%html%
Shopping Cart
General

Are Your Casual Employees Actually Casual: Examining A New Federal Court Decision and What It Means For Australia’s Casual Workforce?

Many employers engage casual employees who are often longstanding members of their workforce and/or work a regular pattern of hours. However, are these employees really engaged on a casual basis? This has been a vexed issue for some time and for legal questions such as access to the unfair dismissal jurisdiction and long service leave entitlements it has been recognised that casual employees who work regular and systematic hours, are to be treated in the same way as permanent employees. However, it has always been accepted that if casuals are paid a casual loading, they are not entitled to paid leave.

This specific issue was considered last year in WorkPac Pty Ltd v Skene [2018] FCAFC (“Skene”) (refer to our previous article on this case). The decision held that an employee who was described as a casual but worked a regular roster set a year in advance was in fact a permanent employee. Consequently, the Court ordered in Skene that the employee was entitled to annual leave under both the National Employment Standards and the enterprise agreement which applied to his employment. In Skene, it was found that a true casual employee must have no firm advance commitment as to the duration of their employment or the days worked. However, the decision left open the ability for an employer to ‘set off’ the liability for leave or other benefits against the casual loading where such a loading is clearly expressed and the loading was received by the employee.

Interestingly, WorkPac chose not to appeal this decision but instead commenced proceedings relating to a claim by another employee – WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (“Rossato”).

In the proceedings, WorkPac sought declarations that an employee, Mr Robert Rossato was a casual employee and therefore not entitled to be paid annual, personal and compassionate leave and public holiday entitlements. Specifically, WorkPac attempted to distinguish Rossato’s circumstances from Skene by demonstrating that there was no firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work. In addition, and in the alternative, WorkPac argued that even if Rossato was deemed to be a permanent employee, WorkPac could ‘set off’ the casual loading Rossato received. In other words, if Rossato was in fact entitled to the benefits received by permanent employees, he had already been paid for those benefits.

By way of background, Mr Rossato was engaged by WorkPac under 6 separate casual contracts of employment (at various locations) over the course of 3.5 years. The contracts of employment identified Mr Rossato as a casual employee and referred to the payment of a casual loading being incorporated into Mr Rossato’s flat rate of pay. The contract stipulated that the casual loading of 25% was in lieu of entitlements to annual leave, personal leave under the Fair Work Act 2009 (Cth) or its specific enterprise agreement.

The Full Federal Court unanimously found Rossato, like Skene, should have been treated as a permanent employee. The Full Bench adopted and endorsed the principles of the Skene decision. It was held that the parties’ description of the engagement as casual in a written contract is not determinative of the question of true legal characterisation, and consideration of the features of the relationship is required. For instance: a casual employee should have no firm advance commitment from the employer to continuing and indefinite work, the employee should have irregular work patterns, uncertainty, intermittency of work and unpredictability.

In addition, all Judges noted that post-contractual conduct could vary the nature of the engagement. For instance, the engagement might transition from casual to permanent at some point in time, based on the subsequent conduct of the parties.

As a result of finding Mr Rossato was in fact a permanent employee, WorkPac was required to backpay Mr Rossato unpaid annual leave, personal leave, compassionate leave and public holiday entitlements, notwithstanding that Mr Rossato was paid a casual loading in lieu of such entitlements.

In response, WorkPac pressed their argument that it should be able to set-off the casual loading it had paid to Mr Rossato against the unpaid entitlements. The Full Federal Court rejected this argument and found that the contracts were not sufficiently worded to give an option for contractual set-off. In addition, it was noted that paying a casual loading was not a substitute for the absence of a right to enjoy the entitlement to paid leave.

In addition, WorkPac sought to recover the casual loading it had paid to Mr Rossato on the basis that the loading was paid in error, if the Court ultimately found Mr Rossato to be a permanent employee. Again, this was also rejected. Justices Bromberg and Wheelahan both found that WorkPac agreed to pay the casual loading in its contract and accordingly “assumed the risk” that the flat hourly rate satisfied its statutory obligations.

Going forward

Ultimately, the Full Federal Court decision clarifies the meaning of a “casual” employee. Essentially, all “casual” employees who have regular and systematic work and an expectation of ongoing work, will be entitled to make a back payment claim for unpaid leave. This will have implications for businesses around the country, especially considering around 1.6 million Australians, prior to COVID-19, were employed on a “casual” basis. Employers would not be able to set-off the amount of leave owing against the casual loading already paid and may also not be able to recover the casual loading paid to the employee.

With businesses attempting to recover from the impacts of COVID-19, this decision has not been welcomed by employers and in particular, a number of industry groups are lobbying the Federal Government to introduce new legislation to address the uncertainty caused by the Skene and Rossato decisions.

Lesson for employers

In the meantime, until there is more clarity on the issue, it is crucial for businesses to review how their casual employees are engaged and in particular, casual employees that are long term and/or work a regular systematic roster. Employers should consider the real substance of an employee’s work rather than the label attached to it. It is important that employers now offer permanent employment to all their long-term casuals. This may not protect the employer from a back-pay claim but will protect the employer from the incurrence of a continuing future liability.

Additionally, it is important for employers to:

  • Ensure that any casual employees are in fact casual. This means the employee is employed on an ad hoc as needs basis. The employee should not have recurring predictable work, so as to give rise to a reasonable expectation of ongoing work;
  • Review your workforce (including labour hire workers) to assess whether particular employees should no longer be categorized as casual employees. In this regard, convert long term casual employees to either permanent full-time or permanent part time employment; and
  • Review contracts of employment to ensure they are carefully drafted and contain appropriate set off provisions, allowing loadings to be set-off against unpaid leave entitlements.

Employers must however remember that they cannot force employees to convert to permanent status. In addition, casual employees have the benefit of the General Protection provisions of the Fair Work Act 2009 (Cth), and as such any actions taken by an employer that may affect them must be done with care.

Finally, we remind our readers that all modern awards include a casual conversion clause which allows employees to request that their employment be converted to full-time or part-time employment in circumstances where the casual employee has in the preceding period of 12 months worked a pattern of hours on an ongoing basis and without significant adjustment. This request may only be refused on reasonable grounds in accordance with the modern award provisions.

We recommend that if this is an issue for your business, you seek appropriate legal advice.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to your employment relations framework, please do not hesitate to contact us.

This alert is otherwise not intended to constitute, and should not be treated as, legal advice.

 

Returning to Work in a Brave New World

Whilst we are by no means in the clear with respect to COVID-19, Federal and State Governments have confirmed that the raft of expedient measures taken by the majority of Australians, such as social distancing, border closures, home isolation and so forth, has seen an ever decreasing reduction in infection rates to the point that on Monday 11 May, NSW recorded its first day of no new infections since lockdown commenced.

To that end, Government is eager for the economy to “reanimate” and many employers are desperate for their employees to return to work as soon as possible. So, what does the workplace look like after COVID-19 has so drastically changed the industrial landscape? In this client alert, we will be examining the challenges employers face in recalling their employees back to work and the necessary steps they should take to ensure employee and customer safety.

National COVID-19 Safe Workplace Principles and Creating a Safe Workplace

The National Cabinet have agreed upon a set of safe work principles to ensure that all workers, regardless of their occupation or how they are engaged, can enjoy returning to a healthy and safe workplace. These principles are generally concerned with employers, in consultation with employees, conducting an assessment of their unique workplace to identify, understand and quantify risks and to implement and review control measures to address those risks. Depending on the industry, that might include:

  • staggering the employees’ return to work;
  • staggering employees’ schedules and start/finish times;
  • workspace arrangements; and
  • health monitoring, cleaning, and hygiene measures.

For example, in many modern office workplaces, including call centres, through the use of more flexible technology, employers have moved to more communal work practices such as open plan workspaces, ‘hot desking’, ‘brainstorming’ rooms and shared recreation facilities. In those communal work environments, an employer might consider creating static workspaces (rather than hot desking) and stagger work schedules so that half the employees work, for example, a fortnight of Mondays, Wednesdays and Fridays while the other half work a fortnight of Tuesdays and Thursdays before swapping (to alleviate congestion in the office and allow for spaces between desks). Note that to keep the groups of employees isolated from each other to reduce the risk of infection, it is important that employers try to ensure that the different rostered employees remain on the sperate rosters so there is little risk of cross-contamination should an employee fall ill.

Employers might also consider temporarily denying access to shared recreation spaces to ensure that employees can abide by the ‘4 square metre rule’ and staggering employee lunch breaks (if taken in a communal break room) to maintain social distancing. With respect to travelling to and from the workplace, employers might encourage employees to commence and/or leave work earlier or later than normal so as to avoid congestion on public transport.

Of course, not all workplaces look the same and specific measures may need to be taken for different jobs. For example, employees who work in a confined workplace and who have more proximate dealings with customers in particular, ought to wear personal protective equipment and operate a regime whereby all employees attend to washing their hands with soap and water for 25 seconds every hour, on the hour.

Nonetheless, whatever the workplace or industry looks like, some constants will apply. For example, implementing and maintaining hygiene standards, attending to proper cleaning protocols and the monitoring of employee health is vital to maintain a safe workplace. If an employee presents for work and appears unwell, has a cough or sore throat or is displaying flu-like symptoms, they should be sent home immediately and directed not to return to work until they have availed themselves of a COVID-19 test or has been cleared by a medical professional. Preferably, that employee should know not to attend the workplace in the first place and in order to achieve this level of individual responsibility taking among staff, employers ought to consider amending their policies to stipulate clear expectations where an employee is unwell.

For further information, the Safework Australia website https://www.safeworkaustralia.gov.au/ has industry specific resources to assist employers in creating a COVID-19 safe workplace.

What if Employees Don’t Want to Return to Work?

