HR for Small Business, The Most Asked HR questions from small business

redundancy vs performance management, HR questions

Where do you get your HR advice from? What HR questions do you have?

In small business, it’s often hard to wear all the different business hats at all times… the business developer, the doer, the accounts, the marketing, human resources… Unfortunately, regardless of difficulty, the buck stops with you, both in making the business decisions, including HR as well as assuming responsibility and requirements when things do not go according to plan or perhaps you didn’t know what you didn’t know. But the good news is that you do not have to do it alone!

HR for small business is tricky. Large corporates typically have access to a team of HR professionals at their disposal, but small businesses have to wade through the minefield of potential issues, often making decisions based on limited information without that internal resource to ensure you are doing the right thing, and doing things right.

Businessary’s top four most frequently asked HR for small business questions

Lauren McCleery, Businessary’s HR Manager, provides HR for small business every day, giving them access to an HR professional who can answer their questions, provide guidance and action resolutions for issues as they arise.

“As you can imagine, with clients across many industries, I receive all sorts of questions, calls for help and ‘hypothetical scenarios’, so I thought I would share with you some of the most common questions that I get asked from small business owners,” said Lauren.

1. Am I paying my employees the right rate? What rate should I be paying them?

This is one of the most important questions you can ask, as this is such a common basis for Fair Work claims and expensive litigation. It is also a focus of audits that see many small businesses either back-paying people they’ve underpaid and receiving warnings or additional fines for noncompliance.

There are many sources that employers use as a guide for pay rates and salary, often market comparison, salary surveys, and even good old ‘guestimating’. Often these can be outdated, not industry specific or does not consider factors that impact your business. However, to be sure you are not underpaying your employees and exposing yourself to risk of a Fair Work claim, always refer to legislation! The Fair Work page also has more information on pay.

Firstly, with HR for small business you need to check if your employee is covered under an agreement or Modern Award (you can check the Fair Work website if you’re not sure). If they are covered by an award, using the classification guide, you can check the level of their role to know exactly what rate per hour and additional allowances you need to be paying. If your employees are not covered by any agreement or modern award, you will be guided by the minimum wage in the first instance as a must-not-go-below rate, but then you can also look at market comparison and business factors.

Sounds complicated? Unfortunately, when it comes to agreements, awards and minimum entitlements, it is an area that detail and interpretation is important. However, not to worry, we support all our clients by ensuring that they are advised with the information they need to do the right thing by their employees and their business, and most importantly to mitigate risk.

2. I’m a small business, do I really need employee contracts? We have an understanding, they are like family and they have been with me since the beginning – is it really necessary?

Legally? No. The national employment standards and modern awards outlines the minimum requirements which come into effect for all employees who don’t have contracts. However, an employment contract, like any contract, outlines expectations between employee and employer. It can connect to things like your code of conduct, the policies that are important to your business and the ramifications should things not go according to plan. Your employment contract is arguably one of your most important agreements so that both parties are on the same page and you can avoid the potential of a misunderstanding due to a verbal agreement.

We’re often told by clients that they started the business as a sole operator and over time have slowly brought on more people to help. Often, this organic growth over time, usually by word of mouth or referral, has meant that the standard process you would see in most businesses has been overlooked. For our clients, we advise that although perhaps some employees are family members or friends and they may feel standard processes are ‘overkill’ and not needed, we would strongly advise that apart from being essential for an employer employee relationship, you need to ensure your business is covered from risk if these relationships take a turn in a negative direction.

The legislation does a fairly good job of protecting employees, employee contracts can help protect your business! Employment contracts give the employer the opportunity to specify terms across a range of things such as notice periods, confidentiality, intellectual property, client relationships/restraint, physical property (i.e. computer, mobile), remuneration and salary package, and even behaviours (i.e. code of conduct).

3. I have an underperforming employee but I’m busy running my business and it’s also uncomfortable because I don’t know how to approach the issue, what can I do?

Underperforming employees can be costly, and an expense that small businesses cannot afford to carry. Whenever we’re asked about how to deal with an underperformer, we first check if you have employee contracts, policies or job descriptions in place. Our next question is whether the issue has been raised with the employee and is there is any documentation of the discussions?

When it comes to managing performance, there are several compliance gates you need to ensure you go through. For small businesses, it is essential that you comply with the small business dismissal code and follow the correct process of managing performance. Ideally you manage performance and there is sustained improvement.

However, in the cases when there is not improvement, dismissal may be the next step. If you follow the steps and ensure a fair and reasonable process, you are mitigating the risk of unfair dismissal.

It can be hard to translate the process into tangible actions while simultaneously ensuring that there is correct documentation in case your business is challenged. That is why we work closely with small business to ensure they not only know and follow the process in clear and appropriate actions, but also support in preparing documentation, letters and communication that is compliant and defensible.

4. An employee has asked me if they can work from home – should we allow it/do we have to allow them to work from home?

Requests from employees to work from home, change their hours and days are called ‘flexible working requests’. These requests can be made by some employees, however there are eligibility criteria for being able to make a request. There are also criteria to assess the viability for the business and whether a request can be accepted, all within a set time frame for a business to make a formal decision and response.

The short answer to the question is yes, if the employee is eligible and the business can viably support the request, you can (and arguably should) provide this opportunity to your staff. We always tell small business clients that you need to give due consideration to each request as it comes in and assess them on their merits. Sometimes a business may not be able to viably support the request, and that can be ok too, but it is important to know the reasons for appropriate refusal and how to manage it correctly.

Supporting clients through this process is something we enjoy doing as often it is not a black and white yes or no, but a negotiation and discussion on what is an option or alternative that will work for both and coming to that outcome. The assistance with managing the process and drafting correspondence and communication is something that saves clients time, reduces their business risk and allows them to focus on working on the business.


No matter the question, is it not only providing the answer that is important, but supporting small businesses to action and implement things correctly that makes the difference between knowing the right thing to do and doing the right thing. To read more about the support we provide for HR for small business you might like to check out our tailored HR packages here.

Do you have a HR question of your own?

Have any question you need answer to? Think you may need some expert advice on your people risk? Or need to just run something past an HR professional? Contact a HR Consultant on 03 9662 9900 and let’s get it sorted or contact us here.