Introduction
Karen Arnold:
Welcome to HR2Go by Effective Workplace Solutions.
In this episode of HR2Go, we’ll be chatting about HR myths. Most myths sound practical, simple and logical, and this is actually what makes them so dangerous.
The problem with an HR myth is that it often ignores context, awards, the Fair Work Act, processes, documentation and, of course, risk.
Joining me today to unpack this topic is Greg Arnold, the founder of Effective Workplace Solutions. Welcome, Greg.
Greg Arnold:
Thanks, Karen. Good to be here.
Why HR Myths Create Risk for Employers
Karen Arnold:
So Greg, you’ve seen it all over the years, everything from employers relying on pub lore or industry gossip or some gold nugget of advice that they heard from another business owner, only to find themselves in hot water later.
Greg Arnold:
Yeah, absolutely. I think these myths have been exaggerated over time, but they still remain in place.
I’m still hearing stories of situations or laws that used to exist 30 or 40 years ago, but have definitely changed over time, and they’re still being propagated.
Karen Arnold:
Yeah. So when we talk about HR myths, we’re talking about those kinds of things that employers say with absolute confidence, like, “You need three warnings before a termination,” or, “Salaried staff don’t need timesheets.”
As you flagged, Greg, there is a danger with these myths because whilst they may contain a tiny piece of truth, they’re often incomplete. And we know that incomplete advice, when it comes to employment law, can be super expensive.
Greg Arnold:
Yeah, that’s right, Karen.
Most employers do not get into trouble because they set out to do the wrong thing. They get into trouble because they’ve relied on something that they thought would have been common knowledge.
In preparation for doing this podcast today, I did a little bit of research into how an HR myth might start. Basically, the general rule of thumb is that someone gets advice for a specific situation, which makes sense.
Someone else repeats that advice as a general rule. From there, a manager applies it to a different employee. Then the business builds a process around it. Five years later, everyone says, “We’ve always done it this way.”
Karen Arnold:
Yep. And honestly, that’s a terrifying approach to compliance.
Greg Arnold:
Yeah. I think that’s the propagation that I spoke about before. It starts off as a seed and all of a sudden it becomes this giant problem based upon something that may have been in place 30 or 40 years ago.
Karen Arnold:
Right. Well, let’s dive in and unpack some of our favourites.
We thought we’d target some of the most common myths that we hear as we move in and around our work each day. Believe it or not, these are coming up regularly.
HR Myth: Salaried Staff Do Not Need Timesheets
Karen Arnold:
So myth number one to kick it off: salaried staff do not need timesheets.
Greg Arnold:
Yep, this is a common myth.
The reality here is that employers still need to keep accurate employment records, including for those on annual wages or salaries.
The risk, if you’re prescribing to this myth, is that if an employee works excessive hours, or claims to have worked excessive hours, without any timesheets or some other recording platform, the business may be unable to prove that the salary actually covers the hours that were worked.
So there’s no timesheet or something in place to substantiate the hours.
For example, even if the employer pays what they might consider to be a good salary, he or she assumes that there’s no overtime and there’s no risk in terms of the overtime. But if there is a claim for overtime payments, weekend penalties, or indeed public holiday penalties, then depending on the contract, they can still be liable.
The problem is that they’ve got no records and therefore there can be no defence.
I think the other problem is that in the absence of timesheets, or some sort of process to record time worked, it also creates issues in terms of work health and safety.
The primary issue I’ve come across is, for example, a psychosocial hazard claim where employees say they’ve had to work 70 or 80 hours every week to cope with the demands of the job.
Without any timesheets or time recording platform or device, how do you disprove that claim? You can’t, because you’ve got nothing there to prove it.
The other issue, in terms of work health and safety, is a fire or bomb threat. If you’ve got no time recording system, how do you determine who’s in the building or on the premises and who’s not?
Karen Arnold:
They’re really valid points, Greg.
So I think, you know, we’re debunking this myth. Salaried staff are still required to complete a timesheet, and for a number of reasons.