For those employees who have been able to work from home these last couple of months, without the hassle of a commute or adherence to a dress code, and have developed a routine to perform their work whilst simultaneously doing a load of washing, the desire to continue to work from home may be quite strong. In addition to positive feedback from employees, employers have realised that reducing the number of employees at their premises may result in bottom line savings on the costs of commercial rent, cleaning, heating/cooling and other incidental office costs, as well as alleviating congestion in the workplace. These advantages must also be offset against the costs of a more sophisticated IT system to allow employees to work remotely and, as we discussed in our last client alert, the potential for employees to work less efficiently when not directly supervised.

However, what if an employee does not wish to return to the workplace? Employers will need to carefully consider the circumstances for any such resistance on a case by case basis, although need not agree to staff working remotely on a permanent basis so long as the reasons for this are predicated on reasonable business grounds. Obviously, for some employees (such as those that work in hospitality, retail, or logistics) they will have to return to the work premises to perform their work as it cannot be performed remotely but what of the employees who are still be able to perform the inherent duties of their role from a remote location?

In any case, the employer must have established their COVID-19 Safe Plan (as detailed above) before directing employees to return to work as it is obligatory for employers to provide and maintain a safe working environment in order to comply with work health and safety laws. Systems will need to be in place for maintaining effective hygiene, health monitoring and cleaning and employers will need to plan for the possibility of COVID-19 cases in the workplace and the procedures to follow in such an event.

Some employees may also have unique circumstances whereby a return to the workplace puts them at specific risk. For employees who suffer health complications that cause them to have weakened immunity, or those who live with and/or care for elderly relatives that are vulnerable, to require them to return to the workplace – particularly in circumstances that require them to commute via public transport – might create an unacceptable risk for their return at this stage of the pandemic. In these cases, employers will need to carefully consider directing those employees back to the workplace as to do so might be a breach of work, health and safety.

Nonetheless, if employers have taken the appropriate steps to ensure, as best as possible, a COVID-19 Safe workplace, where an employee fails to heed a reasonable direction to return to the workplace, the employer can take disciplinary action against the employee including up to termination of employment.

What are Employers not able to do?

For those of us who have cast a wistful eye towards the return of professional sport in Australia, a small selection of Rugby League players who have put their immediate employment in jeopardy by refusing to accept a flu vaccination, has created an interesting conundrum. At this stage, the Queensland State Government have required that any players entering the State to play Rugby League cannot do so unless they have received up-to-date influenza and pneumococcal vaccinations. So can an employer insist that its employees accept a flu vaccination, despite objections on moral or religious grounds, as a precursor to return to work?

An employer may well strongly encourage its employees to get the flu shot by providing free vaccinations to its employees. After all, whilst the seasonal flu vaccination will not protect against COVID-19, the threat of contracting both simultaneously has been described by health authorities as an extremely negative situation; however, unless the employer is a residential aged care facility, an employee cannot be forced to get a flu vaccination. As for employers who run residential aged care facilities, there are no exemptions for getting vaccinated on personal, cultural or religious grounds; the only valid exemption is for medical reasons.

In addition, most members of our community will be familiar with the push from the Federal Government urging Australians to download the COVIDSafe application on their mobile phones. Essentially, this app allows users to upload medical data if they have, at any point, tested positive for COVID-19 and, when their phones (which are presumably on their person) come into range of another person with the COVIDSafe app, a contact tracing record is created to allow health authorities to ‘follow the path’ of the virus in the event of another spike in infections. Despite it being voluntary to download and use the application, many employers will want their employees to download COVIDSafe to help protect the health and safety of their workforce, customers/clients and the wider community. Whilst an employer might actively encourage its employees to download and use the new app, it cannot force them to do so.

This means that while an employer may encourage their employees to download or use COVIDSafe, they cannot direct employees (or any other person) to download or use COVIDSafe, either on a personal mobile device or on a mobile device provided by the employer for business use and any pressure to do so, whether by positive obligation, or by adverse consequences, is unlawful.

We are Here to Help

Our team is currently engaged in a staggered return to the office and is otherwise working remotely but still servicing clients as usual including, with the aid of technology, via virtual meetings and conference calls. If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue arising from the COVID-19 crisis, please feel free to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

A Practical Guide to Managing Remote Employees During COVID-19

Unless you are an essential worker, just about all businesses have employees working from home. For many employers all their employees are now working remotely. In this client alert, we will discuss firstly the challenges posed by remote work and in addition, the very real opportunities it creates.

As we will be focussed on the challenges imposed by remote work and in particular when working from home, we will also look at some of the mechanism employers can adopt to address these challenges. If an employer has policies regarding working from home, it is important those policies are reviewed to ensure they are still practical and achievable in the current climate. It would be best to be able to ensure that all employees are working in a safe, secure and optimal location, however this is just not practical when so many employees have no choice but to work from home. It would also be ideal to ensure that employees are actually working when they are supposed to be working, but again parents with young or school aged children may now find this challenging. These are some of the issues we will examine.

Work Location and Home Set-up

It is trite to say that despite the fact that employees are not working in the employer’s premises, whilst working, the employer still has work health and safety obligations to its employees. To the extent reasonable, employers should make proper enquiries of their employees as to where they are working within their homes, whether that is safe and whether they have the necessary equipment to safeguard their health and wellbeing. If employees are expected to sit in front of computers or on the phone for long periods, the employer should be ensuring to the extent possible that the employee has a suitable chair and desk for this purpose.

If an employer has the requisite resources available, it may wish to assist employees by purchasing the necessary equipment for setting up an office at home. In usual circumstances, an employer that asks an employee to work from home, will normally bear the additional cost to the employee of doing so. In the current climate, it is possible to agree with your employee that they will bear this additional cost in return for the ability to continue working. The alternative being that other cost saving measures are put in place such as reduced hours, redundancies, stand down and the like.

When working from the employer’s premises, employees typically take an unpaid break for lunch and, depending on the industry, one or two paid or unpaid rest breaks during the course of the day. Where employees are working from home, they may not consider it as necessary to step away from the ‘virtual office’ and take a break. Where practical, employers should encourage employees, where they would ordinarily step out of the employer’s premises for a break, to still take that break to get some food and exercise, maybe take a walk around the block, and return to the ‘virtual office’ refreshed and reenergised.

Lack of Supervision and Oversight

A common issue with remote work is the inability for managers to have a clear understanding of exactly what employees are doing whilst working. This raises a challenge but also a fantastic opportunity. It will become quickly evident what type of employees are currently employed and how the culture of the business has either facilitated the practice of only working when watched or whether the employees are self motivated. It stands to reason that in circumstances where employees are working remotely, it is really important that they be very self motivated. This is an opportunity to foster such a culture. In order to do so, managers need to set clear and structured objectives and deadlines, and then inform employees of their expectations. It is important to have regular check in meetings in a structured manner. In this regard, we suggest that a team meeting be scheduled for the same time every day or twice a day (once in the morning and once at the end of the day). This is the forum where the team gets together virtually to discuss the days work, priorities and whether anyone needs help. It is also an opportunity for team members to share ideas and consult on issues. We suggest that individual virtual meetings then also occur once a day at a set time between the manager and their direct report. This will allow managers to ensure they know what the team members are doing and be able to properly offer assistance and support. It will also allow team members to get on with the work during the day with some confidence they are doing the work appropriately.

Access to Information and Collaboration

One of the biggest challenges of remote work is the relative difficulty in sharing information with colleagues as compared to talking with them when they sit next to you in an office. We suggest that if possible, employers try to recreate this by using technology which allows for instantaneous messaging. This means employees can quickly and easily send out a message to the team or individual team member when they want to ask something or can respond to another team member request or inquiry. For employers who have invested in electronically storing information, which is easily accessible, now is the time when that will pay off. For employers who have not been able to do so, and still rely on hardcopy information, this will be a useful time to assess whether that aspect of the business can be better managed. There are a number of technological solutions (including many solutions which form part of Microsoft Office) to sharing information and store information that can be made available to all team members.

Keeping Track of Workflow

I never thought I would be an advocate of team task lists. However, remote working makes this ability an essential. It is important for managers to be able to track what work is being performed and whether employees are on task. It is also useful for team members to have some visibility on what others are doing, when they are not as easily able to just ask the employees themselves. Again, the use of team applications which allow team members to upload task for all to see can be a very useful tool.

An article in the Harvard Business Review states that research has shown that the lack of “mutual knowledge” among remote workers can often lead to co-workers not being willing to give their colleagues the benefit of the doubt in difficult situations, and make interpersonal communications more fraught.

Social Isolation and Mental Wellbeing

There is ample research which shows that importance of social interaction to our mental health and general wellbeing. For most of us this interaction is gained in large part by our involvement in work and our relationships with work colleagues. One of the most direct consequences of working from home for many people is the increased social isolation coupled with loneliness this engenders. This is exacerbated now by the forced social isolation imposed by the government, which has restricted our ability to interact outside of work. This sense of social isolation can also directly impact on employees’ commitment to work and how committed they feel to the organisation and their role. It will be interesting to see the number of employees who resign from their current employment at the conclusion of the current pandemic. I am of the view that this number will be greater than what would be average for the organisation because of this very factor. It is therefore even more important now to ensure employees remain connected and embrace the organisation and its goals. This can only be done if the organisation and the individual employees’ managers stay connected and put in place real and ongoing initiatives to foster strong working relationships. This does not have to be solely work related. Some innovated organisations are organising social events via virtual mechanisms, such as a daily game or quiz, hosted by a different team member each day, as part of the morning meeting and end of week social drinks via videoconferencing platforms.

