge that is required to run a business within the stringent and robust Australian Employee Relations framework that we operate in.

Now their risk is likely to increase with the Federal Government having given ‘in principle’ support for 22 recommendations from the Migrant Workers’ Taskforce Report.

This included criminal sanctions, introduced for serial offenders and serious, deliberate, cases of worker exploitation. “Criminal offences can be punished by imprisonment and community service, as well as fines, but there can be other serious consequences, such as loss of reputation and income if disqualified from running a business,” the report noted.

So why is this a problem for Startups?:

  • Startups have a tendency to ‘cut corners’ or ‘wing it’
  • They are prepared to take a riskier position, to make it through another month
  • There is a sense that they can tidy things up later when they have ‘made it’
  • They assume that ignorance is a defence
  • They often use Independent Contractors incorrectly and are ‘sham contracting’, as a result
  • They are unaware of, or ignore, the Fair Work Act and their ER obligations under their relevant Modern Award

What can they do to protect themselves?

  • Identify what Modern Award(s) their business is covered by and abide by the terms and conditions
  • Have a copy of the Modern Award(s) in the office, where employees know where it is and can access it
  • Send out the National Employment Standards (NES) to all new employees, including casuals
  • Know what pay and entitlements your employees require
  • Develop and adhere to a ‘best practice’ recruitment process
  • Learn to, and have, the difficult conversations to exit employees that aren’t working out

Educate themselves and a great way to do that is to read my book ‘From Hire to Fire & Everything in Between’ to quickly get up to speed. Being compliant with your ER obligations is not optional – it’s a serious business risking, not only gaol time, but each breach of the Fair Work Act carries a fine of up to $63K, or a personal fine of $12 600. I am pretty sure a fine such as this would bring most Startups undone.