Probably the most critical being that, in the event there is some sort of dispute down the track regarding the hours they’ve worked, we need a mechanism that allows us to prove or disprove that.
But also, as you said, the Fair Work Ombudsman has requirements around keeping accurate and complete records for employees. There are obligations there that don’t differentiate between how an employee is employed. You need to keep accurate and complete time and wage records for employees.
And then, of course, as you pointed out, there are also some really practical reasons why those time and wage records are so important. That includes having information in terms of work health and safety risks, or genuine safety hazards such as a bomb threat or a fire, where we do need to know who’s in the building at what time.
If payroll has access to those records, obviously they can determine that.
So there you go. Salaried staff do actually need to be completing timesheets.
HR Myth: You Need Three Warnings Before Termination
Karen Arnold:
Over to myth number two, and this is another oldie but a goodie: you need three warnings before you can terminate.
Greg Arnold:
Yeah, well this is my favourite oldie but goodie, and it is a common myth.
I think it used to be called “three strikes and you’re out,” and it stems from the 1980s when there were a couple of decisions that came out of the state tribunals and the Australian Industrial Relations Commission, now the Fair Work Commission.
There were a couple of decisions where a commissioner made a decision and suggested that you needed to give someone three warnings before you could terminate them.
As I say, that’s the myth that stems from the 1980s. But the fact is, there is no universal rule relating to warnings. It’s all about fairness and indeed the context of the issues involved in the termination.
I’ve actually seen cases where the employer has defended a claim of unfair dismissal where there has only been one warning, and even one case where only one verbal warning was given.
So it depends on the circumstances and the context around that dismissal.
The important point here, Karen, is that you need to make sure the employee knew there were issues in relation to their performance or indeed their conduct, but they failed to heed that warning or those warnings.
That’s the important part. It’s not necessarily the number of warnings. It’s the warnings that were given, how they were given, and whether the employee understood those warnings.
Karen Arnold:
Yeah. So the message here is that it’s not about the number three. It’s about fairness, evidence and context around that.
We can be terminating someone who has only received one warning, or I would argue in the most serious of cases, perhaps no warnings if their behaviour justified summary dismissal.
But then, by contrast, we could have someone who’s had maybe eight or nine warnings over a period of, say, 15 years of their employment because those warnings are about different things that have occurred within that workplace.
Greg Arnold:
Yeah, I think the other important point is that when you’re giving those warnings, you need to make sure they understand that if there is a continuation of the issues in relation to performance, they may end up with further disciplinary action, which may include termination of employment.
Karen Arnold:
Yeah, and I think probably a timely reminder too that the actual purpose of warnings was not so much about getting to a point of exiting someone. It was actually designed to provide someone with an opportunity to improve.
Greg Arnold:
Great. It’s part of a performance management process.
So yes, we use warnings to justify decisions to terminate, but that’s not actually the primary purpose.
I think the other problem I see in prescribing to this myth is that employers often have to delay the termination because they think they have to wait for three warnings before they terminate, or they just become impatient and terminate with no warnings at all.
That becomes an issue.
I can also recall, when the myth was still around, well, the myth is still around, but some years ago one of our clients came to us with an unfair dismissal case where they provided two warnings on one day and another warning on the following day just to get through the three warnings.
The Commission saw through that, obviously.
Karen Arnold:
Look, I think you’re right, Greg. These myths can add complexity in those scenarios because people are relying on information that isn’t accurate and then potentially making decisions that don’t protect their business or put them in the best position as a result.
HR Myth: Probation Means We Can Terminate Without a Reason
Karen Arnold:
All right, let’s dive into myth number three: probation means we can terminate without a reason.
Greg Arnold:
Yeah, well this is another myth, and it has also been around for a long time.
The reality is that employees who are on probation still have rights during probation.
While there’s a six-month jurisdictional barrier to take an unfair dismissal claim, in other words, if you’ve been employed for less than six months and you’re dismissed, you can’t take an unfair dismissal claim, the problem is that employees within their six-month probationary period still have rights in respect to general protections claims, discrimination and work health and safety.