Avoiding Distractions at Home

It goes without say that most employers who are paying their employees to work from home, expect the employees to actually be working. How does this work in circumstances where, given the current crisis, it is likely the rest of the family (including young or school aged kids) are also at home? If the employee is also required to care for children or home school, how are they also going to be able to work? These are matters that must be dealt with on a case by case basis. Ideally, employees should have dedicated childcare and a dedicated workspace without distraction in order to properly focus on work. We consider that it is reasonable in the current climate that employers modify their work expectations to accommodate these realities.

However, if it is clear that the employee is actually unable to effectively work from home, then this is something that should be addressed head on. It is preferable to allow the employee to take leave whether with or without pay, or if you are able to stand them down under the JobKeeper regime, then to continue to have a significantly underperforming employee. This can only lead to resentment by colleagues and stress for the employee themselves.

Even though working from home is challenging and can make managing poor performance more difficult, it should not be an excuse to allow a poorly performing employee to continue to perform badly. If proper support structures have been established, and there is appropriate management oversight (even if it is remote), then poor performance should be addressed when it occurs. This will be made far easier, and less likely if managers are checking in daily with their team, and there are regular team meetings as discussed above.

We are Here to Help

We are currently working remotely but still servicing clients as usual including, with the aid of technology, via virtual meetings and conference calls. If you require further information in relation to any aspect of this client alert or assistance in dealing with an employment law related issue during the COVID-19 crisis, please feel free to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

COVID-19: HOW TO DEAL WITH YOUR EMPLOYEES – A PRACTICAL GUIDE TO THE LAW

The global outbreak of COVID-19 has and will continue to have a material impact on businesses worldwide and in Australia.

The COVID-19 landscape and both the national and state government updates are regularly evolving and changing. As a result, many employers are now faced with the challenge of understanding their rights and obligations in managing employees during this health pandemic and in circumstances where their business has significantly reduced and/or the business has shutdown.

In this regard, we have had a number of clients contact us over this period seeking advice to understand their rights and obligations during the COVID-19 pandemic. There have also been a number of Fair Work updates released in order to deal with COVID-19 and changing employment circumstances.

It is crucial businesses are complying with national and state government directions in relation to COVID-19 and employers are reminded to keep in mind employee safety, employee rights and leave entitlements to ensure the best outcome for everyone involved.

Accordingly, in this client alert we cover an employer’s rights and obligations regarding shutdown, some of the changes being implemented by the Fair Work Commission and the government’s newly introduced stimulus package.

How does an employer lawfully reduce an employee’s hours of work and/or remuneration?

Outside of the specific changes to the modern award regime (mentioned below), in all other circumstances, an employer cannot unilaterally reduce an employee’s hours of work or remuneration. Any reduction of an employee’s hours or remuneration should be done by agreement and the agreement should be reflected in writing and signed by the parties.

Can an employer stand down its work force and what does this mean for your employees?

Section 524 of the Fair Work Act 2009 (Cth) (“FWA”) provides that an employer may stand down an employee during a period in which the employee cannot usefully be employed because of, among other things, a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

In these circumstances, the question then becomes whether COVID-19 is a lawful cause beyond an employer’s control. In this regard, section 524 of the FWA cannot usually be relied on in circumstances where there is merely a downturn of business or if a building is inaccessible. As such, the COIVD-19 impact on businesses and the question as to whether businesses can lawfully stand down their employees during the pandemic crisis remains untested by law.

However, it is important to understand there is a differentiation between businesses who have been affected by COVID-19, and as a result has seen a significant reduction in business (such as the retail industry) compared to where the government has sanctioned a lockdown or closure of certain business (such as hospitality, beauty premises, fitness centres and other sectors of the economy now restricted from trading). The latter would be considered a very clear example of circumstances beyond an employer’s control under section 524 of the FWA. However, the former may not qualify for such treatment. We note that the unions are challenging the shutdown by Qantas for this reason. In essence, where a business has decided to close stores and cease trading because of a significant downturn in business, this may not be sufficient to warrant a shut down sanctioned by section 524 of the FWA. Employers should tread carefully in this regard, and to the extent possible, provide as much notice of a shut down as possible and obtain employee consent.

Does an employer need to pay an employee during a stand down period?

In usual circumstances when an employer does not require work to be performed by a permanent employee, subject to an employee’s agreement, an employer will be required to pay the employee for the period.

However, in circumstances where an employer has a stoppage of work and stands down employees in accordance with Section 524 of the FWA, an employer is not required to make payment of ordinary remuneration to those employees for the period of the stand down. Notwithstanding this, employers must accrue for leave entitlements as per usual.

In addition, employees that are stood down by their employer under the FWA are still entitled to be paid for public holidays that fall during the stand down period. This is only if the public holiday falls on a day that the employee would have usually worked. It is important to keep this in mind with the upcoming Easter public holidays.

Can an employee ask to use annual leave during a stand down period?

A stand down is a drastic step for any workforce, and it deprives employees of an income for an unspecified period. Accordingly, inviting employees to access their accrued leave or long service leave entitlements as an alternative is a great benefit to both the employee and employer. For the employee, it allows them to continue to receive an income, and for the employer, it reduces the employer’s leave liability.

If an employee requests to use their leave entitlements, employers must not unreasonably refuse an employee’s request to take paid annual leave. What is considered ‘reasonable’ will depend on the personal circumstances of each employee and the employer’s business needs. In these circumstances, it is best if the employer and employee come to a mutual agreement in this regard.

Notably, an employer may refuse paid annual leave to an employee on reasonable business grounds. In this regard, if a business is financially unable to pay annual leave due to the downturn in business and financial impact COVID-19 has had on the business, this may be considered a reasonable business ground.

Changes to Modern Awards relating to COVID-19

The Fair Work Commission has announced proposed changes in relation to modern awards in response to the current and unique COVID-19 pandemic crisis.

Notably, on 1 April 2020, the Fair Work Commission (“FWC”) announced an intention to vary 103 modern awards across various industries and occupations. These variations will be in place until 30 June 2020 (unless extended). Accordingly, businesses should check if they are affected by the changes proposed.

The proposed changes include the following:

· Provide all employees who are required to self- isolate the ability to access two weeks of unpaid leave. This was a response to a concerns that if an employee was required to self-isolate because they have been exposed to someone infected with COVID-19, they did not have protection in relation to unfair dismissal and were not able to use their personal leave as they themselves were not unwell. It will not be necessary for employees in these circumstances to exhaust their paid leave entitlements before accessing the unpaid pandemic leave.

· Provide additional flexibility in respect of annual leave by allowing an employer and employee to agree for the employee to take up to twice as much annual leave at half the rate of pay. Notably, this provision has already been introduced in the Hospitality Award 2010, the Restaurant Award 2010 and Clerks – Private Sector Award 2010 (discussed further below).

In addition to the above, the FWC have made additional changes specific to the Hospitality Award 2010, Restaurant Award 2010 and Clerks – Private Sector Award 2010 as a result of the major impact COVID-19 has had on these industries.

In order to assist our clients, we have outlined the changes below:

Hospitality Award 2010

On 24 March 2020, the FWC made a determination to provide additional flexibility for employers under the Hospitality Award 2010 during the COVID-19 pandemic. These include:

Changes in duties:

Employers can tell their employees to do any tasks that they have the competency and skill to perform, even if those tasks are not in their usual classification or normal work. However, the task must be safe, and the employee must have at least the appropriate licence and/or qualifications to perform the task.

Hours of work for full-time and part-time employees:

Employers can now direct the reduction of permanent employees’ hours of work to an average of:

· Between 22.8 and 38 ordinary hours each week for full-time employees; and

· Between 60% and 100% of the guaranteed hours per week or over the roster cycle for part-time employees.

If employers want to reduce an employee’s hours, they need to discuss the changes with the employee, ensuring they follow the Award prescribed consultation rules about changes to rosters or hours of work and provide as much notice as practicable. It should be noted that employees will continue to accrue leave entitlements based on their ordinary hours before the employer reduced the hours.

Annual leave:

An employer can direct an employee to take annual leave in accordance with the updated award. Employers now need only to provide the employee at least 24 hours’ notice (rather than 4 weeks) and consider the employee’s personal situation. In addition, employees can take twice as much annual leave at half pay by agreement.

Restaurant Award 2010

On 31 March 2020, the FWC introduced the same changes as the Hospitality Award 2010 above to the Restaurant Award.

In addition to these changes, the FWC also provided that if a business is closing down for a period, an employer can direct their employees to take annual leave in accordance with the new changes by giving the employee at least 1 weeks’ notice (or any shorter period of notice which is agreed). If an employee does not have enough paid leave to cover the whole period of shut down, the employer can direct the employee to take unpaid leave for the remainder of the close down. The period of unpaid leave would continue to count as service for entitlements.

Clerks- Private Sector Award 2010

On 28 March 2020, the FWC introduced temporary flexibility provisions during the coronavirus outbreak for the Clerks – Private Sector Award 2010. These changes include:

Changes in duties:

Employers can tell their employees to do any tasks that they have the competency and skill to perform, even if those tasks are not in their usual classification or normal work. However, the task must be safe, and the employee must have at least the appropriate licence and/or qualifications to perform the task.

Minimum Engagement:

Part-time employees who have agreed with their employer to work from home can have their minimum engagement reduced from 3 hours per shift to 2 hours per shift. Casual employees who have agreed with their employer to work from home must be paid for a minimum of 2 hours’ work per shift (rather than 3 hours per shift).

Span of hours:

Employees who have agreed with their employer to work from home can make an agreement with their employer to change their span of hours to allow them to work between 6 am and 11 pm Monday to Friday, and 7 am and 12:30 pm Saturday. Employers do not need to agree with a majority of their employees to make these changes.

