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Start-ups often overlook human resources and employment issues

By Kristin Ramsey08 Jul 2016

Innovation and new business ideas have always been a strong part of Australia’s economy.

Queensland is heralded as an attractive destination for start-up businesses given our competitive advantages such as proximity to the Asia Pacific region and existing capability in a variety of industries.

The Queensland State Government’s recent announcement regarding the establishment of a ‘start-up precinct’ in Fortitude Valley’s historic TC Beirne Building means that up to 500 businesses will “…have a space where they will gather, incubate their ideas and learn from each other.".

This is a great initiative that is also getting traction in a number of other regions across the South East with similar start-up hubs being set up on the Gold Coast, Sunshine Coast and in Ipswich.

Obviously there are a lot of things going on when a business is in start-up phase – there’s business planning, IP and trademark considerations, business structuring decisions, taxation and regulatory advice to seek, not to mention market testing this cracker idea you have!

What is missing in the above mix though...?

In my experience start-ups rarely seek legal advice about human resources and employment issues. I imagine there a number of reasons for this including the desire to limit initial start-up costs and also perhaps because many start–ups have only a small number of employees.

In many situations the business owner simply uses an employment contract from a previous job, changes the company name and presto – there’s a contract for new staff.

After a few years the business has expanded, cash flow has improved and so the business engages a lawyer to prepare a “proper” template employment contract and perhaps a couple of workplace policies.

By this stage, employees have been working in the business for a few years and are already starting to get set in their ways. Why do I need to comply with new policies and procedures, they grumble? They are also suspicious when asked to sign a new contract employment – was something wrong with the old one, they ask?

Whilst it is certainly understandable that new businesses want to limit their expenses in the initial stages, employment documentation is really not an area to skimp on!

Poorly drafted employment contracts or policies can create a number of costly problems for businesses including:

  • the inadvertent creation of rights and entitlements;
  • confusion over terms and conditions;
  • inadequate protection of confidential information, IP, customer connections and goodwill;
  • non-compliance with the Fair Work Act and other applicable laws; and
  • exposure to a variety of different legal claims.

When starting out it is essential to put proper employment documentation in place from the Get –Go! This avoids a whole raft of headaches later on and can also help prevent a number of disputes and legal claims.

At Hynes Legal we regularly act for start-ups and offer fixed price employment documentation packages to ensure you start out on the right foot.

For further details please contact me at kristin.ramsey@hyneslegal.com.au or on 07 3193 0542.