There is this myth that you can just terminate during probation without providing any reasons for the dismissal, or that you can say, “You’re not suited to the job,” or, “You’re not suited to the business.”
The problem is that if an employer doesn’t provide a valid reason for the dismissal to the employee at the time of termination, the employee can quite easily make up a reason, and that reason may give rise to a general protections claim.
The perfect example is if you’ve had some performance issues with an employee, but you haven’t given them any warnings or had any discussions with them about their performance, and then last week he makes an inquiry about his pay.
This week, you’ve decided you’ve had enough in terms of these performance issues and you dismiss him, saying that he’s not suited to the position.
The problem is that he then claims he was dismissed because he exercised a workplace right. There could be no other reason, because there were no discussions or warnings about his performance.
So he exercised a workplace right by questioning his pay, and that’s a basis for a general protections claim.
We all know that general protections claims can be costly and damaging. But the biggest problem here is that the onus of proof in these general protections claims is on the employer to prove that he wasn’t dismissed because he asked about his pay.
But there’s no evidence of performance issues to prove otherwise.
That’s the biggest issue in terms of prescribing to this myth about probation meaning you can terminate without a reason.
Karen Arnold:
Yeah. So I think there’s a really strong message there that probation reduces some risk, but it certainly doesn’t remove all the risk.
Probation is designed to stress test whether or not the employee is the right fit for your business, but it is still important that you are stepping through processes with that employee so that in the event that you do decide to exit them from the business, you can defend that decision if you need to.
Obviously, it won’t be in the unfair dismissal jurisdiction, but it could be within the general protections jurisdiction or some other avenue that they decide to take.
Thanks for unpacking that one, Greg.
HR Myth: If Someone Resigns, There Is No Risk for the Business
Karen Arnold:
On to myth number four: if someone resigns, there is no risk for the business. Over to you, Greg.
Greg Arnold:
Yeah, well this is also a myth that’s been around for a long time.
It’s a myth that is devoid of understanding the reality of the situation.
A resignation can still become risky. There’s absolutely no doubt about that.
The reality is that if an employee perceives they were forced to resign from their employment, they can still take an unfair dismissal claim, otherwise known as a constructive dismissal.
The employee will argue that they were pressured, bullied, or left with no choice other than to resign their employment.
Typical examples we see are where the manager might say to an employee, after having some discussions about some issues, “Maybe you should just resign.”
That’s going to automatically lend itself to an unfair dismissal claim.
The other classic that we hear all the time is that the employer will say to the employee, “I’ll give you the option to resign or you can be terminated.”
This can still lead to an unfair dismissal claim on the basis that it was a constructive dismissal.
So the fact is, this myth that there is no risk to a resignation is wrong.
Karen Arnold:
Yeah, well an important message there, I think. Resignation is not always the end of the story.
When we were preparing for this podcast today, Greg, I was sharing with you that a few weeks ago someone was telling me about a conversation that a manager had with an employee, which was basically along the lines of, “I’m not overly impressed with your performance. You probably should start looking for a job.”
Those sorts of comments within a workplace are just so risky.
What might look like a resignation on the way out the door still, as you said, gives rise to that constructive dismissal argument.
Greg Arnold:
Yeah. I think, as you said before, resignation is not the end of the story. It could be the start of the story.
We really need to be careful about how we handle resignations.
HR Myth: Serious Misconduct Means We Can Dismiss on the Spot
Karen Arnold:
All right, so we are now moving into myth number five: if it is serious misconduct, we can dismiss on the spot.
Greg Arnold:
It’s a myth, there’s no doubt about that.
The bottom line is that serious misconduct can justify summary dismissal. There’s no doubt about that. You can terminate someone without providing notice if it is for serious and wilful misconduct, as defined under Regulation 1.07 of the Fair Work Regulations.
There are certain reasons there as to what justifies serious and wilful misconduct, and we’ll talk about that in a moment.
But the employer still needs to have sound evidence and go through procedural fairness, unless of course the circumstances are exceptional.
Often the problem, and the risk, is that the employer reacts emotionally and terminates immediately, and then discovers later that the facts were probably incomplete or inconsistent.