Hours of work for full-time and part-time employees:

Employers can temporarily reduce permanent employees’ hours of work to not less than 75% of their full-time hours or agree part-time hours immediately prior to the reduction. This may be applicable to the whole business or a section of the business. If an employer wants to reduce their employees’ hours, the employees will need to vote in favour of the reduction of hours. At least 75% of the full-time and part-time employees in the business or section of the business must approve the temporary reduction. There is a specific provision contained in the award which outlines the steps an employer must take to ensure the vote is considered ‘valid’.

Notwithstanding the above, an employer and employee can also individually agree in writing to reduce an employee’s hours.

In addition, an employee who has had their hours reduced can ask their employer for permission to find more work with another employer and/or access training, professional development and study leave through their employer. In this regard, an employer cannot unreasonably refuse an employee’s request to find alternative work and must consider all reasonable requests regarding training, professional development or study leave.

Employees on reduced hours under the changes will continue to accrue leave entitlements based on their ordinary hours of work prior to the reduced hours.

Annual leave and close down of business:

Employers can direct an employee to take annual leave by giving their employees 1 weeks’ notice (or any shorter period of notice that is agreed).

If the business is closing down for a period because of COVID-19 and an employee does not have enough paid annual leave to cover the whole period, the employer can direct the employee to take unpaid leave. The period of unpaid leave counts as service for entitlement purposes.

However, if the business is not closing, the employer can only direct an employee to take annual leave if the employee still has at least 2 weeks of annual leave left after the direction and the employer consider the employee’s personal situation. Employees can take up to twice as much annual leave at a proportionally reduced rate if their employer agrees.

Government stimulus package

On 30 March 2020, the Federal government announced the intention to pass legislation to introduce wage subsidies for businesses significantly affected by COVID-10, known as the ‘JobKeeper stimulus package’. The stimulus package is designed to preserve jobs and alleviate financial pressure on businesses in Australia.

In this regard, the JobKeeper payment is paid to employers by the Australian Taxation Office (ATO) who then provide the payment to eligible employees. The payment will be in the sum of $1,500 per fortnight (before tax).

In this regard, if the employee is employed, their prevailing wage or salary continues to apply and the JobKeeper subsidy serves as a supplement.

However, if the eligible employee has been stood down or re-engaged post 1 March 2020, the employer must pay, at a minimum $1,500 per fortnight, before tax. Superannuation contribution in these circumstances is discretionary.

The eligibility criteria for a business to apply to the stimulus package includes:

• turnover of less than $1 billion, which must have fallen by more than 30 per cent (of at least a month); or

• business has a turnover of $1 billion or more and turnover has fallen by more than 50 per cent (of at least a month); and

• the business is not subject to the Major Bank Levy.

The eligibility criteria for employees to benefit from the stimulus package includes:

• currently employed by the eligible employer (including those stood down or re-hired);

• employed by the employer at 1 March 2020 (or rehired);

• Available for full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);

• are at least 16 years of age; and

• Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder.

The JobKeeper subsidy will be available for 6 months unless extended by the federal government. If your business is interested in the JobKeeper stimulus package, you can register your interest on the ATO website.

We are currently working remotely but still servicing clients as per usual including, with the aid of technology, via virtual meetings and conference calls. If you require further information in relation to any aspect of this alert or assistance in dealing with an employment law related issue during the COVID-19 crisis, please feel free to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

Coronavirus and the Workplace – A Timely Update

Earlier this year we published a client alert to provide some general advice to employers in dealing with employees’ leave entitlements in light of COVID-19. That was on 21 February and since then, the COVID-19 landscape seems to be changing on an almost hourly basis.

On 12 March the World Health Organisation declared COVID-19 to be a global pandemic and on 15 March, the Federal Government issued the direction that all persons arriving into Australia must self-isolate for 14 days otherwise they will be committing an offence under the various pieces of State Public Health legislation and will be subject to significant fines. Furthermore, the Federal Government has mandated that everyone practice ‘social distancing’ and has banned gatherings of over 100 persons indoors and over 500 persons outdoors. As of yesterday, the Federal Government has also shut the borders to anyone who is not a citizen or permanent resident.

Our clients are rightfully concerned about the impact these measures will have on their businesses and, moreover, how to deal with their workforce following the inevitable downturn of business. In this article we expand on that initial advice to address some of those key current concerns.

Overseas Travel / Recreational Cruising

Employers have a duty under work, health and safety laws to use their best endeavours to maintain a safe work environment for workers and customers alike. Travel or overseas travel, whether by air or sea, now presents an unacceptable risk to health and safety until further notice. Whilst employers should not be approving annual leave requests for employees at this time, if employees take pre-approved annual leave and travel overseas, employers will have no choice but to issue a direction to those employees that they will not be permitted to return to the workplace until undergoing a period of mandatory self-isolation for 14 days, before being cleared to return to work by a qualified medical professional per the Federal Government’s “Direction”.

Employees subject to the Direction will only be entitled, if applicable, to take annual leave or long service leave where such leave is available. Personal leave will not be payable to employees in mandatory quarantine as a result of recreational travel overseas except if the employee provides a medical certificate during this period.

Forced Self-Isolation of Employees

In the event that an employee suspects a possible COVID-19 infection (e.g. attends a GP for testing), the employer will have no choice in such circumstances other than to require the employee to self-isolate. Where the employer requires an employee to self-isolate on the basis that to continue allowing them to attend the workplace presents an unacceptable risk to others, the employer will not be obliged to pay the employee their usual remuneration benefits. Self-isolation must continue until cleared by a medical professional.

In such circumstances, however, employers should consult with employees, on an individual and needs basis, to reduce the financial impacts of any forced self-isolation period. This will include consultation with employees as to the use of their paid personal leave, paid annual or long service leave entitlements (if available) or taking unpaid leave.

Modifications to Work Arrangements

If employers are experiencing significant financial hardship as a result of a downturn in business, in order to safeguard the business and the ongoing employment of its employees, employers may

choose to consult with employees about temporary alterations to working conditions, which may include:

· the short-term elimination of casual roles;

· a reduction in working hours to manage economic imperatives and overcome quiet trading periods; or

· temporary closure or stand down of employees.

It should be noted that, in the event an employer opts to make employees’ roles redundant as a result of a downturn in business, redundancies should be made in accordance with requirements under the National Employment Standards and any relevant modern award or enterprise agreement provisions.

With respect to stand down or work stoppages, the Fair Work Act 2009 (Cth) prescribes that an employer may stand down employees where they cannot be usefully employed/engaged for a stoppage of work for any cause which the employer cannot reasonably be held responsible. It should be noted that it is untested at law as to whether unsustainable downturn of business and productivity due to the COVID-19 pandemic qualifies as a ‘stoppage of work’ for the purposes of the Act, exempting an employer from its obligation to pay its employees – however, it is at least arguable. We note, however, the stand down provisions in the Act are not intended for indefinite periods of business closure, or a circumstance where the business cannot generally meet its financial obligations as and when they fall due.

In all circumstances where a stand down is being implemented, employers should discuss with affected employees, among other things, the nature of any workplace changes, the likely effect on employees and possible measures to avoid or reduce the adverse effects of the changes. In addition, employers should invite employees to give their views on the proposed workplace changes so that appropriate outcomes can be reached.

Working from Home Arrangements

Where possible, employers should actively encourage their employees to work from home given the work health and safety laws that apply. In such circumstances, however, some guiding principles ought to be followed, such as:

· ensuring a safe work environment (e.g. use of a supportive chair, free of trip and spill hazards etc);

· ensuring a quiet work environment (e.g. insulating against noise from pets or other residents);

· ensuring a reliable internet connection;

· instituting a regular contact plan with colleagues and management;

· adherence to normal hours of work;

· separation from distractions as best as possible (e.g. putting in place other measures to care and cater for children whilst working from home); and

· remaining collegiate (e.g. reaching out to colleagues on a regular basis to maintain a degree of workplace normalcy.

School Closures

In the event of school closures, whereby employees are unable to attend for work due to the care of a child, such absence will be treated as unpaid leave except where the child is unwell (e.g. evidenced with a medical certificate). Employers may permit the use of accrued annual leave and long service leave entitlements during any period of school closures. Again, this should be decided after

consultation with the affected employee(s). If the employee is able to work from home, the employee should be allowed to do so.

Way Forward for Employers

No doubt, the fear and alarm from the COVID-19 pandemic is causing a significant deleterious impact on employers which, in turn, is creating further fear and alarm for employees with respect to their immediate job security. Our experience is that employers are genuinely trying to take care of their employees whilst remaining sustainable and operational over the forecast next 6 months.

Ultimately, during this COVID-19 pandemic, an employer’s policy should be of collaboration and consultation with affected employees. Where such a policy fails to bear fruit, we recommend legal advice be sought as to the alternative options available.

This alert is not intended to constitute, and should not be treated as, legal advice.

BIOMETRIC DATA AND PRIVACY IN THE WORKPLACE

Employers are not always aware of their obligations in relation to privacy in the workplace. The invasion of employee privacy can occur in a number of different ways including through records and information, physical and electronic surveillance and monitoring.

From a company perspective, the advancement of digital workplaces and technology has increased the amount of information employers can access about their employees. It is now also becoming more common for organisations to use biometric templates, for example to use your fingerprint to sign into work. Interestingly, the decision of Lee v Superior Wood Pty Ltd [2019] FWCFC 2946 provides insight on the extent to which an employer can request personal data in this regard.

Accordingly, in this week’s article we discuss the general principles of privacy in the workplace and the Fair Work Commission’s interesting interpretation of the Privacy Act 1988 (Cth) and Australian Privacy principles.

Privacy Act 1988

The Privacy Act 1988 (Cth) (“Privacy Act”) applies to federal government agencies as well as private sector organisations including bodies corporate who use or disclose personal information in the course of carrying on a business. In March 2014, the Privacy Act was amended to introduce thirteen legally binding Australian Privacy Principles (“APP”) which apply to personal information held by Australian government agencies and most Australian companies. Worthy of note is that personal information handled by a private sector employer is exempt from the APP if it is directly relates to:

· a current or former employment relationship; or

· an employee record relating to the individual employee concerned.

