Labor

The structure of a business and the types of people you employ can make a big difference to productivity and profit, as well as your culture, employee engagement and retention.

There are many options: full-time, part-time, casual, fixed-term, independent contractor, labor hire worker… the list goes on. Confused? You’re not alone.

The world of work is changing. Long-serving, full-time 38-hours-a-week employees are becoming a rarity, replaced by a new generation which demands more flexibility from their employer.

Turnover rates are increasing, too. It’s quite normal for employees to move on after just three to five years. So, how do you engender loyalty and create permanency to establish stability within your workforce and avoid the costs and lost productivity of constant churn?

Legislation has tightened the parameters around casual employment. In 2017 a casual conversion clause was added to more than 85 modern awards. It was designed to counter the unrestricted use of casual employment and allow those casuals with more than 12 months service, who have worked regular hours, the right to request to be made permanent part-time or full-time.

Labor sought to further protect the rights of Australia’s 2.6 million casual workers

This became a hot topic at the recent Federal Election. Labor sought to further protect the rights of Australia’s 2.6 million casual workers, by introducing a definition that makes it clear that casual work is short-term, intermittent and irregular. Employers are worried about the prospect of more red tape and reduced flexibility.

We have also seen a rise of independent contractors, with much debate about whether the relationship is truly independent or closer to one of employer and employee. A recent decision by the Fair Work Commission (FWC) determined that Uber drivers were independent contractors, not employees.

Employers, meanwhile, have used labor hire arrangements to take advantage of reduction in time on recruitment and selection, to access specialised skills and to manage risk and payroll costs. This option has also become more complex, with increased regulation in several States requiring labor hire providers to be licensed.

So how do you navigate your way through this ever-changing landscape? Understanding your options is the first step. Look at what others in your industry are doing, what your modern award might allow (if your workers are covered by one) as well as what other industries are doing.

Second, tie your people decisions to your business operations and overall strategy. If you have seasonal demands then labor hire, or a casual workforce is going to suit your requirements. If your industry is going through disruption, maybe you need some stability with the flexibility to downsize if you need to – perhaps with a blend of a permanent workforce combined with fixed term, or casual options.

What do you need to offer prospective employees to attract them to and retain them in your business? If they are students, then a more flexible arrangement would usually be preferable, as opposed to a family with financial commitments looking for a more permanent arrangement.

Getting the mix right for your business will depend on several factors. You will also need to consider the impact on your cash flow, fluctuating wage bills and the additional on-costs of permanent employees, such as superannuation and leave entitlements.

The key is to not set and forget, or to structure your business because that’s the way you have always done it. The world of work is moving too fast. Ensure you review and monitor the work arrangements of your employees as they will undoubtedly evolve over time.

Esther Colman is the director of The HR Dept Eastern Suburbs Sydney, providing outsourced HR services, practical advice and support for small to medium-sized businesses. If you would like to talk to Esther about how she can help your business call 02 8052 3355.