There needs to be a proper investigation of the circumstances that may lead to summary dismissal.
The other issue is that a lot of employers don’t properly classify serious and wilful misconduct.
Sometimes it might be, for example, an issue in terms of swearing in the workplace or not providing proper customer service, and they often say that’s serious misconduct.
Well, there’s a definition of serious misconduct under the regulations, and that includes theft, drunkenness, fraud, all that sort of stuff.
A lot of people think that if it’s a performance-related issue, it may be considered serious misconduct. It might be inappropriate conduct, but not necessarily serious misconduct as determined under the Act.
So even when the conduct occurs, it may be serious, but there still needs to be a process followed. You need to make sure you’ve got your facts straight before you actually terminate.
Karen Arnold:
I think this is a good myth going back to what I talked about at the beginning of our podcast around how myths start, where someone gets advice for a specific situation and then someone else repeats it as if it’s a general rule.
I think this is probably a really good example of how you could see that unfolding within a workplace.
There might have been a situation where a termination was valid for serious misconduct, and then over time the facts around that situation, the specifics, have been watered down. Someone has just decided that this Chinese whispers version of the original advice is now fact and the state of play.
We also see sometimes people terminating or summarily dismissing someone in a really rushed and hasty manner, as you spoke about, and then discovering facts later.
It’s important to remember that you can stand someone down and still take your time to work through the process, dot your i’s, cross your t’s, and terminate them two or three days after the situation occurred. It can still be a valid termination, and you can still summarily dismiss someone.
Just because it didn’t happen right at the moment that the issue or incident occurred doesn’t water down how serious it is. It just shows that we took the time to go through the process.
Greg Arnold:
Yeah, I think the other important point in terms of risk here, Karen, is that if we do summarily dismiss someone for serious and wilful misconduct and we end up with an unfair dismissal or indeed a general protections claim, the onus of proof is going to be on the employer to prove that it actually happened.
So you’re going to have to prove, let’s say theft. We’re going to have to have some evidence of a proper investigation to be able to be successful in defending that claim.
Karen Arnold:
Yeah. I think it’s about being aware that the threshold for terminating someone with no notice is going to be higher than if we were to terminate someone and provide them with their entitled notice period.
So it adds a layer of risk, and certainly one that means we should not be taking a myth to be fact.
HR Myth: Paying Above Award Rates Covers Everything
Karen Arnold:
On to our next myth: we can pay above award rates and that will cover everything.
Greg Arnold:
Yep, this has been around for a long time.
I can recall, in my early days in my career, having discussions or answering queries from clients or members and providing advice. A lot of them would simply say, “Well, we pay above the award,” or, “We pay them on a salary, so we don’t have to pay them overtime,” or, “We don’t have to pay them weekend penalties,” or, “We don’t have to pay anything else under the award.”
I remember one classic where I was talking to a business in North Queensland who told me that the award didn’t apply to them because they had no union members. That was an interesting approach that was taken at that point in time.
The reality is that paying above the award does not automatically offset every entitlement under the award unless the arrangement or the agreement is properly drafted and properly applied.
The Fair Work Ombudsman says employers should seek independent advice before attempting contractual offsetting arrangements, including to ensure that they’re properly drafted.
I think this is an absolute case because the risk of saying the salary covers all entitlements, or they’re not covered by the award because we pay them an over-award payment, does not properly identify what’s being offset.
The employee may later claim overtime, weekend penalties, allowances or loading.
It’s important to understand that you can’t just pay above the award and then ignore the rest of the award provisions. You need to have a proper employment agreement drafted and make sure that it still covers the BOOT test, that is, the Better Off Overall Test.
Karen Arnold:
Yeah, and I think that’s really important, Greg.
I was having this conversation with someone the other day about how quickly those over-award amounts of money can be chewed up with overtime.
It doesn’t take long for $20,000 to be chewed up if someone is regularly working overtime, or perhaps on weekends, or even with allowances that you’ve decided you’re just going to absorb with your over-award component.