“Employee record” refers to a record of personal information relating to the employment of a person, such as information about the employee’s:

· health;

· engagement, training, disciplining or resignation;

· terms and conditions of employment;

· personal and emergency contact details;

· performance or conduct; or

· taxation, banking or superannuation affairs.

However, the exemption does not include information otherwise collected about candidates when determining to offer employment. In this respect, employers must ensure that any personal or sensitive information collected about a prospective employee is not used unless the

employee consents and the information is reasonably necessary for one or more of the entity’s functions or activities. In addition, employers must ensure that the means of collecting such information is only by lawful and fair means. In this regard, the employer must act in accordance with the APP.

Jeremy Lee v Superior Wood Pty Ltd

The recent decision of Lee v Superior Wood Pty Ltd [2019] FWCFC 2946 demonstrates the importance of understanding and complying with privacy obligations and how they interact with the rights and obligations of employees.

Mr Jeremy Lee was employed at Superior Wood for over 3 years before he was dismissed for failing to comply with the company’s Site Attendance Policy (“Policy”). The Policy required employees to use newly introduced fingerprint scanners to sign on and off the work site.

Mr Lee refused to provide his fingerprint for the purposes of signing on and off the worksite, raising concerns about the control of his biometric data and the inability for Superior Wood to guarantee no third party would be provided access or use of the data once stored electronically.

Superior Wood attempted to discuss his concerns with him and warned that a continued failure to follow the policy would result in his employment being terminated. Mr Lee again refused to sign in with his fingerprint and was dismissed as a result. Mr Lee subsequently brought an unfair dismissal application.

At first instance, the Fair Work Commission found that the Policy was not unjust or unreasonable because, amongst other things, Superior Wood had the right to require employees to comply with the policy and refusal to comply after adequate warning would not render any dismissal invalid.

The Commissioner also considered the Privacy Act 1988 and found that although biometric data is ‘sensitive information’ for the purposes of the Privacy Act 1988, it was reasonably necessary to collect the information in accordance with the Australian Privacy Principle (“APP”) 3.3.

The Commissioner noted that Mr Lee was entitled to withhold his consent, however in doing so, meant that he failed to meet a reasonable request to implement a fair and reasonable workplace policy. Accordingly, it was found in all the circumstances the dismissal was valid.

Appeal Decision

Mr Lee was granted permission to appeal the decision to the Full Bench of the Fair Work Commission. The Full Bench overturned the Commission’s decision, finding that there was no valid reason for the termination. Relevantly, the Full Bench noted the below:

· On a strict reading of Mr Lee’s employment contract, Mr Lee was only bound by any policies and procedures in place at the time of entry into the contract. As the Policy came into existence following Mr Lee commencing employment, the Fair Work Commission was not satisfied that compliance with the Policy was a term of Mr Lee’s employment.

· It was found that biometric templates are considered ‘sensitive information’ under the Privacy Act. APP 3 states that an entity cannot collect an individual’s sensitive information without their consent. The Full Bench ruled that ‘a necessary counterpart to a right to consent to a thing is a right to refuse it’. Accordingly, a direction to a person to give consent would be considered unreasonable and not a valid reason for dismissal.

· Section 7B(3) of the Privacy Act contains an exemption from an employer’s requirement to comply with the APPs in regards to an employee record held by the company and relating to the individual directly related to a current or former employment relationship. However, the Full Bench did not agree that the fingerprint scanners fell under the employee records exemption because the exemption applies only to sensitive information that has been created or is within the employer’s custody or control. In this case, the employer was only at the stage of soliciting the sensitive information, it had not in fact collected the information.

Lessons for Employers

With new and emerging technology being utilised in the workplace, this decision is an important reminder for employers to ensure that data collection in the workplace is only used if necessary and is carried out in compliance with Privacy legislation and employers are having regard to privacy concerns and employee consent.

We suggest employers should:

· Ensure that employment contracts are drafted to allow the organisation to gather personal information with consent of the employee and make provision for changes to the employer policies.

· Ensure you understand your obligations under the privacy laws and ensure human resources or relevant managers are provided training to prevent potential breaches, and ensure your company practices operate efficiently.

· Any workplace policy that is introduced should be distributed to each employee and the business should provide training on the policy. It is also important to continue to review and update your policies to ensure they are current and applicable to your business and evolving technologies.

· For the avoidance of doubt, we suggest obtaining legal advice to ensure your privacy practices are up to date and there are suitable workplace policies to cover these issues.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to your obligations under privacy laws, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

Coronavirus and the Workplace

Monopolising media coverage since its outbreak in December 2019, the potentially deadly coronavirus (COVID-19) has not just limited itself to widespread disruption to cultural events and travel plans and, not least of which, harm to those who have contracted it, but it has now emerged as a genuine factor in the Australian workplace.

A client recently reached out to us seeking guidance as to how to handle an employee who had just returned from a holiday to mainland China. When the employee initially returned to Australia, his employer asked him (to which he readily agreed) to see a GP and upon visiting the GP, was advised to refrain from attending work for 14 days as a precaution. The employer was unsure how to treat the additional 14 days away from work, and whether to require the employee to take it as annual leave or unpaid leave. The employer did not turn its mind to whether the employee could take personal leave. In this client alert we step through various scenarios and how an employer should respond. For completeness, this advice concentrates primarily on permanent employees who have an entitlement to paid annual and personal leave.

What happens if an employee or their family member is sick with coronavirus?

Under the NES, a permanent employee is entitled to paid personal (sick) leave when:

  1. he or she is unfit for work because of their own personal illness or injury (including pregnancy-related illness); or
  2. to provide care or support to a member of their immediate family or household, because of a personal illness, injury or unexpected emergency affecting the member.

Furthermore, casual employees are entitled to 2 days of unpaid carer’s leave per occasion.

If a permanent employee, or a member of the employee’s immediate family are suffering from coronavirus, they are entitled to take paid sick / carer’s leave as would be the case for any other personal or family illness or injury.

Of course, the employer is well within its rights to ask the employee to provide evidence that they have been diagnosed with an illness.

In the event that the employee has no paid personal leave available, the employee has the option to use annual leave or to take unpaid leave.

What if an employee is stuck overseas or required to be quarantined?

This is a unique situation that is not imagined under the legislation or under the National Employment standard. For example, several Australian employees have been quarantined on cruise ships as well as in temporary accommodation and are unable to return to work as scheduled. There may also be numerous Australians unable to fly home as a result of the current travel bans. In these cases, the employee should contact their employer as soon as is practicable and the employer and employee settle on a mutually agreeable plan. This may include the employee taking paid sick leave, paid annual leave, taking leave in advance, taking any other leave available (such as long service leave if available) or unpaid leave by agreement.

An employer however, is not required to pay for the employee if the employee is unable to attend for work. A more interesting issue, is whether the employer can terminate the employment because the employee is unable to perform the role. This raises the legal argument of frustration. In other words, the purpose of the employment contract, being the employment of the employee has been frustrated by no fault of either the employee or employer. Unless, the performance of the role is critical to the business and it is not able to operate for extended periods without the role being performed, and temporary solutions to fulfilling the role are not viable, the reliance on frustration will be problematic.

What if an employee wants to stay home as a precaution (on advice of their GP or otherwise)?

If an employee wants to stay home as a precaution, and in effect place themselves under quarantine, a number of options may be available to the employer and employee. For example, if the employee has not tested positive for coronavirus but has been advised by a GP to stay home as a precaution, the permanent employee can apply for leave through the normal process. If the employee has personal leave available, despite not suffering from symptoms that would make him or her unfit for work, it is arguable that the employee is entitled to take personal leave considering he or she is acting on advice from a medical professional.

If the employee has not been provided such advice but wishes to stay home as a precaution (for example, where another employee in the office reported ill), the employee might choose to take paid annual leave.

Of course, during the precautionary period where the employee remains at home, there is no reason why the employee should not be given the opportunity to work from home where practical to do so. If the employee can ostensibly complete work during the precautionary period from home or another remote location, they may not need to take leave at all. This is the best resolution as an employee may resent using their accrued entitlements to stay away from the workplace as a precaution, particularly when they feel fit for work.

What if an employer wants their staff to stay home?

Under work, health and safety legislation, employers have an obligation to ensure that the workplace environment is safe. Where an employee has recently travelled through mainland China or has been in contact with someone with the coronavirus, an employer is perfectly within its rights to request the employee seek medical clearance before attending the work premises. In circumstances where medical clearance is not provided, or where the employer directs the employee to stay home as a precaution, it is arguable that irrespective of whether or not they have accrued annual or personal leave available, the employer will be obligated to pay the employee whilst subject to the direction to stay home.

Alternatively, if the nature of the work allows it, the employer might direct the employee to work from home for a nominated period to which the employee would be subject to remuneration as usual.

Unless the employee is subject to a unique rule under an enterprise agreement or contract of employment that allows the employer to stand down the employee without pay, if the employer directs the employee to stay home, they will likely be entitled to their normal remuneration.

Employer’s Duty to Prevent Discrimination

Unfortunately, the coronavirus has caused examples of discriminatory conduct towards individuals on public transport and in public. It is vital that the employer takes steps to ensure that such conduct does not spill into the workplace. As described above, employers are obligated to provide a safe work environment and discriminatory conduct towards an employee or group of employees might find the employer in breach of this obligation.

In circumstances where the employer is faced with an employee or group of employees requiring to take leave for actual illness or as a precaution in the event they become ill, employers must ensure they observe their legal obligations under the national employment standards and applicable industrial instruments along with their obligation to provide a safe and healthy workplace that is free from discrimination.

