Employing workers should be one of the least difficult jobs in a farm business. But, if not done correctly from the start, it can turn into a minefield.

Loose work arrangements, without clearly defined parameters, have the potential to turn sour and can cost an employer dearly, if a disgruntled employee makes a complaint.

Fortunately, there are sets of statutory rules that govern the employment of staff and once you have identified which ones apply to your operation it's simply a matter of following them.

This doesn't mean challenges won't present themselves - and they tend to occur at the busiest times of the year - but if managed correctly, the process should be fair and stress-free for all parties.

Putting together a comprehensive employment contract that provides clarity around the work agreement and clearly sets out the duties the employee will be required to do is critical.

The business should also have a set of policies and procedures that give employees clear guidance about what is expected of them in the workplace so there can be no confusion if an issue arises, as can often happen.

Picture this scenario:

A farmhand sitting on a header complains over the two-way radio about his work hours and being underpaid using language that would make a sailor blush.

The owner of the property, his employer, believes this behaviour has undermined his authority with other employees and is a continuation of several issues that have emerged with this employee over a number of years.

He considers this the final straw and sacks him without notice for unsatisfactory performance.

Soon after, he hears from the Fair Work Commission, which is following up a complaint from the worker and is looking into whether the termination was harsh, unjust or unreasonable. He is asked the following questions:

• Does the business have a written policy addressing swearing?
• Had the employee been given any prior guidance over what is, and what is not, acceptable behaviour on a two-way radio?
• Were any prior formal warnings given to that employee regarding behaviour of a similar nature and was the employee given the opportunity to have a representative present at disciplinary meetings?
• Do you have a track record of behaving in a similar manner?

The employer contacts his lawyer and it is determined that the business does not have a set of workplace policies in place, no instruction on appropriate use of the two-way radio had been provided, the employee received no formal warnings, was given no opportunity of redress and yes, the employer is also known for swearing over the airwaves.

In the course of its investigation. the commission discovers the employee was also being underpaid due to the employer not meeting the technical definition of providing 'keep in lieu of being paid at the award rate and that the employer's record-keeping does not comply with legislative requirements.

A hearing is set down for the middle of harvest. On the advice of his lawyer, the employer reaches a settlement with the employee before it gets to that stage - in the form of a payout that contained a sum as reimbursement for underpaid wages and an ex-gratia payment for him to agree to drop his complaint.

In all, it was a costly exercise for the employer that could have easily been avoided.

The business should...have a set of policies and procedures that give employees clear guidance about what is expected of them in the workplace so there can be no confusion if an issue arises, as can often happen

Starting point

Your business structure is the key to working out which set of rules - Commonwealth or state - need to be followed when employing staff.

The Fair Work Act 2009 and Commonwealth awards cover businesses operating as Pty Ltd companies (including trusts with a corporate trustee) and incorporated partnerships. Sole traders, unincorporated partnerships and unincorporated trusts will come under state legislation and awards.

The type of farm work being undertaken will determine the relevant award, with larger scale cropping operations likely to come under the Pastoral Award 2010.

The next step is to identify employment type - permanent, part-time, casual or seasonal, noting that casual can transition to permanent if the employee is engaged on a systematic basis, with reasonable expectation of ongoing work.

As well as outlining the duties the worker will be expected to perform in exchange for a wage and entitlements, the employment contract will also set out hours of work and how the tricky issue of overtime and loading for weekend work will be managed.

Your business structure is the key to working out which set of rules - Commonwealth or state - need to be followed when employing staff

There are clear rules that need to be followed in relation to this. Be aware that even if an employee agrees to work extended hours during peak periods, such as harvest or sowing, in return for time off in lieu, this must be clearly documented in a signed agreement or they will have the right to request payment for overtime at the loaded rate.

Employers also need to be aware that a set of National Employment Standards must be adhered to under law, with a copy provided to every employee when they start work.

These standards include allowing for flexibility with work hours where possible, provision of parental, carer's and community service leave and appropriate notice periods for termination.

Another important area that can often bring employers unstuck if they find themselves being audited after a complaint is complying with record-keeping obligations, which last for seven years.

Fines for corporations can be as high as $63,000 for non-compliance due to ignorance, and $630,000 if it is a knowing contravention. The penalties also apply to accountants, lawyers and anyone else who knew what the employer was doing and assisted them.

Due diligence

Compliance with workplace laws should be just another part of managing risk in a business, alongside occupational health and safety issues.

Just as you have policies and procedures to ensure you provide a safe workplace, you should have policies and procedures for employing staff.

Once the fundamental decision is made to handle the process properly, there is plenty of assistance available for everything from drafting work contracts and managing the payroll, to setting up workplace systems and policies.

Professional organisations such as state farmer associations and grower groups can be good contact points for information, as well as state and Commonwealth websites and hotlines.

Just as you have policies and procedures to ensure you provide a safe workplace, you should have policies and procedures for employing staff

Employing people should be a satisfying and rewarding experience - being aware of and abiding by employment laws will enhance the positive outcomes for you, your employees and your business.

More information: Fair Work Ombudsman, www.fairwork.gov.au; award rates, www.calculate.fairwork.gov.au; GRDC booklet 'A guide to farm labour'.

Acknowledgement: Stephen Park, Pacer Legal, Perth