If you haven’t properly done those calculations, you might find yourself eight or nine months into a year and all of a sudden employees are starting to be underpaid because of their pattern of work.
That annualised salary that you’re saying covers everything for that 12-month period may actually already have been chewed up with all of the overtime they did at, say, the eight or nine month mark within that year.
With the changes and the recent cases around annualised salaries, I think even more care needs to be taken to ensure that the Better Off Overall Test is actually being applied and met.
Greg Arnold:
You’re absolutely right, particularly in relation to those recent cases around annualised salaries. It’s becoming tighter and tighter.
Employers need to be aware that it’s not simply paying an over-award payment that’s going to absolve yourself from the rest of the award.
They need to be properly drafted.
I think you and I have had this discussion before about employment agreements being drafted by AI and some of the horror stories we’ve seen in terms of those employment contracts, where obviously they have no idea where it comes from.
We’ve seen ones come from the US where obviously there are different rules and regulations, and the contract is horrible. It simply doesn’t take into account the fact that we have an award system in Australia that needs to be complied with.
Karen Arnold:
Yeah. So I think the key message there is that if you’re paying above the award, that’s not automatically going to cover everything.
Also, it does not mean the award doesn’t exist, which is something else I’ve heard people say: “Oh no, the award doesn’t apply to us because we pay over the award.”
No, the award still applies.
The key message is that paying above the award does not automatically mean that you’re compliant.
HR Myth: Informal Conversations Do Not Need to Be Documented
Karen Arnold:
All right, on to our last myth that we’re going to bust in this session, and I will start with this one. It is quite literally the bane of our existence.
So myth number seven: we do not need to document informal conversations.
Greg Arnold:
Yep, this is the bane of our existence, particularly around disciplinary action that needs to be taken, or indeed unfair dismissal or general protections claims.
It is a myth.
The reality is that informal performance management, whilst it may be very useful in some areas, if there’s no record, it becomes difficult to prove what was said, when it was said, and what the expectations were from that conversation.
The risk is where the employer says, for example, “We’ve spoken to them many times,” and we use that as the basis of our defence.
The employee then turns around and says, “Well, no one ever told me the job was at risk.”
If there’s nothing in writing to prove that, then we’ve got a problem.
Karen Arnold:
Yeah, and look, it’s one that we see with frightening frequency.
It’s fantastic that people are having these conversations and they’re looking to correct behaviour or coach an employee into performing to the level at which they need them to perform.
But if it’s not recorded, as you said, we can’t use it as a defence.
So I think the takeaway from this is: if it’s important enough to say it, then it should be important enough to document it.
Given the technology that we have available to us today, you can do a voice memo to yourself after a meeting or conversation with someone, email that through to yourself, and put it into a file note format later on.
That excuse of, “I didn’t have time because I wasn’t at my desk and I was on the floor all day with staff,” well, you still have capacity to do it because you can do a voice memo or something like that.
Then we’ve got the paper trail. We can paint the picture and demonstrate all of the effort that went into correcting that behaviour.
Greg Arnold:
Yeah. You might remember some industries used the term “warning on the run.” That was a term used for verbal warnings.
Sure, it is fine to give them a verbal warning, but let’s make sure we document so we know exactly what was said, when, and what was the nature of that conversation so we can use it further down the track.
If it is important enough to say, it is important enough to document.
Karen Arnold:
When we deliver performance management training, one of the things we say is documentation makes it real.
Even for the employee. If you send an email after a conversation, it makes it more real for them as well and hopefully leads to improved performance.
Closing Note
This episode is a reminder that HR myths often sound simple because they remove the context. But when it comes to employment law, payroll compliance, termination, probation, serious misconduct and performance management, context is often where the risk sits.
Employers should not rely on workplace folklore or “we’ve always done it this way” thinking. Clear records, fair process, accurate advice and proper documentation can make a significant difference when workplace decisions are later questioned.
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Disclaimer:
This content is general in nature and provides a summary only of the subject matter without the assumption of a duty of care by Effective Workplace Solutions. No person should rely on the contents as a substitute for legal or other professional advice.