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any advice or legal support.

This alert is not intended to constitute, and should not be treated as, legal advice.

New Year, New Law

Welcome back to all our readers and best wishes for 2020!

With the New Year comes changes to legislation. It is also a perfect time to reflect on the matters the business would like to achieve in the coming year and how best to align your people with those goals.

In our first article for the year we set out the key new changes and pending legislative amendments as part of the next wave of employment and industrial law regulations.

 

1. Whistleblower Legislation

As many of our readers are aware, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (“the Whistleblower Act”), which amended the Corporations Act 2001 came into effect in July 2019. However, the Whistleblower Act required public companies, large proprietary companies and proprietary companies that are trustees of registrable superannuation entities to implement Whistleblower Policies by 1 January 2020.

Even though the requirement to introduce a Whistleblower policy is not compulsory for all companies, we recommend all companies consider implementing a policy in their workplace as all businesses must still comply with the legislation and understand their obligations under the Whistleblower Act. In November 2019, ASIC released Regulatory Guide 270 whistleblower policies, which sets out what a whistleblower policy should contain to comply with the requirements of the Whistleblower Act.

In addition, an effective workplace policy should be backed by training so that employees (specifically, managers and supervisors who will be classified as a recipient of a disclosure) have a clear understanding of steps to follow at a practical level. Training is also essential in determining how a disclosure will be investigated and dealt with so that there is no inadvertent breach of the legislation. It should be noted the penalties for breach of the Whistleblower Act are very significant.

 

2. Annual Salary changes in Modern Awards

As discussed in our article last year, on 4 July 2019, the Fair Work Commission finalised its decision in relation to the incorporation of new ‘annualised wage arrangement’ clauses in many Modern Awards. These clauses will replace the existing annualised salary clauses in the modern awards already containing an annualised salary clause. The new terms will also be inserted into three modern awards (Pastoral Industry Award 2010, Horticulture Award 2010 and Health Professionals and Support Services Award 2010) which have not previously had an annualised salary clause.

The new annualised salary provisions introduce a number of compliance requirements on employers requiring them amongst others to:

a) advise employees in writing (e.g. within their contracts) of the award provisions that are satisfied by the annualised wage – i.e. specifying which of each component of minimum rates, allowances, overtime/penalties and annual leave loading are satisfied by the annualised salary; and

b) advise employees in writing and specify (e.g. within their contracts) the outer limit of ordinary hours that would attract award penalty payments, and the outer limit of overtime hours the employee may be required to work without being entitled to an additional payment, such that:

i. the employer needs to forecast the maximum ordinary hours an employee might work on a weekend or after hours that would otherwise attract a shift penalty;

ii. the employer needs to forecast the maximum hours the employee might be required to work over and above ordinary hours that would otherwise attract overtime pay, and if the employee works in excess of these forecasts, shall be paid an additional sum over the weekly/fortnightly/monthly remuneration imagined by the annual salary; and

iii. at the end of each 12 months from the commencement of the annualised wage arrangement (or at the employee’s termination) to compare the annualised wage paid against the actual remuneration that would have been payable to the employee under the award. Where there is any shortfall, the employer must pay the outstanding amount within 14 days; and

iv. keep records of the starting and finishing times and unpaid meal breaks of each employee, for the purpose of complying with the comparison obligation described above.

These new requirements as proposed in the decision, for some industries, will reflect practices already implemented whilst for others, will appear oppressively onerous. To that end, we note that the Commission has already begun publishing the future awards in draft, set to commence operation in March 2020. However, these draft future awards contain annual salary clauses that do not, at this stage, mirror the Commission’s decision.

Specifically, the draft future awards do not incorporate the requirement that employers advise employees in writing and specify the outer limit of ordinary hours that would attract award penalty payments or the outer limit of overtime hours the employee may be required to work

without being entitled to an additional payment. Furthermore, they do not compel employers to keep records of the starting and finishing times and unpaid meal breaks of each employee.

Nonetheless, it should be noted that these draft future awards have not yet been finalised and may yet incorporate all the requirements as set out in the Commission’s decision.

Accordingly, we strongly recommend employers not to delay and consider undertaking the following:

· Identify whether employees are covered by a modern award;

· If the employees earn an annual salary, whether the salary term and contracts of employment comply with the proposed new award clauses;

· Implement time and attendance recording procedures; and

· Implement mechanisms to conduct annual reviews to ensure compliance with the award pay requirements.

In addition, employers should review their current contracts of employment for employees who are in receipt of annualised salaries and be prepared to implement contract variations for affected staff to maintain compliance.

If you employ employees covered by any of the above awards, we advise that you review the changes and ensure your business is complying with the obligations in the Award. Employers should also carefully review their rosters and rostering practices to ensure they are complying with the minimum entitlements in the Award.

 

3. Wage Theft

Last year, the Morrison Government announced the potential introduction of criminal sanctions to help reduce deliberate and systematic wage theft of Australian employees. In September/October 2019, feedback was sought from the community and specifically in relation to the penalty regime which will include jail terms and fines for most serious offences. It is likely this will continue to be a topic of discussion this year.

In addition, the Fair Work Ombudsman continues to take a strong stance against underpayment of employees. In this regard, many companies continually fail to properly classify workers, pay overtime, penalties and/or meet superannuation contribution obligations. Wage exploitation particularly remains a serious problem for migrant workers, young workers and for those on working visas and in certain industries.

2019 saw many restaurants (including restaurants owned by well-known celebrity chefs) and businesses in the hospitality industry come into the spotlight for significant underpayment issues. A number of large publicly listed companies (such as Woolworths, Sunglass Hut and so on) had self-reported to the Fair Work Ombudsman after they also discovered they had underpaid a substantial portion of employees in their business.

The Fair Work Ombudsman has made it clear that businesses will no longer be given leniency for failing to have their house in order, even where they self-report underpayments. It seems clear that the identification of underpayments and record keeping obligations will continue to be a major focus for the Fair Work Ombudsman throughout 2020.

Businesses, both big and small, need to take note of their obligations under the Fair Work Act 2009 (Cth), and their applicable modern award. The level of potential liability for repayments and civil penalties and the current prospect of criminal prosecution is very real and can be extremely costly. Accordingly, there is no better time to consider getting your house in order and ensure your business is complying with all wage and employee entitlements and obligations.

 

4. Understanding Confidentiality Provisions

Employment contracts often contain confidentiality provisions that prevent an employee from disclosing information obtained during their employment after their employment has ended. The scope of confidentiality clauses can be very broad and can effectively prevent ex-employees from disclosing or discussing aspects of their former employment. Most often the issue arises when ex-employees go to a competitor and the former employer wishes to prevent the employee from using the confidential information. However, it has far broader application.

In a recently decision, the Full Court of the Federal Court of Australia in Crown Resorts Limited v Zantran Pty Limited [2020] FCAFC 1 (“Zantran Decision”) considered whether confidentiality obligations prevent a litigant from speaking with potential witnesses if such statements may divulge confidential information subject to such confidentiality clauses, even in circumstances where the information is directly relevant to the litigation and could be given by the witness in court.

The specific issue in the Zantran Decision was whether Zantran’s legal representatives should be permitted to speak to the relevant employees to obtain witness statements or outlines of evidence and to obtain relevant documents regarding their criminal prosecution and conviction. In this regard, Zantran sought an order for the employees to be relieved of their contractual obligation of confidence owed to Crown Resorts Limited.

Accordingly, on appeal, the Full Federal Court determined that even though the courts were authorised to enforce obligations upon litigants and lawyers to approach cases in a way that best promotes efficient, timely and cost effective resolution of disputes, this did not mean that the Court had the power to relieve people of their enforceable obligations solely to create a more convenient running of litigation.

Effectively, this has meant that the Crown Resorts Limited employees will be permitted to give evidence at Court but Zantran would not be able to obtain witness statements prior to hearing.

Consequently, this decision demonstrates the breadth of contractual confidentiality obligations and establishes that former employees are not able to speak to third parties in any circumstances unless compelled by a Court or competent authority to do so.

In summary

As we look over the year that was, and forward to 2020, employers should be taking time to consider what the above matters mean for their businesses while ensuring that they have implemented the changes necessary to make certain they are compliant going into a new year.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law issue this year, please do not hesitate to contact us. Otherwise, we wish all our readers all the best for a successful and productive 2020!

This alert is not intended to constitute, and should not be treated as, legal advice.

Managing the End of Year Christmas Party – and The Aftermath Pt2

Oh my gosh – that could not have happened! We hope this is not something the business is saying after the end of year celebrations. Unfortunately, all too often a form of this reaction is all too common. In our last article, we looked at various control measures an employer can put in place to minimise the risk of inappropriate behaviour of employees at end of year or Christmas events which, in turn, minimise an employer’s exposure to subsequent legal claims and possible litigation.  In this, our Part 2, we look at management of the aftermath of the event and what practical steps can be taken to minimise an employer’s exposure where an incident has occurred.

Quite often, incidents occur when the employer-controlled event is over.  At the conclusion of the event at the controlled venue, employees will often continue the festivities at other venues where they can become quite intoxicated and unsavoury incidents result.  In our previous article we gave some guidance on the steps that responsible employers should take to minimise their risk for incidents to occur at the company organised event. As it is often tempting for employees who are enjoying themselves to ‘kick on’, employers should also ensure the policy is broad enough to cover conduct that may bring the Company into disrepute even if it occurs outside of work, or work events. In addition, employees should be encouraged to leave the venue for home once the event is over. Or, if a more carrot than stick approach is favoured, providing the employees cab vouchers to ensure they have a safe means of transport home, can be an enticement to depart before an unsavoury incident occurs.

In the event that a complaint or inappropriate workplace matter is raised about alleged misconduct at a work Christmas event, it is of vital importance that responsive action is taken quickly by employers. Leaving it to mid-January to start an investigation or take action is often too late and lacks the procedural fairness required to be given to an employee. Such measure that ought to be considered, depending on the sensitivity of the issue, include:

  1. providing counselling and support services to the complainant;
  2. keeping the complainant informed as to the steps being taken to respond to the matter;
  3. cooperating with Police and notifying the relevant safety regulators (if warranted);
  4. investigating the matter fully either internally or via a third-party investigation service;
  5. notifying the employee against whom an allegation has been made and requesting their response; and
  6. suspending the accused employee until all the facts have been gathered and a course of action has been decided upon.

In approaching these matters, practical strategies employers should otherwise bear in mind when responding to workplace complaints include:

  1. avoid delaying the response time to allegations;
  2. never assume an allegation is frivolous or vexatious without making inquiries;
  3. consider all the evidence and then determine an appropriate disciplinary response;
  4. document clearly and comprehensively your records at each step of the response process;
  5. provide employees with counselling or an EAP services provider; and
  6. communicate effectively and appropriate when dealing with sensitive workplace matters.

It is also appropriate to have a clear social media policy in place as photographs or video taken ‘in the moment’ and posted to online social media platforms can embarrass or damage the reputation of employees and the employer alike.  It is advisable that employers implement a policy that no images or video from the party are to be posted online by anyone other than the employer.

Finally, whilst inappropriate workplace conduct should be dealt with and punished accordingly, employers need to ask themselves whether the punishment fits the crime. It is therefore not only relevant to act in circumstances where a complaint of inappropriate behaviour is received, but to ensure the ensuing response is proportionate, fair and reasonable.

A common occurrence after the workplace Christmas party can be employees calling in sick the next day.

While employees are entitled to take sick leave if they are not fit for work because of a personal illness or injury, over-indulging to the point where they are unable to attend for work the next day may be a valid reason for disciplinary action.

In Avril Chapman v Tassal Group Limited T/A Tassal Operations Pty Ltd [2017] FWC 4630, Ms Chapman was dismissed after leaving a voicemail for her employer admitting she had over-indulged at the Christmas party and was subsequently unfit for work the following day.

The Commission found that there was a valid reason for dismissal and held that Ms Chapman chose to ‘over-indulge’ the day before she was due at work to such an extent as to be unable to fulfil her obligations to attend for work the next day. However, the Commission ultimately held that the dismissal was unfair considering that this was the first time Ms Chapman had conducted herself in this manner during her 5 years of service with the employer.

We recommend any employer wishing to obtain advice in relation to an incident or complaint arising from an end of year event or Christmas party, takes appropriate and prompt steps to seek legal advice and assistance.

As this article will be our last publication for 2019 and we will resume our alerts from February 2020, we wish all of our clients and readers a wonderful Christmas/Holiday period and a happy New Year!

We trust that, within reasonable parameters, this season of Christmas and end of year functions will be well attended and thoroughly enjoyed!

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any advice or legal support this silly season.

This alert is not intended to constitute, and should not be treated as, legal advice

Managing the End of Year Christmas Party – and the Aftermath

A quick Google search for career ending moves at the work Christmas Party may be an amusing exercise. However, at this time of the year it serves as a timely and educative reminder to both employers and employees that poor management, planning and behaviour can make the annual Christmas festivities, and their aftermath, a very sobering experience indeed.  In our experience these events are notorious for being a potential breeding ground for inappropriate workplace behaviour and may put employers at risk of litigious actions such as sexual harassment, bullying, discrimination and unfair dismissal claims.

An employer owes an overarching duty to take all steps reasonably practicable to prevent the risk of injury in the workplace. Any workplace Christmas or end of year event will be considered the “workplace” and the employer will be liable for any inappropriate or unlawful behaviour that occurs, if they have not taken all reasonable steps to prevent such conduct. In the context of work Christmas parties, subtler risks can often be overlooked by employers such as the service of alcohol, at an employer’s expense, and the possibility of illegal drug taking and, in some circumstances, sexual misconduct amongst staff.

Furthermore, the meaning of a “workplace” in this context has been extended, through judicial reasoning, to include not only a principal place of business, but also social gatherings at bars, restaurant or other public venues at which organised interactions amongst staff occur.

It is therefore imperative for employers to educate staff as to what constitutes acceptable behaviour, and what kinds of conduct may give rise to disciplinary action. To this end, it is important that employers implement control measures, so their staff understand what behaviours are acceptable in the context of an event organised by the company, even if it is not on work premises or during ordinary business hours.

Examples of recommended control measures include:

  1. developing and implementing policies around appropriate workplace behaviours, and refreshing these expectations with your employees regularly and in particular before the work Christmas party;
  2. consulting with staff in relation to your expectations of their behaviour at work Christmas parties;
  3. providing training to employees on their obligations under various legislation, including in respect of work health and safety; and
  4. providing access to counselling and an EAP services provider.

At the event itself, particularly where alcohol is being served, an employer can take steps to support their duty to prevent the risk of injury by:

  1. limiting the amount of alcohol supplied;
  2. preventing employees from ‘self-serving’ by appointing suitably qualified third-party officers to serve alcohol (e.g. bar service attendants with RSA’s);
  3. commencing and concluding the event earlier in the evening; and
  4. ensuring adequate security and safety measures are in place at the venue.

Careful planning, management and control of venue are vital in mitigating an employer against the risks of litigation, for example, for unfair dismissal.  In the recent decision of Drake & Bird v BHP Coal Pty Ltd [2019] FWC 7444, one employee’s termination was upheld while another was reinstated after a physical altercation at a Christmas event. The employees believed they were at a ‘pyjama night’ (an event organised by BHP mineworkers to mark new rosters) and were thus not attending a “workplace” function.  Nonetheless, there were some 60 employees of the company, including family members, attending the function, allowing the Commission to conclude that the event was sufficiently work related as to be covered by BHP’s code of business conduct and charter values.

Uncontrolled and excessive consumption of alcohol was the principal driver in causing the altercation where an uninvited supervisor decided to belatedly attend the event and was attacked by two employees, one of whom punched the supervisor.  The Commission upheld the termination of the employee who punched the supervisor but reinstated the other.  Despite the conduct of both employees running counter to BHP’s conduct policies, the event was poorly managed and controlled by BHP and they were thus exposed to unfair dismissal litigation with mixed results.

To further highlight the different outcomes that can arise based on the planning, management and control exercised by an employer (or lack thereof), it is worthwhile to compare Keenan v Leighton Boral Amey NSW Pty Ltd [2015] FWC 3156 and Vai v ALDI Stores (A Limited Partnership) [2018] FWC 4118. 

In Keenan a drunken employee was dismissed for verbally abusing his boss and sexually harassing a fellow colleague. Despite the employee being warned that the usual workplace code of conduct would apply at the Christmas party, the Commission still found that the employee’s dismissal was unfair.  In Vai, an employee was dismissed for misbehaviour at a work Christmas party at which the employer also supplied free alcohol. In this matter, the employee threw a full glass of beer towards other employees. 

While the former matter appeared more serious, the Commission found that the termination of Mr Keenan’s employment was unfair because employees were able to serve themselves alcohol and no one was given the task of supervising the function whereas Mr Vai’s termination was upheld because the work function was at a hotel where the serving of alcohol was controlled and where there were senior staff present to supervise.

Whilst work functions are a great opportunity to have fun with colleagues, our recommendation to surviving the silly season is to be honest with yourself as to whether everything reasonably practicable has been done to ensure all employees are safe and without risk of being subjected to offensive behaviour.

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any advice or legal support this silly season.

This alert is not intended to constitute, and should not be treated as, legal advice.

Ill or injured employees – what can employers do?

Can an employer terminate the employment of an ill or injured employee, who has been of work for sometime and is refusing or ignoring requests to attend independent medical examinations. Disability discrimination legislation allows an employer to terminate the employment of an employee where the employee is not able to fulfill the inherent requirements of the role as a result of the disability. However, the application of this defence is often difficult, as it means the employer needs to be sure by reference to compelling evidence (usually independent medical evidence) that this is the case.

In addition, the General Protection provisions of the Fair Work Act 2009 (Cth), prevent an employer from taking “adverse action” against an employee because of a disability. There is no similar inherent requirements defence, although if the employer can argue that the reason the employment was terminated related to the failure of the employee to perform the role (and not the disability itself) then arguably the termination would not offend the FW Act. It is notable that most employers have been reticent to take the ultimate step of dismissal because of the inherent requirement defence, because it is only due to the disability that the individual is unable to work, and as such a strong presumption is created that the dismissal is due to the disability. This is the very issue that was the subject of the decision in Western Union Business Solutions (Australia) Pty Ltd v Robinson [2019] FCAFC 181.

Background

Mr David Robinson was employed by Western Union Business Solutions (Australia) Pty Ltd (“WU”) as a ‘Client Executive’ from February 2013 until his dismissal on 8 May 2017.

Prior to his dismissal, Mr Robinson took an extended period of sick leave whereby he provided medical certificates that lacked detail with respect to his condition, other than to indicate he was suffering from “a medical condition”, “significant work related  stress and anxiety” and “a major depressive disorder associated with significant anxiety”.  The medical certificates ostensibly did not change from the commencement of his sick leave in around September 2016 to his dismissal on 8 May 2017, did not indicate a positive prognosis nor imagined a regime whereby Mr Robinson would return to work.

During Mr Robinson’s absence and on three occasions, WU directed Mr Robinson to attend an independent medical assessment who would provide a timeframe for Mr Robinson to return to work; a direction Mr Robinson ignored.

Considering Mr Robinson’s role was one that “continued to be required” by WU, Mr Robinson’s refusal to attend an independent medical assessment and the lack of specificity in the Work Cover certificates that were being provided, decided to terminate the employment. WU ultimately terminated Mr Robinson’s employment, providing him with 2 months’ pay in lieu of notice plus accrued but untaken leave entitlements. The dismissal letter stated, “in light of the Company’s serious concerns about your capacity to return to work, the company has decided to terminate your employment”.

Mr Robinson commenced proceedings in the Federal Court alleging that WU had terminated his employment because of his mental disability in contravention of section 351 of the FW Act.

Relevantly, s351 of the FW Act provides:

  1. An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
  2. However, subsection (1) does not apply to action that is:
    1. not unlawful under any anti-discrimination law in force in the place where the action is taken; or
    2. taken because of the inherent requirements of the particular position concerned…

At first instance, WU gave evidence that Mr Robinson was dismissed because:

  1. he unreasonably failed to co-operate with three attempts by WU to arrange for him to attend a medical appointment;
  2. he was likely working elsewhere;
  3. he was not genuinely unwell; and
  4. his absence could conceivably be indefinite considering his medical evidence was ostensibly unchanging and did not envision a return to work plan.

At first Instance

Judge Flick found that:

  • The lack of capacity of Mr Robinson to return to work was a “manifestation” of his claimed mental disability, which could not be severed from that disability;
  • Although Mr Robinson’s employment was not terminated because he suffered a mental disability, it nonetheless was terminated because of a manifestation of that mental disability and his subsequent inability to return to work; and
  • Adverse action was taken against Mr Robinson because of, or at least for a reason which included, a manifestation of his claimed mental disability and hence for reasons which included his mental disability.

Judge Flick drew comparisons with the decision of Judge Katzmann in Shizas v Commissioner of Police [2017] FCA 61 where the Assistant Commissioner of the Australian Federal Police had refused to employ Mr Shizas because he had formed the view that Mr Shizas “faced an unacceptable risk of injury in the future” due to his suffering from a physical disability.  Judge Katzmann found that it was “difficult, if not artificial” to draw a distinction between a disability and its manifestations or effects, and decided that the Commissioner of Police had contravened section 351 of the FW Act.

Appeal

The decision of Judge Flick was overturned on appeal by the Full Bench which found that:

  • The lack of capacity of Mr Robinson to return to work was not a manifestation of his mental disability, even though it may have been a consequence of it;
  • Not every consequence of a disability should be regarded as a manifestation of it;
  • A manifestation of a disability includes, for example, symptoms such as lethargy or fatigue. A consequential inability to attend work because of lethargy or fatigue is a result of the manifestation and not a manifestation of the disability itself; and

Judge Flick had incorrectly assumed that Mr Robinson’s incapacity for work was caused by an underlying mental condition and then incorrectly reasoned that the WU took action because of the mental condition rather than the incapacity.

The decision of the Full Bench draws a clear distinction between:

  • A disability (as described by its name, e.g. depression);
  • The manifestations of that disability (e.g. lethargy or fatigue); and
  • The consequences of the manifestations of a disability (e.g. inability to attend work or perform certain duties).

Lessons for Employers

The lesson for any employer considering taking adverse action against an employee, including termination of employment, who has a disability should first consider whether it is doing so:

  • Because the employee suffers from an impairment; or
  • Because the employee suffers from or experiences the manifestations of a disability (e.g. suffers from or experiences anxiety or fatigue due to depression); or
  • Because of a consequence of a manifestation of a disability, including:
    • An employee doing something (e.g. an employee truck driver improperly securing a load due to fatigue);
    • An employee potentially doing something (e.g. there exists a risk that an employee truck driver could possibly fail to secure a load due to fatigue);
    • An employee not doing something (e.g. an employee truck driver failing to secure a load in a safe manner due to lethargy); and/or
    • An employee potentially not doing, or not being able to do something (e.g. the risk that an employee truck driver will not secure a load in a safe manner due to lethargy).

Ultimately, the Full Bench determined that an employer can take lawful adverse action against an employee because of a consequence of a manifestation. Otherwise employers would have had no ability to terminate the employment of any person who is absent from work for an indefinite period if that absence was wholly or evenly partially due to a disability.

This decision effectively means employers can now more confidently manage the employment of long term ill or injured employees, who are unlikely to be able to return to work as a result of the their illness or injury.

Protecting the business when executives leave

The importance of the Senior Executives team for any business cannot be underestimated. They are ultimately responsible for the culture, performance and success of the business. However, what happens when a senior executive leaves the business. Have you considered how this may impact the business? What are the matters that any responsible business should consider in circumstances where a senior executive leaves?

Following on from our last article in relation to how to motivate senior executives, in this week’s article, we look at the factors an employer should consider ensuring the business is protected when senior employees wish to resign, or the business chooses to remove them.

There are many issues that should be considered when a senior member of the organisation leaves. Unfortunately, many of these matters should be properly considered way before a decision is made to either terminate the relevant employee, or before the employee’s terms of resignation are accepted. In fact, I would go further and say that prudent employers should be holding regular catch-ups with the senior executive team, to ensure that if there is any apprehension someone may be considering leaving, that this is not news when it occurs, and if they are vital, that the reasons for the move are addressed and perhaps the departure avoided. In any event if this does not occur at least the following should be considered:

  • How will the departure affect the operation of the business and what must be done to manage this;
  • Why the person is leaving and whether the issues affect others in the business and especially in the Executive’s team;
  • The level of knowledge shared across the team about the matters dealt with by the Executive and how this will be managed;
  • The timing of the departure;
  • The messaging regarding the departure and its effect on both the departing employee and the rest of the business;
  • The legal requirement, which we discuss more fully below.

One of the most important protections for any business is an appropriate contract of employment. It should provide for appropriate notice periods, which is vital to ensure the business can properly plan and manage a departure, garden leave clauses, and otherwise clearly identifies the rights and obligations of both parties. In particular, in addition to the standard clauses, an employment contract for an executive should include the following:

Notice Period

Notice of termination clauses sets out the amount of notice the employee and the business must provide before the employment relationship may terminate.

It is crucial that the notice clause sets out the notice that both the employer and the employee must provide so that each party knows exactly what to expect from the other.

In circumstances where a contract does not include an express term setting out the notice period, the courts will imply a term of “reasonable notice”. Reasonable notice will be determined on a range of factors such as age, length of service, time it would likely take for the employee to obtain commensurate employment, qualifications and so on. Accordingly, it may be found that reasonable notice is substantially more than the business was prepared to provide. For senior executives who have been employed for considerable periods of time, reasonable notice could be as much as 12 months.

An appropriate notice period can also act as an effective restraint of trade, as it will prevent an employee from starting with a competitor during that period. It is for these reasons that notice periods for senior executives are often more than the standard one month. It is also important that the contract allows for the payment of notice in lieu of the employee working the notice. If this is not the case, but the employer actually wants the employee to leave immediately, without the relevant clause allowing this, there may be an argument that doing so is a breach of the contract.

Garden Leave

A garden leave clause allows the business to isolate the employee from their business while having them remain employed. During the garden leave period, the employee remains an employee of the business and as such, has the same obligations and duties to the business as any other employee, however the employee is not required to attend for work. In addition, other restrictions can be imposed including that they have no direct contact with clients, suppliers and/or access to confidential information.

Garden leave can therefore be a great way of restraining an employee. For example, if your business suspects an employee has resigned to join a competitor it is unlikely the business will want to make a payment in lieu of notice as that would simply bring their termination date forward, meaning the employee could start with the competitor even sooner. Placing the employee on garden leave, ensure they are unable to commence with the new employer or compete with the business for the notice period, but allows them nonetheless to be removed from the operation of the business.

Garden leave clauses also allow an employer to retain the knowledge of the employee for a transition period, but not necessarily have the employee attend for work. This may be invaluable in transitioning another person into the role or managing the departure.

It is important to understand that there is no general right to put an employee on garden leave and as such, a properly drafted clause should be included in the employment contract to allow the business to do so.

Restraints of Trade

Senior executives are usually the repository of the business’s knowledge and confidential information, not to mention customer connections and goodwill. When these employees leave, they create a substantial risk to the business. Well drafted post-employment contractual restraints can be an extremely useful tool to protect the business from the impact of former employees using this knowledge and connections for the benefit of others.

It is critical that a restraint of trade clause is carefully drafted to ensure that it is reasonable and enforceable. In this regard, the legal position is that post-employment restraints will be enforced if the employer seeking to enforce the restraint is able to show that the restraint is reasonable and necessary to protect the employer’s legitimate business interest.

Without appropriate restraint clauses, there is very little an ex-employer can do to prevent an employee from competing. The same observation can be made for the protection of confidential information. Unless the contract contains an appropriate clause dealing with the protection of confidentiality, the employer will need to rely on the common law which is very limited.

Termination Payments

It is not unusual in circumstances where the employment of executive employees occurs, to find that this creates significant disputation over the quantum of the termination payments, entitlement to bonuses, share options and other incentive payments. The contract of employment should make clear what payments will be made to an employee in these circumstances, and how discretionary benefits will be treated.

Lastly, in circumstances where a business may terminate an executive employee and is considering a termination payment, it is important to ensure the business does not breach its obligations under the Corporations Act 2000 (Cth). Specifically, the Corporations Act places limits on the quantum of termination benefits payable to relevant executives. For executives captured by these provisions, unless the business has obtained shareholder approval prior to the payment being made, the termination payment cannot be greater than the executive’s base remuneration in the preceding 12 months.

If you require assistance with drafting an executive employment contract, restraint provisions or require general employment law related advice, please feel free to contact our office.
This alert is not intended to constitute, and should not be treated as, legal advice.

1